Getting in the Game and Leveling Up | State of the DAOs
You're reading State of the DAOs, the high-signal low-noise newsletter for understanding DAOs.
Gm and welcome to DAO life! Often, people who join a DAO are overwhelmed. Sometimes they’re paralyzed by all the activity and don’t know where to begin. Others jump in straight away and spread themselves too thin. If you fall in either of these two camps (or somewhere in between), you’re in luck! This week we share tips on how to step up your DAO game. Written in collaboration with a bonafide DAO onboarding professional, we share tips, tricks, and strategies to build your DAO reputation and level up!
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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Working Thru the Ranks of a DAO
(This article was written in collaboration with the bDAO’s first talent scout, Samanthaj. Samanthaj is an early contributor to BanklessDAO and has a home in the Writers Guild. She began her DAO career as the Writers Guild's first talent scout and shepherded the guild as it grew in active members by more than 6x. She serves as the coordinator for BanklessDAO’s Editorial and Publishing Arm, a decentralized publishing house.)
For many in crypto, DAOs are not new, but as crypto grows, the number of participants increases and the “general knowledge base” shifts from that of the well-versed multi-cycle crypto natives to that of the recently exposed. And while DeFi and NFTs have already seen tremendous growth, the next class of crypto natives wants to direct their time, efforts, and talents to the DAO ecosystem.
But what are DAOs? To me, DAOs are just a collection of heartbeats. These heartbeats are humans that are like-minded and organized online. Each DAO is a movement working towards a set of goals created by an online, member-owned community; a community without centralized leadership.
By studying the mistakes of the past and using them to correctly navigate into the future, DAOs will become the cornerstones of the broader Web3 ecosystem. This ecosystem is a place where the contributors OWN what they do. Web3 has flipped the narrative from one of adherence to the rules and of hierarchical structures to one of experimentation and peer-to-peer collaboration.
Getting in the Game
If DAOs are a game, you are creating your own character, and to effectively add value you could simply begin by looking at your character’s base stats.
What skills do you have? How can you contribute? What’s important to look at is your skills, your experience, and where you find excitement. Some skills may not directly transfer, but no matter what your background is, they are tools in your DAO toolbelt! This ecosystem is all about bringing diverse people with diverse skills together.
If you’re just starting out in your journey, the world is even wider. You could start by taking a look at what you want. Ask questions like: what would I like to do? Or, what makes me happy, interested, or excited? This is your journey and the advantage of being early to DAOs is that you get to create your own experiences.
We are on the bleeding edge of technology and finance, it’s a space for community and contribution, and a space that’s creating new ways for humans to collaborate online. But with edge comes risk! This is the wild west, after all. Things won’t always go as planned and things need to be fixed. The key for success at these junctures is a bias towards action.
In an interview with BanklessDAO’s veteran talent scout, Samanthaj, gives us some insight on how contributors can think about their DAO journey:
Q: What should new members think about as they begin their DAO journey?
Samanthaj: I think a lot of people come into DAOs thinking that they're going to be told what to do like a traditional job. No one actually knows what each individual person should be doing or how each individual person should be spending their time. You have to really, really be self directed and the process is a lot more exploratory.
When people are thinking about their journey, they should see it a lot more like uncovering a new frontier. Every day is different. We're all trying to figure it out together, and people have different skills, but no one has the answer. In a traditional company, you just do what people tell you to do, but here you really have to do your own thing. It's a very, very different mindset.
If you’re new to crypto, be warned that this is a nascent and rapidly evolving space. The crypto market is very volatile! The money you earned yesterday could be cut in half tomorrow. Education is needed for onboarding. If you want to get paid in crypto, you need a crypto wallet!
Doing Your Homework
Once you have found a DAO that you connect with and that connects with you, start reading and exploring! It's a good way to get familiar with this new world and it will make your DAO journey easier. Don’t reinvent the wheel! Orient yourself within the DAO and get an understanding of the problems that have already been solved in order to find a place to contribute. Don’t let your first message be “wen token”!
