Web3 – Decentralized Autonomous What?
What’s a…. DAO?
You can think of most decentralized autonomous organizations or DAOs like any modern remote company.
There’s typically no offices.
Team members work from all over the world.
They use lots of the same tools to get stuff done – Slack, Notion, Google Docs, Github, Zoom, etc.
They look like “normal” businesses.
Or SeedClub. They’re a traditional startup accelerator… except they incubate other DAOs. And each DAO that goes through their program owns equity (tokens) in each other.
Yea… SeedClub is kinda meta.
There’s also DAOs that look nothing like a normal business. Like ConstitutionDAO. It was created to buy a copy of the US constitution at a Sotheby’s auction.
They raised an astonishing $47M in a matter of days (though they were later outbid).
DAOs get a little more interesting too when you take a look at how decisions are made, who contributes labor, and how those contributors are compensated.
Proposals and bounties DAOs typically have a few core members (think founders or early employees) and a mix of part-time and full-time contributors.
When a DAO needs to build something new a proposal is created. Often they include a bounty to incentivize others to work on it.
For example, a DAO might put out a proposal to have a new feature built for its app and offer a $5,000 bounty (paid in an equivalent cryptocurrency).
Proposals can be created by core members, contributors, or even the wider community. And proposals are then typically voted on and approved before the bounty is funded.
You can check out some real proposals from different DAOs on Snapshot right now. 👀
So just about anyone can contribute. Work is compensated in crypto.
Oh yea – and people love voting on things.
A small detour – shared wallets
One novel element in most DAOs is the use of a shared wallet. Sometimes referred to as a multi-signature or multisig wallet, or more broadly, the DAOs treasury.
A shared wallet makes is easy to pool funds quickly.
Ya know, in case you and some internet friends wanna pool together a couple mil to buy a copy of the constitution. 😁
But a killer feature of shared wallets is that you can require multiple peoples’ signatures or even a majority vote before any funds are dispersed (in case buying an expensive piece of paper isn’t an approved use of funds).
And since a DAO’s funds (the shared wallet) are stored on the blockchain:
- It’s “bank” balance can be publicly viewed and verified.
- Transactions are visible so you can see how funds are spent.
- And It’s easy to pay contributors no matter where they live.
Now, I have no idea who brands these things 🙈
Suffice to say, don’t take the acronym DAO too literally.
- Decentralized? – Almost no DAOs I’ve seen are fully decentralized. Many have a core group of full-time contributors that hold majority power and look like a leadership team in a typical company.
- Autonomous? – DAOs offer a lot of autonomy but most have not completely gotten rid of humans or traditional communication structures and processes.
- Organizations? – Yea, sure. Why not. What about the future of work?
I think DAOs could help us shape how we think about it. Here’s three ideas:
- Contribute-to-join – some DAOs require you to contribute to smaller projects before joining full-time and earning bounties. This could radically change the way we think about hiring (and hopefully remove some of the bias). When I joined Buffer in 2016 you had to complete a 45-day bootcamp before potentially being offered a full-time role. I loved it.
- Ad-hoc work – I think we may see more individual contributors (non-managers) working with multiple DAOs at once. Pick and choose interesting projects. Stay on as long as you’d like.
- Wallets as the new street cred – paid bounties, like any other transaction on the blockchain, are publicly visible. This could turn your wallet, and your past contributions, into your new CV/resume. It could even help you skip the contribute-to-join phase at the next DAO you join!
Here’s your takeaway:
Decentralized autonomous organizations are much a modern remote company and embrace shared wallets, cryptocurrencies, and async work.
They kind of feel like internet-native organizations.
And they’re making it easier for groups of internet friends to join forces and tackle some really interesting ideas.