By Paige Donner

Co-Founder, FrontierDAO

If you’re reading this, no doubt you’ve had occasion, at least once in your lifetime, to read The Prince And The Pauper, the Mark Twain classic?

The primary lesson from that timeless tome can be grafted onto the learning journey I’ve experienced these past 9 months since deploying our DAO, FrontierDAO.

Here goes…

First Lesson:  If you are going to deploy a DAO, couple your lofty visions with boots-on-the- ground insight. Do this by  contributing to one (or more) DAOs yourself. Contribute as a rank-and-file DAO-er, not as a ‘Big Picture’ thinker. This way you get an authentic experience of the inner workings of a DAO. Only from this ‘lowly’ vantage point will you gain credible, genuine insight into the functionality (or not) of DAO systems.

TL;DR

1. Leadership – Full Accountability

   To put it bluntly, not being fully doxxed and wielding authority of any kind in any capacity is a license to be an assXXle with impunity.

2. Purpose & Mission

   As we note in this article, it’s pretty easy to spin up a DAO. But it’s clarity of purpose and mission that will galvanize your community around and behind achieving the shared goal(s).

3. Workflow

   DAOs are inherently susceptible to quasi-oligarchic dynamics. Systems architect your workflows to prevent this.

4. Treat Everyone As An Adult

   Hire adults. And when you hire adults, assign them to teams where everyone is expected to behave as adults and treat others as adults.

5. Incentivize and Value People first As Contributors, Community Second

   This isn’t self-serving. On the contrary. Only when people’s individual needs and aspirations are met can they then be expected to contribute to a community in beneficial ways.

6. Allow For Lateral Movement

   If you onboard a Tesla, don’t try to put diesel gasoline in it and expect it to run. Rather, allow enough flexibility to find its optimal environment (that would be an electrical outlet in this analogy  ; ).

7. Pay Your Core Contributors In Fiat/USDC

   Use native tokens only as a reward, performance incentive or bonus.

It’s Easy To Deploy A DAO; It’s Not Easy For a DAO to Run Smoothly

Deploying A DAO

Firstly, so much focus is needlessly put onto the technicalities of actually deploying a DAO. I have lost count, now, of how many times people have approached me full of questions about how one actually sets up a DAO. Initially I indulged in lengthy answers. Any more, all I say is, ‘Do it and see for yourself.’

Now that response may sound a bit abrupt to some, but in Web3 I’ve found that it’s best to learn by doing. Lots of people are going to tell you lots of disparate and conflicting things in this space. But, until you’ve walked through the steps of setting up a Gnosis multi-sig wallet, of configuring the on-chain voting percentage thresholds,  minting your own tokens and establishing a Snapshot dashboard for your community, it will all remain a black box mystery enshrouded in words that sound more like hocus-pocus than technical deployment manuals. And, guess what? Big surprise! The actual deployment of a DAO on-chain takes about 5 minutes. No kidding. (See: Aragon, Colony, DAOHaus, Flow, DAOstack, etc.)

If you’re still hesitating to ‘pull the trigger,’ then do what I did. First, spin up your DAO using a Testnet such as Rinkeby.  It’s easy to load up your wallet - for free - with this ‘play’ cryptocurrency.  You may have to opt for Goerli or Optimistic since I’ve read they are phasing out Rinkeby. Or play around with Mumbai (Matic) if deploying on the Polygon network. Whichever Testnet ‘Monopoly Money’ cryptocurrency you use, it will give you the authentic experience of deploying your DAO, without actually having to spend any ‘real’ money and without it actually deploying anywhere other than on a TestNet. After you’re comfortable with that, then deploy ‘for real’ i.e. on-chain to Mainnet or an L2.

Architecting The Smooth Operations of A DAO

So are DAOs complicated to run?

You bet they are.

And, no. Not because of their smart contract configurations and on-chain deployment. DAOs are complicated to run because we human beings are complicated organisms and it is we who actually make a DAO function - or not.

‘By locking agreements into automatically executing computer code, DAOs can foster rapid and transparent decision-making,’ thus notes the World Economic Forum’s whitepaper, ‘DAOs: Beyond The Hype, June 2022.’

True. But it’s still people who are making the decisions and executing governance. And this is where DAOs are proving to be complicated. As a contradiction to Vitalik Buterin’s initial imaginings of DAOs being, “automation at the centre, humans at the edges’ I am finding that it is quite the opposite - humans at the center, and automation at the edges.

So, when systems architecting a DAO, it is of paramount importance to factor in human dynamics and the overwhelming role that plays in organizational coordination especially in DAOs.