The more you familiarize yourself with the DAO’s activities and inner workings, the easier it is to understand and contribute.
Think of DAO exploring like entering a new country and getting acquainted with what the country’s culture is like before making suggestions. Simply learning the internal terminology will significantly improve your understanding of what needs to be done when the time to engage arrives!
Focus and Reputation
One integral part of a DAO is that it’s a place to meet, a place where everyone can come together and coordinate resources and ideas. Discord has been instrumental for the success of the modern DAO. Many will say it is an intimidating prospect to get involved, and they are right! The shear number of Discord servers gives a certain “spoiled for choice” feeling.
For instance, BanklessDAO’s Discord alone is like a small city, easily reaching the maximum size at 500 channels! Server size is an indication of the amount of activity happening in a DAO and a sign of a healthy and vibrant ecosystem. But it’s easy to get distracted and get “shiny-object” syndrome:
Q: What do people find the most challenging about onboarding?
Samanthaj: There are two types of people, one type just kind of attends the meetings and doesn't really do much other than that. Which is fine. There's room for all kinds of contributors. On the other side there's the person who over commits and then just completely burns out or ends up not making as big of an impact because they're spread thin over too many things. Once you have your bearings within the DAO, you can definitely enter new arenas and make big impacts in those areas, but for the new contributors, spreading yourself too thin can end with you not making any impact at all.
Samanthaj focuses on the importance of consistently showing up and the importance of not burning out. Discords can often be messy, and to make an impact you must create an online reputation (even if it’s pseudonymous).
Early in your DAO journey, you should be focused on developing rapport and building credibility with your peers. Where and how do you spend your energy? One tip is to focus on just a few areas at first so you don’t over leverage yourself. Once you’ve found your home, be consistent!
Samanthaj: […] If you don't begin making an impact, you don't earn the token, people don't know who you are, and you don't get social capital. You have to start building your identity. If you don't speak up in meetings, people will not remember who you are. A good way to start is by asking questions. And remember, it's important to stick around and be consistent.
Putting It All Together and Contributing
The best way to begin contributing is by showing up to meetings. As asynchronous and digital as DAOs are, the human factor cannot be ignored! You have to show what you can do for the DAO. No one will trust you with work, if they don’t believe you can actually do the job they need you to do. Show up, tell people about how you can contribute, and raise your hand for things!
Samanthaj sums it up nicely:
Q: What are some indicators that someone is going to add value?
Samanthaj: Usually, if they join a meeting, they will stick around. As a talent scout, I got a lot of messages, but the people that stand out include information about themselves. If they'd say, "Hey, this is my name or handle whatever, and then say, you know, this is a little of my background. This is what I might want to do." It's clear that this person is a self starter. So come in with a purpose and some kind of compass.
At the same time, DAOs can also do a better job of activating contributors:
Q: What do you think DAOs can do to easily onboard and "activate" contributors?
Samanthaj: DAOs can be clearer about the kind of roles that exist and the people or skills that are needed. Be explicit about whether a project needs developers or writers or economists. Create automated onboarding mechanisms that can filter people and documentation to scale up your onboarding.
How can DAOs be more effective? By being specific! Tell the world what you need and make sure your contributors understand how to get involved.
Movin’ on Up
A few tips to make your entrance into being an active contributor smoother:
Identify your value add: Use that to zero in on work suited for you before you reach out to the senior contributors. Don't just DM a core contributor as they are usually focused on their own responsibilities. Show that you understand what they are doing in the DAO, communicate how you can contribute, and make your interests known.
Show up to meetings: Attending consistently helps you get up to speed with what the team is doing, where they are headed, and how you can help them get there.
Raise your hand: When you are ready to take on a task or help with a project.
