Random Observation/Comment #731: I can’t wait for the day I tell people I work for or manage a DAO. Imagine the eye roll.
Why this list?
Just as NFTs had its seasons (30 NFT patterns and projects), I figured I’d get ahead of the oldie, but goodie – DAOs. Decentralized Autonomous Organizations (DAOs) from the OG slock.it DAO showing the ERC20 fundraising capabilities in 2016 has evolved into the Future of Work for decentralized employees or self-organizing communities with shared bank accounts.
Props to my colleagues Corbin and Anthony who have sparked some more recent passion in this. Also a recent article on Decrypt about Opolis by Sydney Lai. I’m also attending MCON, which has been awesome talking to some of the greatest minds leading these bottom-up formations.
Love the diagram from this tweet:
Since you already see the result of some thinking, I’ll sprinkle in my own opinions and use cases on DAOS in my list of 30.
Establish your DAO manifesto -There are lots of DAOs out there grouped in some logical ways (see: Coopah Troopa’s diagram) – DAO Operating System, Investment DAO, Grants DAO, Collector DAO, Protocol DAO, Service DAO, Social DAO, and Media DAO – The purpose of your DAO will determine who would like to join it. We’re not just talking blanket Governance tokens, but that’s definitely a piece of it.
Establish the base token – Create the initial founders and economics/design/stock flow around this token. What does it do? Is it for a special community? How was it distributed and allocated? Why is it allocated to the interested parties? There are often a community of DAOs that help with DAO-specific projects.
Fundraise and allocate funds – For pre-sale fundraising, there may be discounts prior to launch to family and friends of the divided pool. These would be negotiated and paid for off-chain or through cryptocurrency to an established entity of some sort. This could be airdropped and distributed on the launch day of the token.
Membership in the DAO – Setting up a DAO is complicated, but DAOhaus has published a set of tools for creating and walking through the tasks for managing and launching the DAO itself. DAO applicants provide TXs that get voted/approved by the rest of the DAO. These are often proposals that can be managed before or after official launches in stages.
Restricted Memberships – It’s an interesting pattern where the initial members can request the member address also own a token, NFT or POAP. With this extra layer, it means the you can create tasks or proof periods of contribution before joining. Some of these tasks are linked to Discord channels and completing a few activities to prevent bot-based joining. It’s like KYC, but with online activities and multiple social layers of verification/validation/participation.
Proposals for Voting – Once in the DAO, you can propose votes through snapshot or just general changes. Voting proposals can be on anything, but for example, protocol-based DAOs will likely vote on which tokens can be added to their pools. An investment DAO may include a breakdown allocation of a portfolio/fund/index.
Liquidity Pool in the DAO – LP-ing for the DAO is very new! This follows the compound lend/borrow model for creating the base pairs of pooled assets in the Vault. Once launched and funded with LP in the Vault, others can jump in and join the DAO by purchasing/staking tokens.
Voter Delegation – Functionally within the DAO, you can encode operations for creating voting parties or delegating your votes to other members. Highly recommend paying attention to proposals and taking advantage of being a democratic citizen.
Asset Allocations – DAOs can hold many types of assets which could be fungible or non-fungible. If your DAO owns an NFT for example then the owner address is controlled by the DAO. Since the DAO is distributed by ownership in shares, then your DAO’s value may derive from its owned asset portfolio.
Monitoring Proposal Execution – As proposals are created and listed, logged in accounts with shares can conduct votes. It would be awesome if there’s better two-way communication on these votes through an application, but profiles do not require email addresses and regular app push notifications don’t exactly exist for wallets. A single place for voting on proposals for DAOs exists already with snapshot.
Other Corporate Actions – This could include management activities of the DAOs like kicking out members or granting special roles. The patterns are endless if you consider what can be programmed into managing a DAO.
Pre-Launch Streaming Liquidity – Even before launches, there are tools like superfluid and sablier that help with managing cashflows and real-time payment streaming. It’s another one of those useful tools layered on top of DAOs that supercharges independent allocation and management from a pool of funds.