“For millennia, any tool that manifestly improved human coordination, eventually caught on and produced dramatic economic and social gains. Only time will tell whether DAOs should be added to this list.”

WEF, DAOs: Beyond The Hype

I would be so bold here as to offer further precision.  It is more than just time that will hone the functionality of DAOs. It is recognition of the human component in our systems analysis of DAOs.  And making the necessary adaptations so that misappropriation and co-optation of the ‘decentralized, community’ ethos don’t overshadow the inherent potential in DAOs. DAOs, when used optimally, are organizational structures that can near-exponentially harness collective resources and community will unified behind a shared goal.

Some areas where Human Dynamics are key:

1. Leadership - Full Accountability

   Prevalent in some DAOs today and certainly in the Discord-centric Web3 space is this penchant for pseudonymity. If you use Twitter you have undoubtedly come across the profile pics that are avatars or, some would call, cartoon characters. While this underlies the current Web3 cultural ethos, it clearly represents a potential for malfeasance. Those who wield authority - or any sort of power - over others, such as contributors, creatives, voters, within the structure of a DAO must be fully doxxed. Those  who are not fully accountable, as in fully ‘doxxed’, can all too easily exploit this pseudonymity in abusive ways. To put it bluntly, not being fully doxxed and wielding authority of any kind in any capacity is a license to be an assXXle with impunity.

   To allow this to continue is to incubate a cesspool of bad actors.

2. Purpose & Mission

   As we note in this article, it’s pretty easy to spin up a DAO. But clearly communicating your DAOs mission and purpose is key. It’s clarity of purpose and mission that will galvanize your community around and behind achieving the defined, shared goal. It will also help to weed out ‘lurkers’ who may have joined your community without knowing exactly why.

“I still see too many DAOs launching without telling the world WHY they exist and WHAT they're trying to achieve.

Strong communities have a clear and explicit sense of who they are, why they exist and what they stand for.

Having a clear Purpose also enables the DAO to prioritise and focus on the most important aspects in achieving their Mission.”

- Etienne LeRoux, Colony DAO & Lead, DAOClub

3. Workflow

For a healthy DAO ecosystem and community, my observations, most of which have been from participatory experiences, workflow systems must be maintained as decentralized or honed down to the smallest teams possible. NASA has perfected teaming systems. When you are sending people to the Moon and Mars, it makes sense to get this part of the equation right. Two people per team is their optimum. Then two teams of two and so forth. Three on a team is a nightmare, according to them.

I would say that DAOs take a page from the NASA playbook on this. If DAO core contributors are subjected to one person in Leadership who has his/her thumb on all, or even most, of the fulcrum levers of workflow this will:

A. Continually concentrate power in that one person’s hands in terms of deliverables that get done (or, more pointedly, are acknowledged as getting done), and

B. Will serve to disempower contributors keeping their contributions undervalued and unrecognized at best and at worst force them into a voting coalition that serves, exclusively, the purposes of their team lead (but not, necessarily, the DAO).

What I am describing here is how oligarchies get built.  DAOs are inherently susceptible to these quasi-oligarchic dynamics, whether by over-centralization of workflow dynamics, over concentration of governance tokens in too few hands or a combination of both.  All of the above are nightmare scenarios. Most DAOs, ideally, offer governance tokens to all active members. This gives all active members a voice decisions being taken by the DAO. But since most voting is token-weighted, it’s relatively easy to drown out some voices. There is exploration in this facet of governance. One proposed remedy is to tally a vote on a proposed issue without any token-weighting, and then also tally the vote with token-weighting. If nothing else, this gives clearer insight into what the majority of the community wishes.

“People are like flowers. They don’a all have to be the same. Everything blooms according to its own nature.”  - Yuu Watase

Human Systems Architecting Insight:

Of course, it depends on which garden scenario you subscribe to. If you subscribe to the healthy garden as one in which all flowers, as in each and every flower, has its own defined space where it can thrive with plenty of oxygen, water, sunshine and soil. Or if you prefer the garden overrun by one tenacious and insidious weed. It’s a choice. The optimal conditions for DAOs I am putting forth here are for the former type of euphemistic ‘garden.’ That garden is one where each flower thrives, expressive of its inherent nature, in its optimum environment, thus contributing to the overall richness of the created, shared space.

4. Treat Everyone As An Adult

Hire adults. And when you hire adults, assign them to teams where everyone is expected to behave as adults and treat others as adults.

If you hire adults and then assign them to teams that are ‘supervised’ by ‘leads’ who feel it is necessary to babysit or otherwise exercise authoritative overreach, you will lose your adult, responsible contributors and be left only with your wannabe despots.