Be dependable: Once you have acquired meaningful work, make sure to execute on expectations. The culture in DAOs is one of social equity and reputation. Your equity and reputation are built only by you and by your relationships within the space.
Connect: Take the open and free nature of this space and use it to your advantage by connecting with people and groups you !vibe with. Remember, in DAOs your reputation is more valuable than digital gold.
Once you’ve taken time to get to know the community and what they are working on, ask questions and give feedback!
Over time, opportunities will open up in the DAO, and if you have been actively contributing and you’ve built a reputation, the team will be more comfortable with giving you responsibility. While the additional responsibility and time commitments may be intimidating, they also come with more reputation points and increased compensation. These tasks may include leadership roles, spearheading ideas, or implementing plans to reach the collective goals of the DAO.
Remember, “your word is your bond” and the way you interact with your fellow DAO-er gives them the faith to depend on you when the time comes. During this collaboration, most projects and processes have time for editing, inspections, and reworks, but do your best and take pride in your work.
Finally, we have a final word of advice.
Q: What advice would you impart to new contributors?
Samanthaj: Put blinders on and focus on one project/guild for a season (2-3 months) to build social capital. Try not to get distracted by other things going on in the DAO. It will be much easier to branch out once you've built social capital in one place.
Because the DAOs have so many places to start and so many paths available, everyone's journey will look unique. This is a “choose your own adventure” game. Learn how to code, manage a Discord server, write about tokenomics, or start your own podcast. The frontier of your DAO life is just beginning!
🙏 Sponsor: Parcel - Simplifying payouts for DAOs.
DAOs at a Glance
Hand-picked articles to understand the current state of the DAO ecosystem
Author: Lisa Wocken
DAOs represent a new form of organization where there is less of a focus on jobs and more of a focus on collective value creation. DAOs are still in their infancy (and generally unheard of) because they could not exist without blockchain technology. This technology enables DAOs to form systems around a trustless, uncensorable, decentralized, and fully transparent core. Rules instanticated in code differentiate DAOs from traditional organizations, which are run by people. DAOs are organizations run by code where people contribute.
DAOs have multiple definitions. DAOs are a new form of organization that consists of a shared community, with shared purpose, with shared capital. They are differentiated and enabled by blockchain technology. DAOs are poised for a breakout year in 2022; and soon, most people will work for a DAO!
Author: Ron Tidhar
Being relatively new affords DAOs the luxury of learning from legacy organizational forms. Corporations that employ a top-down approach to collective problem-solving can move quickly when it comes to optimizing within given constraints, but they often suffer from low levels of innovation.
Digital communities tend to be comparatively large, diverse, and transparent. These characteristics promote a creative environment where novel solutions have spawned from circumstances that traditional businesses identified as dead ends. Historically, the downfall of online populations has come from the difficulty of arriving at consensus between many people.
DAOs have the good fortune of combining attributes from both groups, so their approach to solving problems can take a hybrid form. Friends With Benefits Mayor, Alex Zhang, explains that in Web3 “ownership is decentralized, the best decision making isn’t.” The most successful DAOs are likely to be those that strike a balance between a corporation and a community.
The three elements of “Crypto Success” is considered to be product/market fit, community participation, and community ownership. This perspective is changing due to the increasing gap between the complexity of the demands placed upon collective human systems and the ability of any one individual to fully understand them. More emphasis is being placed on a loyal community to build products.
It becomes important to revisit the incentive alignment to ensure that there is sufficient participation from the community. The forking of Uniswap showed us that economic incentives alone are not adequate. A greater community is bonded by a shared set of values and an overlapping sense of purpose. Uniswap chose a particular license which prevents forks for 2 years. While Uniswap may have a large community, there might not be a correlation between the size of the community and loyalty due to the long-term consequences of prioritizing product fit.
Community and governance are where value will accrue over the long-term. Any inefficiencies within the protocol will be forked and managed. In order to resist a fork, maximizing the voice of network participants is crucial.
