Funding the Future through Scholarship DAOs | State of the DAOs
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Gm and welcome to DAOlife! Social impact DAOs are starting to pop up all over the DAO ecosystem. This week, we explore a new opportunity for investment DAOs: tokenizing education. Blockchain technology allows for degrees of transparency and accountability that traditional scholarship funds could only dream of. By turning investment DAOs into Scholarship DAOs, we might open up a new way to invest in education and usher in a new era of learning and development.
Next, we share the TL;DR on the latest DAO ecosystem takes and thought pieces, making it easy for you to cut through the noise and stay up to date on the world of DAOs.
This is the current state of the DAOs.
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Funding the Future through Scholarship DAOs
Author: Astha Gupta
DAOs have a half trillion dollar opportunity in the United States alone. With Americans donating $471 billion USD to charity in 2020, non-profit entities stand to improve transparency, accountability, and community leadership through the use of DAO organizational structures.
What happens when you reorganize these sponsorships into systems that publicly show where each dollar is spent?
Private donors are always looking for ways to invest and give back to their communities. Student scholarships are one of the main ways donors support younger generations, but often these donors do not have the bandwidth to research how their funds are put to use. Donors want transparency. They want reliable information on the funds demographics and operating expenses. They want to see how their money was invested.
Private donors are always mindful that their gift might not reach the people they want to reach and are often worried that they are being exploited by middlemen.
When I asked a group of sponsors whether they would be interested in investing in a charity that was transparent about operating costs, ensured donated funds reached the people that need it, and could possibly earn some return on their investment, all were very interested.
Scholarship as an investment DAO could be a solution.
The objective of Scholarship DAO is to invest in students and sponsor their full-time education. The parent DAO could have subDAOs based on age group, geographic location, investment amount, or target various specialties. Members of the DAO invest in students and fund school admissions, boarding, and career mentorship. In return, DAO members could receive an allotment of each students’ social token.
Upon graduating and starting a career, 12% of the student’s income would be reinvested in the DAO for a period of four years to make it self-sustaining (investors have the option to reinvest money in the DAO for other scholarships). The DAO could also benefit from the price increase of personal tokens that were issued at the time of investment.
Let's dive into some advantages of a Scholarship DAO:
We are seeing numerous philanthropic and social-impact DAOs forming with a noble vision, including:
Charity DAO coordinates efforts around crypto and blockchain applications for charitable giving.
Big Green DAO works on improving lives through nutrition security.
Human DAO aims to help people create revenue streams through P2E gaming.
Klima DAO aims to make low-carbon technologies more profitable and put a higher price on carbon usage.
Scholarship as an Investment DAO (aka Super School):
There are many ways a Scholarship DAO operation system could be set up, but let’s explore a possible structure:
Team: Teams will create governance mechanisms, establish rules for treasury management, and pay contributors and DAO members, which could include:
Investors: DAO members who own governance tokens representing particular sets of scholarship cohorts (where cohorts are groups of students).
Curators/ contributors: Trusted independent members, or founding members, of the DAO who are aligned with its mission. They identify and validate proposals, manage the multi-sig wallets, and filter for proposals that resonate with the DAO’s mission.
Other central roles: Members can define roles in career counseling, marketing, operations, fundraising, smart contract engineering, or tokenomics management.
Mutual funds for scholarships: SubDAOs could be formed based on investment type (cohort), such as by country, economic status, course type, or age group. This will help members invest in the causes that align with each investor’s individual values. Investments could also be made in several different portfolios to hedge risk across sectors.
Reputation-based fund allotments: Scholarships could be allotted based on the reputation and experience of the proposer. For instance, if a proposer has had a history of bringing in great scholarship recipients, their proposals would be given a higher premium based on this history. This ensures maximum chances of success of the portfolio. Organizations such as GiveWell and Charity Navigator offer a solution for gauging reputation. They give non-profit organizations ratings based on their impact, financial health, accountability, and transparency. DAO projects could receive equivalent scores, forming the basis of fund allocation.
Students onboarding/ KYC: All the students have to complete their detailed KYC, background checks, and reference letter from any member of DAO/ recognized partner institute.