5. Incentivize And Value People First As Contributors, Community Second

Unless your aim is to reconstruct a Soviet-era type of micro-society, be sure to ask, understand and expect that your contributors articulate clearly to themselves, to you and to their team mates, why they joined the DAO and what they expect to get out of it.

This can be facilitated with proper onboarding. Ask the important questions upfront, first.  And chieck in regularly with your teams.

This isn’t self-serving. On the contrary. Only when people’s individual needs and aspirations are met can they then be expected to contribute to a community in beneficial ways.

Example: If you hire an accomplished designer and assign them to a team where they are color-coding file tabs, they are not going to be happy. Their own creative potentials are being both undervalued and untapped and therefore, the potential benefit to the community is also being depreciated. No one likes being put in a chokehold.

6. Allow For Lateral Movement

Onboarding contributors to DAOs is one of the most challenging aspects of architecting functional operations of a DAO. If an enthusiastic and skilled contributor is onboarded into a team that seemed like a fit but proves not to be, allow for lateral movement.  It costs the DAO and the community much more to lose this skilled contributor than to allow them to move laterally into a position where they are more comfortable, whether that is due to human dynamics or task performance. Be flexible enough to allow for some wiggle room so that people’s contributions are optimized both from the contributor’s perspective as well as from the DAO community’s perspective.

If a Team Lead is so rigid and ego bound as to not allow for lateral movement then it is that team lead who will undoubtedly prove to be toxic to the DAO. Not allowing people to thrive and flourish by expressing their inherent nature, but rather trying to box people into rigid pre-sets, is indicative of an outdated management style. It is also symptomatic of coalition building. And there are only two reasons in DAOs why coalition building would take precedence over team well-being: You are trying to stack voting groups towards your own agenda and/or you are preparing for a mutiny on the Bounty.

The takeaway analogy here to lateral moves in DAOs is this: If you onboard a Tesla, don’t try to put diesel gasoline in it and expect it to run. Not only will you not get your Tesla to function, you might actually damage or break the finely tuned machine.

In the end, people are what make a DAO function.  The smart contracts are just machinery. The people -your contributors - are who and what drive the machinery and get it to go places, even to the moon, if you do it right.

7. Pay Your Core Contributors in Fiat/USDC Using Native Tokens Only As A Reward, Performance Incentive or Bonus

Numerous Web3 Pied Pipers are fond of claiming how they paid off their mom’s mortgage by cashing in on the native tokens they’ve earned from their DAO bounties and contributor earnings.

BS. Don’t buy into it. First of all, when a DAO only pays out their contributors in native tokens, there is an unspoken assumption that you are supposed to hodl (crypto speak for save) those tokens and not exchange or spend them. Altcoins, aka native tokens, are notoriously volatile. So if you do the community-expected thing and sit on your earnings then you could be facing a massive depreciation.

In this latest crypto crash, many native tokens are down 50% - 99%. No kidding.

For all you Muggles or hybrid-muggles who earn primarily in Fiat, imagine this:  You accepted your job at a salary of, say, $50K. You’ve worked hard and diligently this past year and managed to hodl (save) most of your salary. Now, due to market fluctuations, your $50K is worth $5K. Or, in some instances I’ve witnessed, $100K is now worth $2K.

That represents a year’s worth of labor that has depreciated by 98%.

These are things that the Web3 and crypto enthusiasts don’t talk enough about on Twitter. But they should. This kind of exploitation of people’s labor and good will cannot be allowed.  At present, I haven’t seen much legal recourse for a contributor who finds themself in this type of situation.

So, unless your native token, aka alt coin, is pegged to a stable coin like USDC and that is clearly spelled out in the hiring terms, pay your people in Fiat or a reliable stable coin. You can reward them in your native token, as performance or bonus incentives. But pay your contributors in Fiat or a trusted stable coin like USDC. Anything else is highway robbery and it’s unethical behavior. Remember, these are people who have mortgages to pay, car payments to make, and mouths to feed.

A few final words: Good luck on your Just DAO It journey!

Citations:  WEF, DAOs: Beyond The Hype, June 23, 2022 - White Paper https://twitter.com/FrontierDAO/status/1540313965288472578

NASA: Clowing Around Lightens The Load,    May 2, 2019 https://www.nasa.gov/feature/nasa-studies-team-dynamics-in-antarctica

Thank you to my draft reviewers

Etienne LeRoux, Colony.io

Russell Hanson, Scientist, ML & AI

Would you like more guidance on setting up your DAO? Plz feel free to reach out to me in the links in my bio or linktr.ee/paigeetolie