In light of progressive decentralization, the three elements of crypto success are:
Fiercely loyal community
Author: Packy McCormick
Like any new concept, web3 has detractors and and believers. In a recent debate about whether web3 is good, rather than concentrating on the topic, popular web3 detractors like Jack Dorsey and Scott Galloway, tried to shift the focus of the debate to centralization. However, this debate is not about centralization versus decentralization. It’s about choice. This debate is about whether or not an internet owned by users and builders and orchestrated with tokens is net good or net bad for humanity.
The article goes on to dismantle certain misrepresentations made by the detractors, mainly Scott Galloway, like ConstitutionDAO being centralized, Bitcoin concentration, and the crypto industry not wanting regulation. To address the point of centralization, it’s not about whether any particular platform is centralized or about who owns what. It’s about the fact that the data is open, that builders and users have choice, and that they’ll choose the platforms that extract less and give them more ownership.
Web3 isn’t all good or all bad (although many will say it’s net good). It deserves more thoughtful, honest critiques and even regulation, in order to reach its full potential. Web3 is inevitable, we just need to figure out how to shape it.
It’s been said that 2022 is going to be the year of the DAO, but perhaps that was last year. In 2021, DAOs grew at an exponential rate. DAO treasuries grew by 40x year-over-year, to 16 billion USD equivalent. The number of people contributing to DAOs exploded by an astonishing 130x, where now 1.6 million people belong to a DAO. Yet without expanding opportunities for all of these new contributors and capital, these new resources could be left under-tapped or misused. To scale at a time of such influx while retaining the energy and enthusiasm brought by new contributors, DAOs needs a new scaling framework. DAOs need subDAOs. 2022 isn’t the year of the DAO; 2022 is the year of the subDAO. A SubDAOs is:
an autonomous organization aligned with its parent organization, or superDAO. SubDAOs are like corporate subsidiaries, with tight relations to the parent companies, but a measure of autonomy in its decision making and financial arrangements. SubDAO autonomy depends on the level of decentralization in its governance structures and treasury management practices.
economically and relationally aligned to the superDAO. Economic alignment is the economic relationship between the entities (swapping tokens and sharing revenue). Relational alignment concerns intangible benefits, such as branding or non-financial asset sharing (talent and logos). Alignment can be strong or weak, depending on the strength of financial and intangible ties. Some subDAOs are inward-facing, like guilds, or outward-facing, like projects that generate revenue or projects that are unrelated to the core mission of the superDAO.
accountable to the superDAO, meaning that there must be a clear path for the subDAO to become financially independent of the superDAO and a way for the superDAO to cut ties with the subDAO if it fails to deliver on its promises of value creation, however that metric is defined.
DAOs are here to stay, but to truly be the revolutionary engines of change imagined by their members, DAOs need to scale while retaining the vital essence of what makes them so special. SubDAOs are the answer.
🔥 and 🧊 insights from across the DAO ecosystem
The world of marketing in Web3, as new and ever-changing as it is, needs concrete strategies for clients building their brands and companies. The gmi-Algorithm proposed by the author is a take on the T-Algorithm, credited for guiding successful businesses in Web2. Here are a few of the nine strategies used to guide Web3 projects.
Flywheel: it’s easier than ever for projects to build together; this cooperation starts the flywheel and makes future progress easier.
Visionary Storytelling: as in Web2, a good story is needed to capture the minds migrating to the new frontier.
GM: good vibes are as important as getting jobs done.
URL to IRL: connecting in real life deepens relationships in the organization.
Member Onboarding: attracting talent, and absorbing new members into workflows regardless of their speeds, is crucial.
Author: Austin Robey
Both co-operatives (co-ops) and DAOs are giving rise to new tools for human organization, collective ownership, and cultural production. Despite differences in things like governance and ownership, there is significant overlap between co-ops and DAOs. Enough overlap that the two can inform each other and blend to make the optimal organization.
