ImpactDAOs: Shaping the Future of Regenerative Organizations

As Decentralized Autonomous Organizations (DAOs) have exploded into public consciousness, new types of DAOs are proliferating. A novel use case for DAOs, termed “ImpactDAOs”, are defined as “any DAO that creates net positive externalities to the ecosystem around it.”[1]An ImpactDAO seeks to use web3 and crypto-economic principles to regenerate a system, increasing resources and sustainability over time. Resources don’t have to be purely financial, as tokenization enabled by smart contracts allows new types of capital to be built on and experimented with. Carbon offsets, cultural capital, and scientific research are just a few use cases ImpactDAOs are being built around. DAOs already offer great potential for us to scale and coordinate human behavior, and ImpactDAOs extend this potential to bring blockchain-powered scalability to ideas that can make a positive impact.

ImpactDAOs offer an opportunity to redefine incentives and scale human coordination around new ideas of resources and the systems they comprise. ImpactDAOs can have new combinations of cooperation, profit approaches, non-profit mechanisms, and new ideas of capital that haven’t been explored. ImpactDAOs utilize web3, smart contract, and blockchain technology to shift organization away from explicitly hierarchical organizations, into flexible, scalable, and autonomous structures, optimized from the ground up. Regulations will need to evolve along with these new organizations to ensure maximum impact in the areas that most need it. Before deep diving impactDAOs, it is important to refresh our understanding of what a DAO itself is, and how ImpactDAOs differ.

Unpacking ImpactDAOs

Unpacking each term that comprises a Decentralized Autonomous Organization clarifies how ImpactDAOs build and expand on their potential. DAOs are blockchain-based organizations built around fulfilling a mission chosen by a community, with members able to pursue how this objective is achieved autonomously. DAOs are decentralized via blockchain technology, which allows the architecture of the organization to exist without 3rd party intermediation. Anyone can spin up a DAO using no-code, permissionless tools like DAOhaus or Aragon, and a blockchain isn’t centralized upon any separate party, effectively making organizational creation direct for a community. DAOs also inherently operate in a decentralized manner, mimicking the technology they are built on, with no centralized player controlling the organization, and members being free to form “guilds” and pursue the primary mission of the DAO as they see fit.

Decentralized

DAOs are autonomous in two key ways. DAOs are built via smart contracts that autonomously execute on the blockchain, akin to a programmable vending machine. What you put in will give you the same immutable result, every time. Called “immutability,” this feature is important as it prevents 3rd parties from interfering in the execution of internal DAO votes, treasury management, and other process. DAO members are also autonomous in how they pursue the goal(s) of the DAO.  They are not “told” what to do but choose to do what they can to advance the DAO goals and projects.

Autonomous

Known as guilds, autonomous groups within a DAO mimic the autonomous guilds founds in Massively Multiplayer Online Role-Playing Games (MMORPGs) like world of warcraft, or crafting organizations in the renaissance. While guilds may be aligned in value structure and in how they coordinate towards a DAOs objective, they are autonomous from any top-down hierarchy in the DAO itself. Having autonomy from top-down direction brings us naturally to the organizational part of DAOs.  Often guilds have a functional role, such as managing media, coordinating investment, managing proposals for the group, etc.

Organizational Coordination

The lack of top-down hierarchy presents benefits as well as challenges in how to coordinate labor and capital. When you combine decentralization with permissionless autonomy, a DAO is a closer digital approximation of the community it represents than a hierarchal firm would traditionally be. DAOs operate in practice like cooperatives, holocracies, and sociocracies. How DAOs choose to organize their members is built from the ground up, as governance through different voting mechanisms sets the tone on how the DAO operates.

The first DAOs were mostly built around different financial use cases, being governance systems for Decentralized Finance protocols like MakerDAO, NFT communities, and smart contract powered cooperatives. ImpactDAOs don’t replace earlier DAOs, in fact, they represent an important emergent use case of DAO technology towards regenerating ecosystems instead of extracting from them.

