dao/docs/content/docs/guide/hierarchy/node-creation.mdx

---
title: Creating Sub-DAOs
description: How to create child nodes and delegate authority
---

# Creating Sub-DAOs

Sub-DAOs (child nodes) allow parent organizations to delegate specific functions while maintaining oversight. This guide covers creating and configuring child nodes.

## Prerequisites

Before creating a sub-DAO:

- Admin role on parent DAO
- Clear mandate and scope defined
- Initial funding approved
- Admin address ready

## Creation Methods

### Method 1: Via UI

#### Step 1: Navigate to Hierarchy

1. Go to your DAO dashboard
2. Click **"Organization"** in the sidebar
3. Click **"Create Sub-DAO"**

#### Step 2: Configure Basic Info

```
┌─────────────────────────────────────────────────────────────┐
│ Create Sub-DAO                                               │
├─────────────────────────────────────────────────────────────┤
│                                                              │
│  Name:         [Research Committee                  ]        │
│                                                              │
│  Description:  [Funds and coordinates research      ]        │
│                [initiatives across the ecosystem    ]        │
│                                                              │
│  Admin:        [0x1234...5678                       ]        │
│                                                              │
│  Type:         ( ) Committee                                │
│                (•) Working Group                            │
│                ( ) Regional Chapter                         │
│                                                              │
└─────────────────────────────────────────────────────────────┘
```

#### Step 3: Set Governance Parameters

```
┌─────────────────────────────────────────────────────────────┐
│ Governance Settings                                          │
├─────────────────────────────────────────────────────────────┤
│                                                              │
│  Voting Period:    [7      ] days                           │
│                                                              │
│  Quorum:           [1,000,000] tokens (10% of supply)       │
│                                                              │
│  Approval:         [50     ] %                              │
│                                                              │
│  Proposal Threshold: [10,000] tokens to create              │
│                                                              │
│  ┌─────────────────────────────────────────────────────┐   │
│  │ ℹ️ Lower thresholds = more proposals                 │   │
│  │    Higher quorum = stronger mandate                  │   │
│  └─────────────────────────────────────────────────────┘   │
│                                                              │
└─────────────────────────────────────────────────────────────┘
```

#### Step 4: Configure Permissions

```
┌─────────────────────────────────────────────────────────────┐
│ Permissions                                                  │
├─────────────────────────────────────────────────────────────┤
│                                                              │
│  [✓] Can create child nodes                                 │
│      └── Allow this sub-DAO to create its own children      │
│                                                              │
│  [✓] Can transfer externally                                │
│      └── Send funds outside the hierarchy                   │
│                                                              │
│  Spending Limit:  [$50,000] per transaction                 │
│      └── 0 = unlimited                                      │
│                                                              │
│  ──────────────────────────────────────────────────────     │
│  Parent Controls                                             │
│  ──────────────────────────────────────────────────────     │
│                                                              │
│  [✓] Parent can freeze                                      │
│      └── Allow parent to halt operations                    │
│                                                              │
│  [✓] Parent can clawback                                    │
│      └── Allow parent to recall funds                       │
│                                                              │
│  Clawback Delay:  [3     ] days                             │
│      └── Notice period before funds recalled                │
│                                                              │
└─────────────────────────────────────────────────────────────┘
```

#### Step 5: Initial Funding (Optional)

```
┌─────────────────────────────────────────────────────────────┐
│ Initial Funding                                              │
├─────────────────────────────────────────────────────────────┤
│                                                              │
│  [✓] Fund on creation                                       │
│                                                              │
│  Token:   [USDC ▼]                                          │
│  Amount:  [100,000                    ]                     │
│                                                              │
│  Available in parent treasury: 500,000 USDC                 │
│                                                              │
│  ┌─────────────────────────────────────────────────────┐   │
│  │ + Add another token                                  │   │
│  └─────────────────────────────────────────────────────┘   │
│                                                              │
└─────────────────────────────────────────────────────────────┘
```

#### Step 6: Review and Submit

1. Click **"Preview"** to review configuration
2. Verify all settings are correct
3. Click **"Create Sub-DAO"**
4. Sign the transaction

### Method 2: Via Proposal

For larger organizations, creation should go through governance:

```yaml
Proposal: "Create Research Committee Sub-DAO"

Description: |
  This proposal creates a Research Committee to coordinate
  and fund research initiatives.

  ## Mandate
  - Evaluate research proposals
  - Fund approved projects up to $50K
  - Track research outcomes
  - Report quarterly to parent

  ## Budget
  Initial funding: $100,000 USDC
  Quarterly allocation: $25,000 USDC

  ## Leadership
  Initial Admin: research-lead.eth (0x1234...)

Actions:
  - type: create_child
    name: "Research Committee"
    admin: "0x1234..."
    config:
      votingPeriod: 604800
      quorum: 1000000
      threshold: 5000
      canCreateChildren: false
      canTransferExternal: true
      spendingLimit: 50000000000
      parentCanFreeze: true
      parentCanClawback: true
      clawbackDelay: 259200

  - type: transfer
    to: ${newChild}
    amount: 100000
    token: USDC
```

