I. The DAO landscape

Our understanding of decentralized autonomous organizations is constructed from the current landscape of us

e-cases: DeFi protocols, NFT collector clubs, public goods, and a great assortment of other interest groups coordinating over common purpose. However, from a technical standpoint, we have yet to see the internet-native cyborgic system described in Vitalik’s 2014 essay:

“The idea of a decentralized autonomous organization is easy to describe: it is an entity that lives on the internet and exists autonomously, but also heavily relies on hiring individuals to perform certain tasks that the automaton itself cannot do.”

Composed of human and machine elements, these entities should operate autonomously. Their governance, much like our own, is encoded in its system. But unlike ours, decisions are collectively decided upon by the community and enacted seamlessly on-chain as impetus towards trustless coordination. As hybrid systems, they are mobilized by the synergy of contract and community, hence, the removal of a small group of early stakeholders should not interfere with business as usual.

That being said, DAOs as internet entities formed around collective action or communities should reflect a kaleidoscopic range of uses. They could be formed from Solidity developers who would decide on the next language upgrade, or from football fan clubs who collectively own a team and decide which players to hire. They could be as ephemeral as a flash mob or as regenerative as an anime fandom. In other words, they could be formed from anything, really. In theory.

But the current state of DAOs reflects a different reality. Despite growth in the space, they still remain speculative novelties that reflect the interests of a niche, esoteric web3 community constructed from a different culture within tech, a culture that prides itself on inclusion, diversity, openness, and empowerment. But regardless of what we promote and believe, if what we produce is narrow and catered to ourselves, we become a reclusive monoculture.

Perhaps the more onerous problem is the recursive death. As a lucrative industry, the value of our values has attracted disinterested parties to capitalize on our innovation, hollowing a culture from the inside out. It’s happened before, why wouldn’t it again?

II. Infrastructural Evolution

From a technical standpoint, one of the main reasons we have not yet seen more flexible, diverse decentralized systems is due to the architectural limitations for DAO governance and decision making. Should this be the case, looking back at the technical trends in infrastructure might better prepare us for where we’re headed.

It started out with monolithic frameworks which featured a simple drag-and-drop type of governance builder through a web application to generate a boilerplate DAO and deploy it on the Ethereum chain. This was considered to be a revolutionary change, but the massive codebase of these frameworks demanded high transaction fees and were limited in terms of interoperability with other smart contracts or on-chain protocols. This model became obsolete quite simply because they were expensive and unusable.

Since then, things stripped down to the bare minimum with a multisig wallet and off-chain voting. Snapshot made it lightweight and easy, but more importantly, free of gas costs as they were done off-chain. This dramatically improved levels of participation, another major problem in the DAO space. Though efficient in terms of execution speed, simplicity, and transactional costs, this model opens itself to a number of attack vectors.

For one, a multisig owner could disappear for a number of reasons, be it legal prosecution, burnout, having an accident, or becoming a contemporary Luddite. They can also turn malicious and refuse to execute governance decisions or rug pull the DAO. In other words, this model constellates the multisig as a single point of failure for the entire organization.

III. Modular Futures

In an attempt to solve this problem, the next evolutionary step for DAO infrastructure has appeared in modular governance. There have been some projects that have made strides in this direction, in which multisig wallets are first-class citizens and other functionalities are modularly added to them. The problem of proposal-automation as mentioned above was partially resolved by SafeSnap that bridged Snapshot and Safe via oracle. Users would be able to vote on proposals through Snapshot and execute them automatically. Eventually this evolved into a set of DAO building tools called Zodiac, and though this didn’t eliminate the single point of failure problem it did solve the issue of automation.

The modular approach to DAO architecture makes it easier to create adaptive and interoperable systems and governance mechanisms. However, most tooling available today is still modeled on the out-of-box approach. These solutions do not provide enough flexibility needed to represent the range of organizations and communities out there, and their continuous use will eventually define DAOs at large.

As mentioned above, if any online community has the potential to become a DAO, then its infrastructure should be designed specific to each case. This is why at Daoism Systems we embed the modular approach in our business model and build made-to-measure for customized systems that fit the specific structural needs per organization or community.