Unique Characteristics of ImpactDAOs

The ImpactDAO ecosystem has several unique characteristics. ImpactDAOs are Symbiotic, utilizing the permissionless nature of smart contract technology to interlink and compound efforts between DAOs and enable efficient movement of talent, energy and resources. ImpactDAOs are Composable just like other DAOs through the permissionless nature of smart contracts, allowing the organization itself to be a building block in a bigger entity. Incentives are critical in ImpactDAOs, and they are inherently a collaborative enterprise, where members cooperate in the service of higher goals, and the community benefits cooperatively based on their contribution. The smart contract-based architecture of ImpactDAOs also lends transparency to the endeavor, granting members full knowledge of fund status, treasury management and voting.[2]  

Case Studies

 In the summer of 2022, ImpactDAOs are primarily being used for verifiable, on-chain impact and regenerative climate projects. Still an emerging phenomenon, ImpactDAOs are meant to build on one another like organizational legos, eventually creating super-structures much more powerful than the individual parts that comprise them.  Interlocking systems of incentives allow business and revenue models to be built around non-strictly financial use cases. Creating regenerative ecosystems unlocks new web3 building blocks that can be further iterated on, allowing new emergent organizations to be built. To understand the ImpactDAO phenomenon in practice, let’s examine some real-world use cases.

Regen Network is an ImpactDAO building ecological assets for the Regenerative Finance (ReFi) economy.  Exploring how to tie in the value of ecological health to economic value, Regen Network is creating an open source, community driven carbon and ecological asset registry.[3] Creating a community of scientists, researchers, and project developers, Regen network has a system of tokenized carbon credits that create new markets around taking positive climate action. The transparency around blockchain technology improve how carbon credits can be sourced, and communities involved in the ImpactDAO can choose what type of methodologies they want to implement within the Regen Network. “Working alongside land stewards, biologists, data scientists, and others, Regen has developed over 40+ methodologies with 12 million hectares of ecological regeneration in the pipeline.”[4] Implementing quadratic funding, Regen network has plans to allocating open source funding towards ecological causes, researchers, and institutions, creating a positive feedback loop where the new economies enabled create further funding for better quality technology and impact ability.

Bloom Network is an ImpactDAO that emphasizes the building block type nature of these organizations. Bloom Network creates an international community of people and projects working to build regenerative cultures. The network can rapidly share resources and intellectual capital with one another to rapidly upskill each community. Right now, there are “30,000 people on the ground across 16 local chapters in 11 countries establishing local economies focused on food sovereignty, transformative justice, arts gathering, and regional autonomy.”[5] The purpose of the ImpactDAO will be to help integrate communities that are already organizing and operating for years on the ground, and incorporating web3 technology in how these communities build and scale their activities.

Orca Protocol is creating tools around “DAO governance that put people at the center of design.”[6] Orca allows DAO contributors to coordinate within cross-DAO pods. Pods are small working groups organized around one’s expertise and ability to contribute. Pods allow mini-DAOs to operate within larger DAO frameworks, letting the needs of the ecosystem dictate how they can integrate and contribute. Orca aims to eventually enable a composable metagovernance framework that could act as a “connective tissue of multi-DAO governance councils.[7]

Conclusion

ImpactDAOs build on the original DAO model by applying web3 technology and ideas towards making a positive impact in on and off-chain ecosystems. ImpactDAOs strive to make net-positive, sustainable, and regenerative impact on the ecosystems they are a part of. Projects are experimenting in real time and rapidly innovating on creating new paradigms of regenerative Redefining how resources are used and shared, ImpactDAOs utilize smart contracts, tokenization, and new governance models to bring scalability to cooperation. ImpactDAOs offer a way for us to address complex 21st century problems, and create long term, sustainable organizations that are a value add and incentivize regenerative behavior.

[1] Kevin Owocki. 2022. ImpactDAOs, 6

[2] Ibid, 13-16

[3] Ibid, 34

[4] Ibid, 35

[5] Ibid, 53.

[6] Ibid, 76.

[7] Ibid, 76.