### Method 3: Via SDK

```typescript
import { HierarchyClient, NodeConfig } from '@lux/dao-sdk';

const hierarchy = new HierarchyClient(signer);

// Configure the child node
const config: NodeConfig = {
  votingPeriod: 7 * 24 * 60 * 60,  // 7 days
  quorum: ethers.parseUnits('1000000', 18),
  threshold: 5000,  // 50% in basis points
  canCreateChildren: false,
  canTransferExternal: true,
  spendingLimit: ethers.parseUnits('50000', 6),  // 50K USDC
  parentCanFreeze: true,
  parentCanClawback: true,
  clawbackDelay: 3 * 24 * 60 * 60,  // 3 days
};

// Create the child
const tx = await hierarchy.createChild(
  'Research Committee',
  '0x1234...admin',
  config
);

const receipt = await tx.wait();
const childId = receipt.events[0].args.childId;

console.log(`Created child node: ${childId}`);
```

## Configuration Reference

### Governance Parameters

| Parameter | Description | Recommended |
|-----------|-------------|-------------|
| `votingPeriod` | Duration of voting | 3-14 days |
| `quorum` | Minimum participation | 5-20% of supply |
| `threshold` | Approval percentage | 50-67% |
| `proposalThreshold` | Tokens to propose | 0.1-1% of supply |

### Permission Flags

| Flag | Default | Description |
|------|---------|-------------|
| `canCreateChildren` | false | Create nested sub-DAOs |
| `canTransferExternal` | true | Send funds outside hierarchy |
| `spendingLimit` | 0 | Max per-transaction (0 = unlimited) |

### Parent Controls

| Control | Default | Description |
|---------|---------|-------------|
| `parentCanFreeze` | true | Parent can halt operations |
| `parentCanClawback` | true | Parent can recall funds |
| `clawbackDelay` | 3 days | Notice before clawback |

## Post-Creation Setup

After creating a sub-DAO:

### 1. Configure Roles

```yaml
Roles to create:
  - Admin: Full management (multi-sig recommended)
  - Lead: Create proposals, manage budget
  - Member: Vote, participate
  - Observer: Read-only access
```

### 2. Set Up Committees

If the sub-DAO will have its own working groups:

```yaml
Working Groups:
  - Review Panel
    - Evaluates incoming proposals
    - 3-5 members
  - Operations
    - Handles day-to-day
    - 2-3 members
```

### 3. Document Mandate

Create a charter document:

```markdown
# Research Committee Charter

## Purpose
Fund and coordinate ecosystem research.

## Scope
- Academic research partnerships
- Technical research grants
- Industry analysis

## Out of Scope
- Product development
- Marketing research
- Operational expenses

## Budget
- Quarterly allocation: $25,000
- Single grant limit: $50,000
- Emergency reserve: $10,000

## Governance
- Voting period: 7 days
- Quorum: 10%
- Approval: 50%

## Reporting
- Monthly activity report
- Quarterly budget review
- Annual impact assessment
```

### 4. Fund the Treasury

Transfer initial operating funds:

```typescript
// From parent DAO
await treasury.transfer(
  childAddress,
  usdc.address,
  ethers.parseUnits('100000', 6),
  'Initial Research Committee funding'
);
```

## Common Configurations

### Autonomous Committee

High autonomy, minimal parent control:

```typescript
const autonomousConfig: NodeConfig = {
  votingPeriod: 604800,
  quorum: ethers.parseUnits('500000', 18),
  threshold: 5000,
  canCreateChildren: true,
  canTransferExternal: true,
  spendingLimit: 0,  // Unlimited
  parentCanFreeze: false,  // Cannot freeze
  parentCanClawback: false,  // Cannot clawback
  clawbackDelay: 0,
};
```

### Controlled Working Group

Limited autonomy, strong oversight:

```typescript
const controlledConfig: NodeConfig = {
  votingPeriod: 259200,  // 3 days
  quorum: ethers.parseUnits('100000', 18),
  threshold: 5000,
  canCreateChildren: false,
  canTransferExternal: false,  // Internal only
  spendingLimit: ethers.parseUnits('10000', 6),
  parentCanFreeze: true,
  parentCanClawback: true,
  clawbackDelay: 86400,  // 1 day
};
```

### Regional Chapter

Balanced autonomy with coordination:

```typescript
const chapterConfig: NodeConfig = {
  votingPeriod: 604800,
  quorum: ethers.parseUnits('200000', 18),
  threshold: 5000,
  canCreateChildren: true,  // Can create local groups
  canTransferExternal: true,
  spendingLimit: ethers.parseUnits('25000', 6),
  parentCanFreeze: true,
  parentCanClawback: true,
  clawbackDelay: 604800,  // 7 days notice
};
```

## Troubleshooting

### Creation Failed

| Error | Cause | Solution |
|-------|-------|----------|
| `Unauthorized` | Missing admin role | Get admin permission |
| `InvalidConfig` | Bad parameters | Check config values |
| `InsufficientFunds` | Not enough for initial funding | Reduce or skip funding |
| `MaxDepthExceeded` | Too many hierarchy levels | Create at higher level |

### Common Issues

**Child not visible in UI:**
- Wait for transaction confirmation
- Refresh the page
- Check the transaction succeeded

**Cannot transfer funds:**
- Verify child has treasury address
- Check spending limits
- Confirm transfer is within scope

**Governance not working:**
- Verify token distribution
- Check quorum settings
- Ensure voting period started