DAOs need a new name. Either that, or we need to call them a “dao” instead of a “d.a.o.” and forget that the letters stand for anything. Otherwise, people will keep saying things like “that’s not really a DAO, it’s not decentralized enough.”
Or perhaps we can still use DAO, but need a broader catch-all term for any groups with 1) organizational structures that are programmed in, and 2) who primarily transact in crypto (large or small, oligarchy or democracy, simple or complex). For the purposes of this article, this broader term is what I mean by “DAO.” How is a DAO governed? As many ways as a programmer can dream up. How do DAOs collaborate? Whatever makes the most sense. DAOs in their current form are hundreds of experiments, each with varying degrees of decentralization and autonomy and any number of features. It’s too early to say definitively what DAOs are good for or not. Many of the current DAOs will fail, or merge with other DAOs. Some people will lose a lot of money. That’s not good. But maybe some of these experiments will succeed beyond our wildest dreams, not only financially and productively, but also for the good of society. Maybe. Just maybe.
For those newer to the space*, who want a bit more background in DAOs, check out:*
- This article from Ethereum.org and this one from Consensys.
- If you want a little more, go over to the CCS Web3 Starter Pack.
In the midst of all these experiments “what is a DAO?” is not as important a question as “what will DAOs become?” The first cars were not very useful: they were slow, couldn’t handle difficult terrain, and kept breaking down. Horses were a much better transportation choice for most people. Likewise with the early telephone, a telegraph could send messages much further and to a lot more people. For both of these, not only did technologies need to improve, but also the infrastructure needed to improve (the roads, the cables, the hardware, and most importantly the network). I’m sure some people at the time could see some potential, but surely things like cell-phones and our current freeway system would have been hard to imagine at the time. Likewise, what a DAO can do may change, not only as we learn best practices, but also as infrastructure gets built-out (laying the “roads” or “phone lines”). For certain groups, organizing as a cooperative or LLC may still be the better choice, depending on what they want to accomplish. But if you look at the unique aspects of what a DAO could be, I think we might be moving towards a more “human” or “relational” way of working and organizing.
Yeah, there’s gonna be problems. Some DAOs will get hacked. Others will be elaborate scams. Some will develop horrible cultures. Others will gather some momentum but never generate enough profits to pay their community well. Perhaps this model puts too much onus on the workers to figure out what to do? Maybe DAOs turn out to be only good at raising money to buy stuff?
Will DAOs be too slow? Whenever we hear about the ideals of democracy giving power to the people, this criticism crops up: “But isn’t group decision-making too slow/clumsy? Would a true DAO ever be able to get anything done quickly?”
This is a valid question. The response, I think, goes back to the experimental nature of DAOs and the infinite options available for how one could be structured. Some will choose to be more democratic for the sake of slowly coming to the best community decision. Many will choose to delegate decision making responsibility to a small group of experts, who can be allowed to quickly build, deploy, iterate, decide, within their realm of responsibilities.
Should everything really be open and transparent? For some use-cases, don’t you want certain things to be secret/proprietary?
Certainly, just as DAOs can delegate decision-making to certain closed groups, they can also delegate certain information and transactions to be private. DAOs don’t have to be fully open and fully hive-mind. They can still allow for the flexibility for some private information, as well as full-time employees. But for certain cases where trust/transparency and crowd-sourcing talent are important, the open and transparent will be able to out-compete the closed and secretive company. In other cases, the reverse may be true.
Will people be able to make a living working for DAOs? Will just “showing up and adding value” pay people enough? Who will be able to make a living solely off of DAO-work? Just a few? Will it become the new under-paid gig-work?
It is hard to say for sure. But the DAOs that find profitable use-cases, and are able to pay well, will undoubtedly have the talent flocking to them. And these DAO experiments that work well will be copied and iterated on by others.
Just as we’ve seen the past half-century transition away from “being a lifetime employee with a pension.” I wonder if the next half century will see a transition away from only having one job at a time. I wonder if both of these are a carryover from the need for work primarily dealing with physical materials in a specific location. Maybe some people will still like to keep one job, but maybe many people will thrive a lot better by being a bit more spread-out and flexible.
On the one hand, I worry that “the tokenization of everything” could lead to a dystopia where all work is reduced to financial incentives and humans become even more of a cog in a machine. However, so far my experience of the blockchain world has been much more welcoming and relational than I would have thought. Why is this? I’m not sure. Perhaps because of the porousness of the communities, workplaces can be more like social relationships: people show up only when they want to be there. Nobody is stuck with “golden handcuffs.” Also, hierarchies are minimized, and people don’t seem to be power-tripping as much. There is often the “core team” but usually everyone else is just somewhere on a spectrum from more active to less active. Show up and add value. “You do you.” I wonder if, when you “encode” certain aspects of a workplace dynamic, it can free a workplace up to be more welcoming and friendly; when “how you get ahead” becomes more programmed in, there becomes less of a need for politicking, and people can connect with coworkers to get the jobs done that they want to be apart of.
Some Interesting Examples to Check Out:
- Audius: a music platform owned and operated by its users. Try the player here.
- Braintrust: a freelancer platform controlled by the talent.
- Decentraland DAO: Decentralized city planning… in the metaverse!
- Mirror: Decentralized, user-owned, publishing platform.
I wonder if DAOs are heading toward a form of capitalism that mirrors the ecology of the natural world (inspired by this article on “DAO Ecology”). DAOs can more easily evolve, merge and divide and duplicate, and spread gifts to all their members. WAGMI is the rallying cry where we aim for mutual gain, since each of our greatest personal benefits comes when the whole community also benefits. Through unity, survival. Mutual flourishing. The DAOs that are set up in a generous structure, sharing benefits with the whole community, are the ones that will gather more community to it. Any DAO that starts to feel exploitative will be abandoned by the community. Even though many DAOs will choose to have employees, some of the payment for work can start to operate more like gifts: members want to contribute as they can since they share in the upside of the community as a whole, and contributions can also be rewarded by the community as a “thank you.” But the original work was done without any prior agreement for payment. This “gift culture” of mutual giving and receiving, being generous, further binds the community together relationally. Maybe this is what organizations have been striving towards with “improving company culture,” a sense of community that comes with “this is how we do things here, and this is the bond that ties us together.”
What will work best for different use-cases has yet to be seen. Compared to past organizational experiments (like “how best to run a joint-stock corporation”), these DAO experiments can be built out in the open, able to be inspected by the broader web3 community to learn from, which I think will enable much faster iteration and improvement in the space. This is all one big DAO experiment and only time will tell. I am excited to see what’s to come. I think we will all be surprised by it.