DAO Reporting: Measuring Success of DAOs
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May 9th, 2022

After opening up to the community on our weekly open DAO Ops call, we have come to the consensus that it would be beneficial for us to have a method for DAOs to submit monthly reporting. We are opening up this discussion to generate feedback that can assist our team as we actively work to improve the DAO ecosystem.

The reality.

We are fully aware of the of the current sentiment surrounding DAOs amongst the community. We are listening, and we wish to address these concerns by analyzing what we can improve upon and taking action. This is why the Harmony DAO Operations team is working around-the-clock to come up with solutions to ensure:

  • Self-Sustainability: A structured system is in place to maintain long-term success.
  • Accountability: Checks & balances for DAOs to maintain rapport.
  • Deliverables: Ensuring deliverables are clarified & met.
  • Best practices: Ensuring effective DAO operations & procedures are practiced.

Why reporting?

Reporting isn’t something you intuitively think of as “fun”, but it is an absolutely necessary component of business development, and crucial as we scale our DAO ecosystem. At the end of the day, a DAO is an organization at its core, so we should treat them as such when funding them, and have a system in place to set them up for success and collect data on how they are performing.

This initiative will assist our community in constructing a map for DAO success & measuring metrics, while maintaining accountability. This will additionally add a layer of transparency to DAO Operations within the Harmony ecosystem, and address the current community sentiment surrounding DAOs. We wish to roll this out in a way that utilizes Web3 DAO tooling while also following up with an ambassador from each DAO through the 1DAO Alliance.

What we are looking for.

Our idea is to collect a monthly report from each DAO funded by Harmony, which would encompass (but not be limited to) the following categories:

  1. Monthly treasury allocation: How resources are being distributed.
  2. Signatory hours & contributions: What your team is working on.
  3. Deliverables & Milestones reached: What your team has accomplished.
  4. Deliverables for next month: Clarifying deliverables & metrics for next month.

We are looking to bring this to fruition, incorporating new DAO tooling which may add to the success to this effort (such as accounting and reporting tools). Additionally, we are open to accepting template suggestions from the community as well as proposed methods of submitting these monthly reports. As we continue developing the reporting framework, community feedback is vital.

For instance, we received valuable feedback on one of our open DAO ops calls from community member @ben2k_Stakeridoo, who pointed out that one of our most pressing priorities should be addressing the community sentiment regarding DAOs. We hope that this is a step in the right direction towards addressing community concerns, and we wish to show the community we take the success of DAOs seriously.

  • Additionally, having reports in monthly segments will promote peer accountability and allow our community to see the progression of DAOs on Harmony over a long period of time.

Self-Sustainability.

A necessary component of DAO success is to ensure that there is a clear pathway to self-sustainability. While keeping in mind core components of what fundamentally makes a DAO a DAO (a decentralized group of individuals, autonomously operating a multi-sig wallet) at the end of the day, a DAO is an organization at its core which is vital to keep in mind while forming a DAO and composing a funding proposal.

According to a report on DAOs from the SEC (Securities and Exchange Commission) “Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO”

“The DAO” is the “first generation” implementation of the White Paper concept of a DAO Entity, and it began as an effort to create a “crowdfunding contract” to raise “funds to grow [a] company in the crypto space.” …“at an Ethereum Developer Conference in London, Christoph Jentzsch described his proposal for The DAO as a “for-profit DAO [Entity],” where participants would send ETH (a virtual currency) to The DAO to purchase DAO Tokens, which would permit the participant to vote and entitle the participant to “rewards.” [1,2]

Generating Revenue.

Revenue - Expenses = Profit (Net Income)

“Two critical profitability metrics for any company include gross profit and net income. Gross profit represents the income or profit remaining after the production costs have been subtracted from revenue. Revenue is the amount of income generated from the sale of a company's goods and services.” [3]

  • Ideally, DAOs must calculate what operational costs are required and what they need to be profitable organizations.
  • This should be followed by developing a clear strategy of generating revenue to cover operational expenses, paying out of signatories, and a plan in place to eventually become a profitable organization.
  • The DAO should ideally consider methods of generating revenue, such as launching a DAO Token, utilizing LPs (Liquidity Pools), DeFi protocols, and NFT sales (DAOs on Harmony can easily utilize our NFT marketplace MadNFT as a platform to buy/sell NFTs) to ensure they are not relying solely on Harmony’s treasury to function.
  • Harmony does, however, fund DAOs through our bootstrap grant.
    • Purpose for bootstrap: We’re providing DAOs funds necessary to get off the ground and eventually achieve self-sustainability through the organization itself to cover operational expenses.

      Essentially, the bootstrap is to give the DAO enough of a runway so they can determine what their monthly expenses are.”

