DAO: Decentralized Autonomous Organization
Each Section (D, A, O)
Decentralized: No core leader(s) making the decisions that impact the rest of the organization’s direction
Autonomous: Decisions, transactions, and the whole infrastructure is transparently documented using smart contracts on the blockchain
Organization: Group of individuals that form together to achieve goals that cannot be accomplished without the group
DAOs are groups working towards collectively chosen goals. To expand upon this, DAOs include one or more individuals that are democratically allocating funds to group determined goals. Proposals for group goals are brought forth by any community member and group members vote for the proposed plan to be approved or rejected. If approved, the funds are rewarded from the DAO’s treasury with every transaction being audited in real-time.
DAOs allow for globally united groups of individuals to work on their passions and be rewarded with DAO-specific currency. For example, if I love to write blog posts as a promotion outlet, then I may join several DAOs and propose plans stating I will complete x number of blog posts in y time for z coins. If approved, then I could continually do this for each DAO while refining my capability to make a meaningful contribution for each one.
Comparison to Web2 Corporation
Web2 corporations (Amazon, Google, Facebook, etc.) are all hierarchical structures with few individuals at the top making decisions to benefit stakeholders. Creators, such as videographers using YouTube, amass a following that can be profited off through good/service offerings, advertisements, and affiliate marketing. Despite creators gaining worldwide recognition with follower counts growing to eight figures and more, the creators are not given opportunities to own part of the platform that props them up.
Web3 corporations allow creators to earn fungible tokens which directly compensate the creator based on the token’s value. With a:
the creator may raise their token’s value by growing their follower count and thus raising the community sentiment. In this reality, there are an indefinite number of ways for creators to earn money (by raising the value of their tokens) using their platform.
Goal of DAOs
The goal of DAOs is to:
1. Grow community
2. Develop products/services in line with the group’s values, mission, and vision
3. Grow treasury funds for more allocation to community members
Clearly, the goals of DAOs are similar to that of living beings: grow towards one’s ideal and reproduce to allow others to do the same. For DAOs, growth is sought after in the sense of community and treasury while the reproduction comes through subDAOs.
Types of DAOs
- Social DAOs serve as communities that evolve to grow their capital and reach without decreasing their sense of belonging.
- Grant giving DAOs collect funds in a treasury and allocate those funds based on proposed grants. For example, a grant-giving DAO community may realize that they must reach more of the public/mainstream in order to grow their treasury, and thus grow their grant-giving capabilities. A writer within the community may put forth a proposal to write a blog post, contact a publicist, and get the article posted within a week in exchange for x amount of tokens (aka their payment). Depending on the size of the proposal and the methodology of said grant-giving DAO, they may have a community-wide vote to decide whether this individual’s price and the expected deliverable are aligned with their mission and worth pursuing. If the democratic vote results in a Yes, then the writer would begin working on their proposed plan, resulting in the writer getting paid to do what they love and the grant-giving DAO growing in their size and reach.
- DeFi DAOs are no different than other types of DAOs in the fact that there is a community that is directing the allocation of funds towards further developments related to a DeFi protocol that they could create and would like to be made available to the public. The community involved with DeFi DAOs are often technically-savvy individuals that understand the DeFi protocol that they are a part of and are rational enough to recognize what proposed improvements could and should be made.
SubDAOs could be thought of as children of the parent (DAO). The DAO’s goal is to recognize that they have a piece of themselves that could be separated for the benefit of themselves and the subDAO. The general principles behind a subDAO forming from a DAO are that the proposed subDAO has four metrics: staff, profit, novelty, and sustainability.
- First, the DAO must understand that the subDAO has full-time contributors that will serve as the working body and communication stream between the DAO and subDAO
- SubDAOs often form as a chunk of a DAO that serves a specific purpose with dedicated team members bringing in consistent profits. Without profits fueling the subDAO, their working history will have a clear deadline and expiration date
- Novelty is important for subDAOs as there is no purpose in having the subDAO work on the same tasks as the DAO. Their efforts may be better put towards the DAOs collective workings rather than branch off and replicate
- Sustainability is needed for subDAOs with the three aforementioned points being prerequisite for it. The subDAO’s working group should be able to survive on its own, without the long-term guidance and financial support of the DAO. As a child, the parent will be there for help, but only to prop them up for sovereignty and independence
Comparison to Web2 Corporation
SubDAOs are of particular interest to me because typical web2 corporations grow big and eat (acquire) smaller companies with growth potential. Web3 corporations (DAOs) grow big and split their size in order to grow many companies working towards well-defined goals.
How to SubDAO
The process of forming a subDAO out of a DAO includes the step-by-step process of creation, funding, staffing, selling, tokenizing, and distributing tokens.
- A subDAO first begins from a community member’s idea put forth to the DAO. A team lead would draft a proposal detailing the creation of a new working group. With the potential for lots of discussions, voting, etc. afterward, the proposal may then be passed. This working group is still part of the DAO, but they are working on a specific goal in line with the DAO’s values, mission, vision, etc.
- The next step would be for the team lead to request funding from the DAO. This funding would often be split between a stable coin, like USDC, and the DAOs native token. The DAO will split its funding in this way to provide enough value through the stable coin’s guaranteed value and the DAO’s native token’s potential growth in value.
- The staffing process involves the team lead onboarding contributors within the DAO’s existing community or unique contributors. Contributing members would be recognized for their efforts, consistency, and care by receiving tokens for their contributions and future commitments towards the working group’s goals.
