Pay to Play VS Proof of Work Models For DAOs

Pay To Play Model

Right now DAOs are an interesting ecosystem with new DAOs popping up every day. Some being exclusive clubs or others starting as memes then almost buying the US Constitution. The trend that appears to be consistent through some of the popular tokenized DAOs is that they are pay-to-play instead of play-to-earn.

Take Friends With Benefits, for example, you have to buy 75 $FWB to be a part of the community and join the Discord Server. At the current cost of the $FWB token, it will cost you $7433 to join. To me, that feels like a country club and as a recent college grad with student loans, I will be passing for the time being. To combat this, they very recently added more tiers to their membership including Events for 5 tokens, Cities for 5 tokens, their Editorial/Newsletter for 1 token, and more. This allows new FWB members to be involved or contribute with a smaller barrier to entry. A great step forward in making the community more accessible, while keeping the community’s quality high.

Another example of this is in the Constitution DAO, a DAO that raised $46M in less than a week to buy the US Constitution. This is a DAO I did contribute to, because… why not.

The Pay to Play trend is here too. As you can see, someone donated 1000 ETH… that’s currently valued at $4.4M . Which is absolutely wild. This means that this individual has the strongest vote on what we would have done with the US Constitution if we would have won the Sothebys Auction. Furthermore, for the people that aren’t flush with ETH, the gas fees alone would turn people away that aren’t as financially fortunate. Maybe should have used Solana instead, but that’s a whole different discussion.

I’d also like to suggest that adding caps on how much of a governance token any one individual can purchase could be a great solution to hampering the pay-to-play model from letting whales take over a DAO. It does not apply as much in the case of the Constitution DAO since their goal was to raise as much money as possible. In case of long-lasting governance-focused DOAs, it could be helpful though. Not a perfect solution since they can just create multiple wallets, but still could help.

To be clear, not all DAO’s operate in the same fashion as FWB and the Constitution DAO. Nor should you not join DAO’s like these, Constitution DAO was quite a ride. I wanted to point to these since they have been trending in the DAO ecosystem and to illustrate the Pay To Play model.

Cooper Turley created this amazing resource to explain all the different formations and structures of DAOs that you should read. Along with that, I found this handy resource for a full list of DAO’s nicely organized so you can check out the DAO’s that interest you.

The Proof Of Work Model

The Proof of Work model seems to be on its way out when it relates to Crypto. ETH is currently in the process of switching from Proof of Work to Proof of Stake. When it comes to DAOs, I see Proof of Work as one of the most important models not only for DAOs to have a thriving community but also for them to connect their community to the real world.

To illustrate how this Proof of Work model would work, I’m going to create a hypothetical DAO to use as an example. Let’s call it Pay It Forward DAO. Its mission is to make the world a better place by doing simple tasks in the real world for others in your community.

In this DAO you are rewarded in $PIF for completing tasks that make your community a better place. Some of those tasks might be:

  • Picking up litter in your community
  • Giving money to a homeless person
  • Buying a strangers meal
  • Giving a stranger a genuine complement
  • etc

All simple little things that in my opinion make the world a better place :)

Now, how does one in the Pay It Forward DOA prove that people complete these tasks in the real world? How is it verified in a way that is fair and also incentivized?

Let’s use the buy a stranger a meal as an example. If I went into a restaurant and filmed myself walking up one of the workers saying “Hey, I’d like to pay for that family’s meal over there.” They say sure, I pay, and I’m given the receipt all on video. Great I just made that family have a little bit better of a day! Awesome!

Then I would upload that video onto the POW system. That video is sent to others in the DAO to verify that the video they are sent is really of someone else in the community buying a stranger a meal. These people will act as verifies, similar to nodes on ETH verifying transactions. The verifiers are paid out a small amount of $PIF, similar to mining and gas fees, for actually verifying that the task was complete. Once it’s verified, by say 5 people, I get paid out in $PIF for buying that family a meal.

An added benefit is that this gives your community real content to share both internally and externally. Furthermore, it gives faces to names in your community instead of just random discord names with NFTs as profile pictures.

I do understand that videos could hypothetically be faked and that it’s not a perfect system. That’s alright and it can be iterated upon. I’d hope that people don’t fake buying others' meals.

As of right now, I haven’t seen a Proof of Work Model implemented like this into the DAO ecosystem and that is probably because the proper infrastructure and technology have yet to be built.

I intend on covering more interesting DAO’s, their governance structures, and more on all things Web3!

If you have thoughts or suggestions, make sure to reach out to me on Entre or Twitter.

Appreciate you, Sully

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