      -Samuel P HarrisonHarmony

  • Additionally, each DAO should ask: Is this initiative relevant to blockchain? Will this be adding value to the ecosystem? If the answer to these is yes, and the DAO meets all of our funding requirements, then it makes sense for us to fund and move forward in supporting the organization.

Proposed Solution:

We are building a structure for reporting which will be implemented through the 1DAO Alliance.

Working title, name subject to change
Working title, name subject to change

Reasoning for 1DAO Alliance:

Vision.

Harmony aims to be “The Home of 10,000 DAOs” by the year 2026. In order to accomplish this, we must be considering crucial elements in scaling the ecosystem.

We aim to offer DAOs the tooling solutions that are necessary to encourage them to be more accountable, while simultaneously supporting them in becoming more decentralized entities and optimizing them for sustainability.

1DAO Alliance Framework
1DAO Alliance Framework

Implementing Sustainable Math.

Funding needs to be carefully and strategically implemented in the years to come to help us meet our goal of 10,000 DAOs. This is why we must have proper accounting and reporting mechanisms in place, and math that is sustainable if we wish to see our vision become a reality.

We must execute an actionable plan for self-sustainability through revenue generation, and ensure measures are in place to protect our chain from failed DAOs or “Zombie DAOs” by actively not supporting negative-sum DAO relationships, and only those that show a clear pathway to self sustainability and are adding value to the ecosystem.

Data.

By implementing reporting, we hope to gather data to showcase strong examples of successful DAOs which will lay the framework for future DAOs.

Collecting data will help us to effectively analyze DAO performance, and determine if each DAO is a viable organizational structure. Through continued data analytics, we can distinguish if there is justification of financial support from Harmony.

“Providing quality guidance or optimizing best practices is impossible without quality data, to help us to provide clarity in the DAO ecosystem.”

-Devin P. MartyHarmony

Clear Standards & Education.

To effectively measure the productivity of each DAO, we must make our standards clear by providing instructions and education (such as training webinars & DoDAO guidebooks) as our reporting framework develops.

Providing clear standards, along with education, will help us to build solid infrastructure and ensure each DAO is familiarized with the essential tooling they need to succeed. We will be publishing DAO tooling training webinars throughout the month of May to address these elements.

As previously mentioned, DoDAO will be assisting Harmony in putting out guidebooks to educate and onboard users to DAOs, and educate on DAO tooling procedures.

  • Go to one.dodao.io to see all of the current guidebooks for Harmony DAOs.
DoDAO Platform
DoDAO Platform
Example of DoDAO Guide (zkDAO)
Example of DoDAO Guide (zkDAO)

Conclusion.

To continue growing Harmony’s DAO ecosystem, it is necessary to implement sustainable math, collect quality data through reporting, and provide clear standards for all DAOs in Harmony. We hope to encompass all of these aspects into the 1DAO Alliance, and to provide the tooling to create a streamlined process.

To achieve our goal of becoming "The Home of 10,000 DAOs" we must move forward strategically, while always adapting and listening to the voices of our community members, who are the true backbone of our ecosystem.

Stay tuned as we continue to work on the 1DAO Alliance and release new DAO tooling throughout the month of May. We aim to develop a system for accounting and reporting that will be supported and made easy by new DAO tools, in conjunction with training webinars to educate the community on how to use each tool effectively.

If you wish to help us gather more data and address the community sentiment surrounding DAOs, please provide your input in the survey below and get involved in the DAO Reporting Community Discussion on our talk forum 👇

Additionally, reach out with your email directly to @RachelBHarmony on Twitter if you wish to join our open weekly open DAO Ops call that will be published to Harmony’s YouTube channel. Here, you can voice your suggestions, concerns, and meet directly with our DAO Operations team.

Author:

Rachel BrissendenHarmonyDAO Operations Team

Promoting open-source growth & development by onboarding various DAO tooling projects to further expand DAO operations.

Citations:

1. Christoph Jentzsch, The History of the DAO and Lessons Learned, SLOCK.IT BLOG (Aug. 24, 2016), https://blog.slock.it/the-history-of-the-dao-and-lessons-learned-d06740f8cfa5#.5o62zo8uv. https://www.sec.gov/info/smallbus/secg/rccomplianceguide-051316.htm; Updated Investor Bulletin: Crowdfunding for Investors, SEC (May 10, 2017), https://www.sec.gov/oiea/investor-alerts-bulletins/ib_crowdfunding-.html

2. See Slockit, Slock.it DAO demo at Devcon1: IoT + Blockchain, YOUTUBE (Nov. 13, 2015), https://www.youtube.com/watch?v=49wHQoJxYPo

3. Gross Profit vs. Net Income: What’s the Difference?[https://www.investopedia.com/ask/answers/101314/what-are-differences-between-gross-profit-and-net-income.asp](https://h ttps://www.investopedia.com/ask/answers/101314/what-are-differences-between-gross-profit-and-net-income.asp)

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