What co-ops teach DAOS
Economic and Racial Justice: collective organization around non-economic goals is ingrained in the cooperative tradition, such as their work in helping the marginalized.
Ambitious Definitions of Ownership: co-ops have a robust framework of ownership rights, including a clear delineation of their scope and legal remedies for breaches.
Shared Principles: common ideals shared across co-ops create a foundation, instead of starting from scratch.
What DAOs teach co-ops
Rapid Experimentation: formalized rules, such as bylaws nested in lawyer language, get in the way of rapid implementation.
Bootstrapping Networks With Tokens: tokens ease the movement of value, such as raising money or paying members.
New Ways to Exit to Community: airdrops are an example how to transfer both value and control to the larger community.
The COVID-19 pandemic has demonstrated that our highly optimized supply chains can be fragile when not underpinned by sufficient local diversity. Despite our efficient global networks, inadequately diverse supply chains have struggled to deliver communities’ basic health needs. How can the modern firm adopt a more purpose-led, resilient, and adaptable business model?
Ecosystem culture: A community-centric approach begins with a mindset & culture that promotes balance. Organizations should consider their actions as part of something larger and stay mindful of externalities. Information should free-flowing and entrepreneurial/innovative activities encouraged.
Structure: Organizations operating within an ecosystem have to become ecosystems themselves. Effectively, this means coordinating as a community of “entrepreneurial micro-enterprises”, abandoning the command & control approach, and allowing value to develop organically.
Benchmark, measure, & model flow: Changing a corporation’s objective function from profit maximization to something more stakeholder-centric requires new benchmarks. Leaders need to map the value channels in their ecosystem, so they can see where their organization overlaps with those flows. Once these dynamics are understood, we can determine whether the group is better suited to contribute to the network’s efficiency or its diversity.
Technology: Operating in a modern, business ecosystem requires a digital-first approach. Communities should connect easily and simplify information flow to optimize resource allocation across component parts. The most important technologies in ecosystem integration include cloud, APIs, and blockchain.
Author: Harry Rook
Currently, the US Dollar is the world’s reserve currency. Due to high level of debt in the system, the Federal Reserve must inflate its way out of national debt. Many, including Ray Dalio, opine that the US monetary order is on the brink of collapse. This is not totally unprecedented with the decline of the Pound and Guilder in the past, but this points to inherent problems with the western financial order:
Unsound Money: Saifedean Ammous explains in the Bitcoin Standard how unsound money will inevitably lead to corrupt institutions. Unsound money leads to skewed preferences, great inefficiencies, and thes misallocation of resources in the economy.
Social Contract: The necessity of some system of rules cannot be discounted. This was famously penned by Thomas Hobbs as the Social Contract theory. It posits that people would have freedom to do anything without formal rules, leading to complete societal chaos.
Enter Decentralized Autonomous Organizations or DAOs: DAOs are places where the power of automating functions of centralized power is acknowledged. DAOs are governed by smart contracts and have significant advantages over traditional organizations:
Fraud-less Voting Systems
Reduction of bureaucracy and rent seeking
While they do not come without their pitfalls, their potential to revamp the current financial order is immense.
Author: Antoine Sakho
🔑 Insights: Many of us are familiar with the saying that “We shape our tools, and our tools shape us,” meaning we become like that which we use. The substance of this quote certainly applies to Web3. Discord, Twitter, and Google, the primary tools on which Web3 runs, are not built for a healthy brain; rather, these tools were designed for us to become dependent on them. Web2 tools are optimized to rewire our brains in ways that lead to dopamine draining, dependency, depression, and an overall mental downgrading.
Web3 is built on the promise of a realignment of incentives. One such realignment is between the tools we use and our incentives. Whether we build products or DAOs, creating non-adversarial and user-aligned tools requires a rethinking of our design environment. In short, to create cultures that reward self-care, DAOs should use tools that:
Minimize cognitive brain drain. Make it easy to silence or batch notifications.