- Now, the working group has grown from a team lead to a full team by onboarding new contributing members. This working group will now prove whether their efforts were worth pursuing based on their ability to generate revenue for the DAO. As the DAO has their treasury money invested in the working group, they are hoping for a return on their investment as well as value provided through the working group’s end goal(s).
- Once a working group has produced more revenue than it was originally given in funding, assign a DAO member to work directly with the Team Lead to create a new SubDAO. If the working group has provided enough value to earn more revenue than it was originally given in funding, then they will then begin the process of creating a subDAO. For example, if the DAO’s treasury grants x USDC + native tokens for the team lead’s proposal, then as the working group has earned x+1 revenue (in whichever currency), then they would best function as a subDAO. This idea of having to earn x+1 revenue is not universal among DAOs, but it may be recommended for sustainable potential.
- For token distribution, the subDAO’s tokens would be minted with a percentage of the total supply being sent directly to the DAO in a cliff vesting period. This means there is a period of time (vesting) where the tokens are locked up and after another period of time (cliff), the tokens would be given to the DAO. This typically plays out with a small percentage of the tokens given to the DAO in x amount of months, then in 2x months there will be another percentage of the tokens given, and so on. Then, the rest of the subDAO’s tokens would be distributed to community contributors and the new treasury.
Joining a DAO
Finding DAO’s is not complicated. The more time-consuming, and more important, part is finding the right communities. To expand upon this, using websites like Forefront or DeepDAO, one may join any number of DAOs. Subscribing to their newsletter keeps subscribers up to date on major news happening in the DAO space. However, to keep one’s finger right on the pulse, then Twitter will have to be the source. In my opinion, Twitter is a hodgepodge of information; some memes, some hate, some genuine knowledge sharing. To stay up to date on DAO developments, I have scavenged many links to find users who are directly or indirectly involved in the DAO and/or web3 space at large. My recommendation is to follow a small number of these individuals at a time to understand what content they reshare and what they involve themselves in. Rather than following everybody and being shown an immense amount of content all at once. Find users who are making contributions that are meaningful to you while sharing whatever you wish somebody posted for you.
Leveling up the ranks
To get more meaningful roles/clout/notoriety within the DAO space, then one must begin making sizable contributions in whatever way is meaningful to others. For example, if I wish to make myself known as a useful writer for DAO’s public image, then I may choose to:
- Join DAO’s and offer my services and develop my “web3 resume.”
- Make meaningful contributions on social media to gain a following and eventually have the credibility from my social network to be offered roles within DAO communities.
- Do both simultaneously.
CoopahTroopa details ways for new members to make meaningful contributions to individual DAO’s and the whole space:
“Take notes at community meetings, interview core contributors and share their stories, engage in governance discussions, vote on every proposal, and organize a local meetup.” These are tasks that anybody can do and require the simple prerequisites of time, energy, and effort. At this stage of DAO development, these three components put in any direction are likely to deliver sizable returns.
Showing worth & providing value
At this time, the DAO space is growing and evolving so rapidly, allowing anybody to use their creative energy towards a unique DAO development trajectory to provide value to the community and earn acknowledgment from one’s peers. Showing worth can be done in any of these broad categories:
- Sharing knowledge about trials and tribulations occurring in other DAO’s
- Back- and frontend hard technical skills
- Soft skills, like writing, speaking, organizing, formatting, and community management
Paid DAO opportunities
The goal is to get paid for our contributions to DAOs. This will likely be done by finding one’s passion and formatting that in ways that will benefit DAOs of any kind. Getting paid DAO opportunities may initially arise by creating one’s own proposals to get funding for certain projects, but with time and credibility, one may begin to get offered new opportunities left and right.
Why I’m Creating my Own
If one wishes to learn about a topic, form meaningful connections, and get involved in unique opportunities, then active-learning will triumph over passive-learning every time. Passively being a “fly on the wall” and watching as the web3 space evolves before your eyes will keep one informed about publicly available information. However, actively adding to the web3 evolution will bring with it an ingrained understanding of whatever one is working on while opening oneself up to mutually beneficial connections with a surplus of unique opportunities.
Creating the Spiritual DAO
Simply put, the creation of a DAO can be boiled down to forming a community (Discord), using fungible and NFTs to reward community contributors, and then instilling a formal governance token.
The creation of a DAO can be split between legal and logistic. At this point, the legal details include Wyoming creating a legal basis for mainly investment-style DAOs to exist. With time, I expect more legal options to arise for DAOs to exist and be tracked for tax purposes. Logistically, forming a DAO can be done in a number of ways.
The Spiritual DAO is using Discord for public (general chat) and private discourse (locked channels). Collabland is a Discord bot that verifies ownership of the Astral Kingdom NFT to keep track of individual membership. The funds from the Astral Kingdom NFT sales will be stored in a Gnosis Safe Multisig treasury. This means the treasury requires multiple signatures to allow for transactions to occur, removing liability for one nefarious individual from using the funds for perverted goals. Next, the Spiritual DAO will use Boardroom or Colony for governance and CommSor for insights in regards to community participation.
The Spiritual DAO will be rewarding members who provide meaningful contributions. While this metric is subjective by nature, members are incentivized to grow the community through knowledge sharing or member count. At the end of the day, any DAO is as strong as its community is. The community is who determines the actions of the DAO, so forming a tight-knit group of rational individuals wishing for collective growth is ideal.
Interesting DAOs to Look Into
(coming soon) 🙂
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