Milestone payouts: To protect DAO member investment, funding can be released on an outcome-basis. For instance, a KPI-based funding scheme could be adopted where some funding can be released initially and can be supplemented upon meeting the pre-defined KPIs. These KPIs will apply on students (attendance percentage, performance in exams etc) as well as contributors (timely disbursements, students’ mentoring etc).This will assuage any concerns that donors might have about appropriate allocation of their donations.
Governance (minimum quorum for voting): Establish a minimum quorum to pass proposals to ensure that proposals are aligned with the DAO’s values.
Partnerships: Partnerships with educational institutes are needed.
Treasury management: Initially the treasury would be funded by investor contributions**.** A percentage of funds could be allocated to operations and curators’ incentives and the rest for scholarship investments. ****DAO NFTs could be given to investors based on investment amount and curators based on contribution. These NFTs could represent the amount, type, or period of contribution.
Earnings of scholarshipped students: Each portfolio will be mapped to a set of students. 12% of each student’s earnings will be encouraged to be sent to the DAO for five to ten years (oracles and devops tools like Phyllo and Argyle will be used to ensure direct payouts in DAO from earnings of students). Investors of subDAOs can reinvest these returns to further strengthen treasury and sponsorships. Students will sign an Income Sharing Agreement (ISA) with DAO to ensure payouts to DAO.
Types of Education Funded:
Online Education: A good start could be with online education focused on short term courses to more easily manage student admission & performance. These courses could be academic (partnership with Coursera, Khan academy), professional (courses from Gitcoin on cryptography), or other specific interests such as STEM, sports, arts, etc. The DAO could partner with existing institutes for specific courses. These partners would then be obligated to share student information with the DAO. This could include enrolled courses, attendance, grades, and tuition.
Offline education: As the DAO grows, scope could be extended to physical education as well. Effectively, any school (from anywhere, academic/ non-academic) can apply to create a subDAO and add students who could benefit from a scholarship. Payments would be made directly to school to cover all expenses, including food, board, and uniforms.
Infrastructure support: The DAO can create its own infrastructure (such as computer labs and libraries) or rent existing infrastructure.
Linking with income of students:
Personal tokens: The DAO will help students launch personal tokens, much like Alex Masmej and some of these early tokens will be allocated to the DAO and some will be issued on the public market. The DAO will earn on the increased valuation of these tokens as the student is successful in their career.
Oracles with Web2 income: We would explore a model where students’ income will be linked via Oracles and a certain percentage of their earnings (12% annually for 4 years) is allocated to the DAO.
It’s time to deliver on the promise of no child left behind. Imagine the scope of what tokenized education funding could bring to underserved communities. It would be amazing to see if members could directly fund an education at any level, anywhere in the world. DAO members will invest in the future, and also get to participate in the upside. And it's all on-chain. Scholarship DAO redefines what it means to invest in the future for the betterment of society as a whole!
Cryptoeconomics as a concept was started with an aim of inclusion and impact has always been in the DNA of DAOs. At a time when the world’s problems are at center stage, it is helpful and inspiring to remember the positive impact that DAOs can have on education and society as a whole.
DAOs at a Glance
Hand-picked articles to understand the current state of the DAO ecosystem
Author: Austin Roby
This guide delves into multiple governance concepts and the current state of implementing them in Web3 projects. Approaching Web3 governance with a civics design approach, collaborators can rethink relationships between members of online communities, considering a mix of governance frameworks to fit the needs of an organization. Instead of simply applying a single frame or concept, there may be a need to blend them in order to achieve a balance of equity, efficiency, and impact.
In many cases, a traditional corporate governance approach has been applied to DAOs and online communities where more shares (tokens) means more voting power. A few other models of governance that may have more merit in creating truly decentralized and equitable communities include a B Corp model, an Environmental Social Governance (ESG) framework, and worker cooperatives. The latter, otherwise known as “co-ops”, practice a democratic “one member, one vote” decision-making process. All of these models should be considered when designing governance structures.
Designing the actual decision-making process for an online community can be done by creating a matrix with three columns - the first catalogs the type of decision to be made (e.g., “business strategy” or “dividend allocation”), the second column identifies the stakeholder group (e.g., “artists”), and the third lists the decision type (e.g., “consensus” or “simple majority vote”). The rows of the matrix make up the different decision types. A sample completed matrix is provided in the article.
