As DAO communities have grown in size and number, more have begun to utilize a suite of DAO tooling options available on the market. No longer in their infancy, DAO tools today are increasingly comprehensive in their offerings. DAO tools give projects the ability to design and manage incentives and maintain relationships between stakeholders, keeping contributing parties aligned on shared goals as the community grows.
A central tenet of decision making within DAOs is distributed authority. Token holders and active contributors can both execute executive decision making in line with the governance structure of the organization. Most responsibilities and operational duties in a DAO overlap with traditional organizations, with the core difference being that opportunities to contribute are relatively more open and flexible.
All DAOs must tackle the challenges of lowering the barrier to meaningful contribution, maintaining operational efficiency as they decentralize, and coordinating decision-making at scale. Featured in this article are some of the major categories of DAO tools and current market players that service those needs.
Potential DAO contributors often discover projects through Web2 social channels like Twitter and Discord. Once discovering a project, they engage with existing members/contributors, and then might go on to contribute to the project. What tools are best suited for these contributors, to make sure they are rewarded for their efforts?
DAOs need to first consider the specific needs and areas for contribution. They need to be able to quantify, incentivize, and properly reward individuals for their contributions. Importantly, their systems need to foster trust through roles and reputation systems. Station is one such platform that empowers DAOs to discover, onboard, and reward contributors for their work. Similarly, Wonder provides DAO tools for contributors to work on project management, and allows DAOs to post work projects for their contributors. Layer 3 is an example of a platform that focuses on monetizing each task a DAO requires so contributors are incentivized to earn and contribute. Verse Network partnered with Layer 3 on a recent campaign.
Payment distribution infrastructure is more mature relative to other DAO tooling categories. Sablier is a popular platform allowing DAOs to streamline payments to contributors. DAOs can also lock tokens in an options contract and stream call options to contributors over some vesting period.
Opolis is one of the first digital employment cooperatives aimed at independent workers in Web3. The platform serves as an “employer-agnostic shared services layer,” giving its members access to employment benefits, payroll and tax compliance services. By unbundling employment such that benefits are attached to the individual and not the employer, Opolis gives individuals the freedom and flexibility to get compensated by different DAOs while retaining the HR benefits of a traditional organization.
Most DAO frameworks come with built-in governance tools which keep voting and on-chain execution tightly coupled through token based voting. Commonly, members vote on-chain in proportion to their ownership of the DAO token.
There are sometimes factors that push projects to do off-chain voting. High gas prices can sometimes be a deterrent to on-chain voting. For an early project with a smaller team, off-chain voting can initially be more logistically feasible. Off-chain polling can be executed via Discord, Twitter or other Web2 channels that are convenient for contributors. The drawback of off-chain governance is that execution power is ultimately left to a handful of admins (multisig signers).
Check out our previous article here for an in-depth case study in off-chain DAO governance.
Some governance tools attempt to bridge the gap between off-chain voting and on-chain execution, utilizing oracles or side chains to allow for proper execution. As part of Verse Network’s DAO tooling solution, we offer projects utilizing the most popular network, Ethereum, the luxury of both voting on-chain while paying minimal fees by bridging cross-chain to Polygon, a highly scalable and efficient Layer-2 chain.
DAO treasuries are often guarded by a multisig through a treasury committee for the project. DAOs have the ability to generate yield by placing their treasuries in interest-bearing DeFi protocols or a variety of other investments. A major challenge in DAO treasury management is the ability to provide more transparency into asset allocation and spending in order for all members to assess performance and financial health. Some good DAO tools for treasury management include Multis, Coinshift, and Juicebox.
Accessible logs of activity are needed for DAOs to operate transparently. There is a need for data aggregators and visualization tools that provide insights into governance, spending, and member participation in DAOs.
DeepDAO is a DAO analytics platform which ranks DAOs across metrics such as voter participation, member size, and treasury holdings. DeepDAO also tracks governance related activity of individual DAO members including proposals created and votes cast. Voting power is important to determining how decentralized a DAO is truly, as DAOs sometimes face issues such as low participation rates or voting being dominated by the highest token holding members.
DAOs have become more mainstream with more and more crypto organizations. The DAO tools highlighted in this article are lowering the barrier, making DAOs a viable path for the millions around the globe. We are working to add additional DAO tooling to Verse Network to offer an all-in-one DAO tooling suite to service the needs of all DAOs.
About Verse Network:
Verse is a censorship resistant, front running resistant, high performance, and interconnected cloud for next gen DAO and DeFi. It enables networks, developers and organizations to decentralize decision making effectively and scale their communities and decentralized applications.
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