One of the core innovations unfolding in the web3 space is the utilization of smart contracts to facilitate interpersonal dynamics, thus augmenting, if not altogether supplanting, any requisite counterparty trust. The idea is that counterparty trust has long required the parties involved to take measures to establish said trust, measures which may be time-consuming or costly, and that the minimization of such costs could be a boon for business in general.

One indicator that DAOs are still young in their development, is the fact that they are still searching for business models which fit the web3 ethos of decentralized power and transparency. Currently DAOs mainly rely on speculative asset sales and royalties, early-stage private investments, or grants to financially sustain their operations.

Decentralization is often discussed and debated amongst DAO builders and operators. And rightfully so – decentralization is a fundamental tenet of web3 – so it’s important we’re all working off shared terminology and frames of reference of what it means to be decentralized. Less often discussed, though, is the “A” in DAO. But maybe it’s time we start looking at it with more rigor and care.

DAOs structured for community face tensions in driving efficiency. I explore how these DAOs can engage members and elevate 'diamonds in the rough'.

In the first part of this essay, I explored what specifically a DAO is, and introduced two ideas: that they automate middlemen in banking and administration. But I also spotted a problem, which is that trying to build an organisation to take advantage of both of these innovations can cause difficulty. That’s because automating the banking aspect lends itself to expert partnerships, whilst automating the latter lends itself to expansive community, which actively undermine each other.

Blockchain replaces middlemen with code. I argue that DAOs must pick between expertise and community, and explore those doing it best at both ends of the spectrum.

Writer’s note: This piece draws direct inspiration from Paul Graham’s 2009 blog post, “Maker’s Schedule, Manager’s Schedule”

At this early stage of the development of PubDAO, we are building the base layer of our service model, a model which could be called Content as a Service, or CaaS.

At PubDAO, an early-stage media service DAO, we’ve been working to develop what could be called an open-access business model. Instead of devising practices, methods and techniques behind closed doors and keeping them there, we are engineering them to not only survive in public, but actually benefit from such accessibility.