Promote mindful context switching. Limit options, have simple filters, a fixed interface, and a clean UI.
Focus on value. Promote time well-spent, focus on the job at hand, turning the tool off when the job is complete.
Go slow. Develop models that incentivize going slow, taking breaks, and minimizing interruptions.
Facilitate peer support. Support contributors through authentic experiences that reduce status and promote fairness.
Once you have the right tools, then it’s about figuring out how to identify the correct metrics to monitors DAO-wide health. Some can include: focusing on value delivery, long-term retention, contributor satisfaction, and optimizing for shorter task-time. Taken together, this is a roadmap to create a mindful and humane future, both of work and of the world.
DAO Spotlight: Balancer DAO
Balancer is a flexible and versatile Automated Market Maker that enables efficient trading and the exchange of any combination of ERC-20 tokens permissionlessly. Balancer also turns the concept of an Index Fund on its head: instead of paying fees to Portfolio Managers, you can now collect fees from traders who rebalance your portfolio by following arbitrage opportunities. The Balancer Protocol is a core building block of DeFi infrastructure—a unique financial primitive and development platform.
Balancer DAO is the community-run organization that governs the Balancer Ecosystem. Balancer DAO is improving the way it operates with the new proposal which introduces subDAOs that will act as autonomous groups of contributors enabled by $BAL holders. SubDAOs are empowered to act independently (within a certain area) in the best interest of Balancer with clearly defined decision making powers. Within a subDAO, there are three kinds of contributors:
Signer (responsible for executing decisions)
Members (active contributors doing work)
Observers (contributors who don’t do much work - e.g. BAL holders)
Balancer DAO’s new and refined way of operating will empower it to expand operations and contribute to the growth of the Balancer Ecosystem.
Get Plugged In
🌄 ETHDenver - February 11-20, 2022 - ETHDenver is a member-owned Community Innovation Festival. With the genesis of SporkDAO in June of 2021, ETHDenver is the first event-based DAO in the world. The ETHDenver #BUIDLATHON is about bringing diverse creativity around a common purpose. Distributed computing is the future and Colorado is a leading community supporting this emerging technology. Our event empowers participants to shape this new world, while cementing the Rocky mountain region and the State of Colorado as a thriving hub of Ethereum and blockchain innovation.
🏔 DAODenver - February 15-16, 2022 - We're going to Colorado, come with us! What will be one of the biggest DAO events is coming in February alongside ETHDenver. Two full days of discussions with the most influential DAOs and DAO leaders, helpful community-run workshops, and great VIBEZ! Whether you want to learn more about evolving DAO governance models, or how to be a better collaborator, DAODenver will have it all. This event is completely DAO-led and managed! All proceeds go to DAODenver organizers and DAOists.xyz treasury with the goal of providing free information and best-practices for DAOs.
🏝 **BanklessDAO** - Permissionless Conference - Tickets are on sale for one of the biggest DeFi conferences! Over 5,000 people will be attending in total and every two weeks 250 more tickets unlock. Once 250 tickets are purchased, registration closes and you’ll have to wait until the next release. Speaking of the next release, prices are currently at $732 and almost sold out. Speakers include our very own Ryan Sean Adams and David Hoffman, as well as many others. Join us on Tuesday - Thursday, May 17 - 19, 2022 in sunny Palm Beach, Florida for the event.
🙏Thanks to our sponsor
Parcel is a treasury management and payments tool that helps to manage payroll, expenses, grants, airdrops and more for a DAO. Parcel works with over 200 DAOs, including prominent ones like IndexCoop, BanklessDAO, Synthetix, Compound Grants and Aave Grants DAO.
Scaling financial operations for DAOs is a challenge, especially when there are multiple contributors with varying levels of contribution. Parcel helps to get rid of the spreadsheets with contributor management, 1-click mass payouts and automated recurring payouts.
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