Author: Patrick Rivera
DAOs are still nascent as a concept, with various types, purposes and needs among them. Simply trying to create “one-size-fits-all” tools for DAOs is not a viable option. Instead, those developing tools should narrow their use case and target specific types of DAOs and meet a specific need. It’s helpful to know what feature sets different types of DAOs generally prioritize. For instance, protocol DAOs value security and transparency, social DAOs usually prefer active communication features, and NFT collector DAOs are more focused on funding mechanisms/protocols.
Given the need to focus on a particular need of a specific DAO type, an effective strategy would be to:
Start with services: jump in to existing DAOs and help build them, recommend new approaches, and solve problems.
Dominate a niche: turn your expertise into a product that is strategically chosen.
Focus on retention and business development: manage a continuous feature improvement cycle, listening to users for new features and finding new customers through outreach.
Grow the market: by increasing the average revenue per DAO and the number of DAO customers.
Become a DAO: in order to become a self-sustaining protocol, you’ll need to implement a smart contract, mint a token, develop a governance process, create a developer ecosystem, and design community initiatives.
Contributing to a DAO is a unique experience. It means that you must rely on more than just your mind and expertise to meet the challenges of the work. As issues and problems arise, you must work with others to build various solutions, all while learning from their perspectives.
Contributors need three important skills:
Mental fitness (the CPU): The two pillars of mental fitness are Cognitive Capabilities Training and Social-Emotional Processing. The former can be honed by meditation, gratitude, and rest, among others, while the latter can be honed by adopting a growth mindset and self-reflecting.
Self-direction (the Operating System): Assessing your skills, values, and projects and how they fit your short-term goals. This helps to prioritize tasks and your day.
Facilitation (the app layer): These are the skills, tools and applications that a DAO contributor needs and should be familiar with in order to collaborate effectively.
The future of technology is not a world full of computers. The future of technology is filled with humans working together to design and build better, more inclusive, and more accessible systems.
Author: Li Jin
Transition to Web3 is a step-by-step guide with real-life examples that will equip you with the knowledge and tools you need to enter the world of Web3 as a non-technical contributor. Web3 and blockchain technology are here to stay, and there will be plenty of jobs and opportunities for those wishing to enter this exciting space, but only if they show up with the right skillsets.
Whether you already have your first project lined up or are still looking, this guide will help you map out the path. Packed with information that gives a high-level overview of different sub-sectors and recommendations for further learning, Transition to Web3 is your essential starting point.
The goal of Transition to Web3, A Guide for Non-Technical Roles, is to arm you with everything you need to succeed and thrive in the new decentralized internet - without needing to learn how to code.
Author: Samantha Marin
DAOs use many different methods for onboarding new members, but many leave people uncertain and overwhelmed. Onboarding should leave contributors with confidence and knowledge. The only way to impart these two precious commodities is through a transparent, opt-in onboarding process “in which contributors can learn about and have introductory experiences in three important categories: purpose, governance, and social.”
These experiences would come as a self-selecting journey through three sieves, or filters, that serve to ensure the DAO ends up with contributors who understand why the DAO exists, how the DAO works, and who does the work and how it’s done on a daily basis. Each step in this process, each journey through the sieve, requires that the potential contributor choose to continue, slowly self-selecting themselves into the DAO. The first sieve ensures contributors want to work within the vision and values of the DAO and want to serve its particular purpose. The second sieve makes sure people know how the DAO operates, from its governance structure and processes to its workflows. The final sieve is when the contributor really gets to know potential teammates and how they can contribute to a place that sets their soul at play.
After completing the opt-in onboarding process, the remaining DAOists are confident they want to contribute to further the mission of the DAO, know how the organization functions at a DAO-wide and local level, and understands where they can plug-in to maximize both self-satisfaction and the purpose of the DAO.
🙏 Sponsor: Balancer DAO- #BALbattles begin!
🔥 and 🧊 insights from across the DAO ecosystem
Author: Jay Scambler
🔑 Insights: Data is the most valuable commodity in the world, so it’s unsurprising that we’ve allocated considerable efforts towards its dissemination, storage, and analysis. Over the past two decades, corporations operating search engines, marketplaces, and social media platforms have grown into giant monopolies on diets of our precious information, but it’s gone too far. Can emerging online communities use blockchains to harness the power of data in a better way?
