2022 was a flaming dumpster fire for crypto.
But since I have neither the heart nor the mental stability to ride that roller coaster a second time, here’s my prediction for next year:
2023 will be the year of ‘Networked’ DAOs
DAOs will move from siloed organisations to networks; a ‘web of relationships connecting people or things’, where people, information and resources can flow free (David Ehrlichman, Impact Networks).
Hold on to your hats, because we’re about to see what DAOs can really do.
But before we talk about what Networked DAOs are, why they’re better, and how they’ll arrive, let’s look at the status quo.
Currently, when you think DAO, you think Discord.
We know it’s got issues: the noise, the spam, the incessant notifications and, as Nathan Schneider put it, ‘the formidable proof of work required to keep up with the conversation’. But its obvious problems conceal something far more significant:
Discord is fundamentally incompatible with how DAOs work best.
Discord is preventing DAOs from achieving their potential because of the way it’s built.
The building block of Discord is the server. Servers have boundaries which keep things in and keep things out. Boundaries have their uses, but one of their downsides is that they prevent communications and information from passing from one side to the other easily.
This has two implications:
You can’t communicate with members of a DAO without stepping inside those boundaries yourself by joining their server.
Everything you do inside a DAO’s Discord server stays within that server even if you leave.
The second point is particularly troubling. It means that all the valuable things we spend considerable time building - relationships, reputation, achievements - none of it can be transferred.
Much like Vegas, what we do in a DAO, stays in that DAO.
Sure, we can try to replicate our network and accomplishments on platforms like LinkedIn (ugh) and migrate our favourite people to Telegram, but these are pale imitations of the original. For the most part, the server is a black hole from which little information escapes.
Just as a container dictates the shape of the water it holds, the boundaries of Discord’s servers force DAOs to become silos.
Because Discord’s boundaries turn DAOs into silos, each DAO expends significant resources to understand new contributors’ capabilities, interests and trustworthiness. Community members must do the same with everyone they interact with. It doesn’t matter whether a contributor has proven themselves a hundred times over, if it happened in another DAO, it doesn’t count.
This friction is killing DAOs, who spend more time and energy managing the community than actually doing.
It’s no picnic for contributors, either. When each DAO is trapped in its own server, finding the right communities is hard. And when you find a DAO that interests you, you have to build your reputation from scratch.
DAOs will never achieve their potential when they’re shackled by Discord. So, what’s the alternative?
From The Cellular Church:
''One of the most unfortunate misunderstandings of our time has been to think of small intentional communities as groups 'within the church.' They are not organizations 'within' the church; they are the church''.
In web3 speak: the DAO isn’t a container for people, the DAO is the people and the people are the DAO.
We must connect people as part of a network and break down the barriers until ‘there are no servers, only peers’ (Nathan Schneider).
What does this look like? GitHub provides a helpful analogy. Developers can find, start and collaborate on projects, and build their network and reputation, which creates opportunities for future work. When many projects are open, rather than siloed, developers can choose what to work on. Developers know that any work they do on GitHub has the power to bolster their reputation by building their profile. GitHub grows the ecosystem and provides more value than it captures.
Contrast that with Discord, where it’s nigh on impossible to see which projects are happening, it takes considerable effort and support from the core team to start a new project, and it’s extremely difficult to evaluate potential contributors.
In a DAO network, users self-coordinate to decide what to work on by seeing what opportunities already exist, or by creating their own and attracting others. In this world, DAOs can move from an unscalable, top-down allocation of resources to a more bottom-up approach, where they can see which projects are creating the most value, gaining the most attention or making the most progress, and support them.
When DAOs become networked, three things happen. Rowan Yeoman’s essay ‘DAOs aren't things... they are flows’ does the heavy lifting here:
Scale - DAOs become capable of achieving the same scales of economy that companies have shown since the creation of the first ‘company’ in the modern sense of the word, 400 years ago.
Adapt - DAOs morph and fork based on the environment and requirements. DAOs outcompete traditional companies by increasing the number of concurrent experiments and shortening the evolutionary cycle.
Signal - DAOs sense the needs of the ecosystem and groups form organically to meet requirements. Great ideas come from anywhere, and there are more great ideas outside an organisation than within one. Networked DAOs are better at producing emergent collective intelligence than siloed organisations. More bottom-up flow, less top-down coordination.
To achieve these lofty goals, Networked DAOs need a new kind of platform. A ‘web3 Discord’ that replicates servers with all their boundaries isn’t going to cut it.
We don’t need another chat tool, we need a way to collaborate without boundaries. We need a better way to work together online.
We need Avenue.
With Avenue, DAOs are nodes in a network, not siloed servers.
Anyone can spin up a collaborative space and work with whoever they want, without tying their activity to an organisation.
Collaborative spaces can be made public to enable permissionless access across the network and encourage contributions from the wider ecosystem, or kept private.
Relationships, reputation and achievements allow contributors to build their web3 resume through their work, which opens doors to further opportunities.
Contributors’ involvement can be recorded on- or off-chain and they can receive compensation for their work easily.
Instead of deciding which projects to work on and invest in in a top-down way, DAOs can see projects with high community engagement and demonstrable progress and allocate their resources more efficiently.
2023 will see a big shift in DAOs, as Avenue helps them move from silos to networks.
To Aragon, Bankless, DAO Masters, and Krause House, who have been instrumental in providing feedback and encouragement, thank you. And to the 90+ DAOs on our waitlist, you won’t have to wait much longer - we’ll be rolling out our new collaborative platform in Q1!
2023 can’t come soon enough. And not just because 2022 was such a disaster, but because we may finally get a glimpse of what DAOs can achieve when they have a platform that embraces and nurtures their unique characteristics, rather than forcing them to play someone else’s game.
The genie is about to be freed from the bottle.
To see Avenue for yourself or to discuss Networked DAOs, DM @nelsontjordan on Twitter.