While Web2’s pursuit of profit has divided communities across digital and social channels, new technology has unlocked the potential for self-sovereign identity, on-chain accountability, and decentralization. An individual’s efforts can now be permanently and immutably recorded.
The rising popularity of DAOs has spawned networks containing qualifications and proof of reputation. These webs can serve as the basis for the credential economy’s infrastructure.
As Web3 identity networks grow, their communities will refine the ability to analyze credentialed users more thoroughly. Aggregations of these character proofs will act as improved resumes and interoperable profiles. This effectively unlocks the ability to crowdsource experts and the implications are profound.
Centralized accreditation has the potential to cause major problems. Even a unique, decentralized source of recognition poses a similar concerns as a single source of truth.
DAOs are laying the foundation for the future today and they bear the responsibility of developing an ecosystem that avoids a dystopian future of social scoring.
Author: Chasing Yield
🔑 Insights: DAO incentives combat the problems of creator burnout, free-riding, voter apathy, and unequal voting influence. There are a variety of ways to reward DAO members such as tips, bounties, or streams of payments, but this multitude of options doesn’t guarantee success. The following concepts should be kept in mind while developing DAO incentive structures.
Clearly Defined Values: establish concrete and transparent core values to avoid subjective assessments when an incident occurs.
Decentralization Spectrum: DAOs have decentralization as a goal, but it’s fine for young DAOs to embrace a degree of centralization as they mature.
Incentive Management: Be aware that certain forms of incentives, such as bounties, may require more management resource input before they deliver results.
🔑 Insights: Many people choose to operate pseudonymously in Web3, creating an alter ego for their blockchain-based life. With people leading with pseudonymity, DAOs need ways to attract, evaluate, and onboard these eager contributors. To encourage pseudonymous contributors, DAOs should:
encourage pseudos who want to contribute by creating pseudo-friendly onboarding materials and processes.
realize that many pseudos don’t have a robust on-chain history or an extensive Web3 resume, and build onboarding programs using open-ended applications, having an organized Discord, and having an accessible bounty program.
leverage Web3 tools to preserve pseudonymity and to avoid accidental doxxing.
Making a DAO pseudo-friendly will increase inclusivity while attracting top pseudo talent.
Author: Jason Choi
🔑 Insights: We don’t need a metaverse for cats. The hype around crypto has instilled a “build it, and they will come” mindset in many founders, but as competition heats up, the winning teams will be those who focus on developing solutions for communities in need.
Years ago, the low-hanging fruit was up for grabs. The core Ethereum engineers didn’t need to think about every specific use case (though Vitalik came close) – they needed to prove the concept that a distributed network of smart contracts could work. Similarly, the early DeFi protocols only had to provide decentralized marketplaces which could later be iterated upon to meet user needs and expectations.
However, as the foundational bricks get laid, new teams shouldn’t expect funding if their roadmap is simply to copy & paste ideas that worked somewhere else. Having a DAO and tokenomics aren’t sufficient conditions for scaling a product people actually want to use.
So far, many web3 projects have been built by the niche community that has used them, but as we go to the mainstream, a new approach will be warranted.
Tomorrow’s success stories will spend time with their future customers to the point where they can build empathetically and design novel solutions that alleviate actual pain points for groups outside the early adopters.
DAO Spotlight: LabDAO
LabDAO is dedicated to building a peer-to-peer platform to share biological experiments, results, and data. The graph stores information in human-readable JSON entries that define experiment parameters, data storage locations (like IPFS ids), and public keys to messaging services.
The protocol consists of a graph-like data structure where each entry has particular characteristics:
Details about the experiment like protocol name, date, designer, and experimenter
Experiment parameters like incubator temperature, test subject conditions, etc.
The treatment whether it be a small molecule or a sequence of CRISPRi and its target gene
How the results are read/measured with links to raw data
These entries can also contain secrets. For instance, if an experiment creator doesn’t want to include the specific compound in their node, they can encrypt the data before submitting it to the graph. Experimenters can also omit their results and instead share a public key to enable encrypted messaging. Curious queriers can contact the experimenter for the results or to collaborate.
Querying the graph costs the user tokens, but extending the graph (creates another experiment that builds upon it) or curating it would be rewarded with tokens. Finally, NFTs can be minted to monetize and define rights to the experiment. This system incentivizes experimenters to share their information and gives their world-wide colleagues standardized access.
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