DAO for Network Establishing – Most L2 solutions like plasma side chains will do an initial fundraise on L1 via ERC20 tokens and then leverage the allocations to bridge into the new network (burn from mainnet and reissue allocations on the L2). The DAO here would govern the initial conditions of the network and might be responsible for providing proofs around the network ceremony.
Funds for Security Audits – Since DAOs have a base set of funds, most decisions being made deal with treasury management. If the DAO is for establishing the network or launching code, then proposals can be made for allocations to security audits and bug bounties.
Funds for Multi-purpose Research and Grants – If the DAO requires some tasks to be completed that cannot be done by one of its members, then the DAO itself can create grant requests to help fund the creation of new projects. This might look like a VC/Investment DAO model, but I believe research grants do not necessarily represent a net new company with a product and the sole purpose of creating more value to the shareholders. I think the research grant model can create improvements to the protocol and platform of tools that could be a tide to raise all boats.
Bridging to Legal Documents via the LAO – While I love the idea of having a global unrooted entity that exists beyond the Nation State borders, people still live in a nation state. It’s probably a good idea to create legal connectivity between the DAO and a LLC corporation. The established guidelines and dispute resolution through a legal document that has specific clauses referencing a published smart contract entity is very powerful.
Linking DAOs to ENS names – Similar to how all companies probably have some website, I think every company that decides to migrate their capital table to a DAO will have an ENS address that resolves to the DAO’s allocations and list of corporate action votes. This would make the company more legitimate and transparent.
DAO for Social Tokens – Forefront is a great example of a newsletter/discussion DAO that keeps track of popular activities and innovations. It’s constantly changing although I’m just using it as a curated knowledge source on special topics. It would be really cool if DAOs took advantage of the Mirror NFT model and directly paid the writers on Mirror tokens for hosting their articles on the site.
DAO Streamed payments for work – If you’re an employee of the DAO and you’ve been hired to continuously run calls or build the community, it would make sense to allocate funds of the DAO paid for this work. Instead of waiting for completed tasks, the ability to stream payments makes the DAO a subscriber to the contributor. Blowing my mind.
Proof of DAO Contributions – I firmly believe that the board of directors play in traditional large corporations is bullshit. People join boards and help with making decisions based on their experience (which is valid and vast), but it seems more like a political game to rally votes than an actual contribution. The latest levels of contribution follow Ray Dalio’s method of voting on top contributors per meeting or workshop session. This can provide users with more incentive to actively participate and build value.
Bootstrapping with DAO Mentorships – Just like companies, all DAOs get started by working with those who have paved the way in creating new patterns. The community of DAOs (e.g. those funded by MetaCartel) are friendly and meshy.
Bootstrapping with DAO Partnerships – In the mentorship process across these discord channels and conferences, you’ll see the linking of complimentary ideas. Partnerships are the key to every successful software company and I’m sure we’ll have more DAOs that work with each other in diversification of funds or collaboration on projects.
A DAO of DAOs – Some investors buy into single companies while others give money to VCs so they can diversify across multiple companies. Even more there are Indexes of VCs which can diversify across multiple competing companies and sectors. I’m not saying that a DAO cannot be a VC or represent a single company, but the wrapping of portfolios can get pretty complicated.
DAOs representing a Union – Unions often form around a single worker type in an industry and negotiate for the rights and representation of these types. I don’t think we need the teamsters of the Union, but definitely a source of trusted workers that can complete these tasks and be properly paid. The types of workers could include developers, Project Managers, DevOps, Product managers, Marketing, Writers, Legal Counsel, etc
Creative DAOs between Artists for an Art Piece – I love the idea of creating a DAO for project fundraising of a collaboration between artists in order to get feedback on what type of piece to make. The voting process determines different mediums or artistic subjects inside of the piece. The artists maybe create an artwork that becomes an NFT that gets owned by the DAO members. Future sales for the NFT art piece would require DAO participation.
Non-Profit DAOs – A DAO that connects to multiple non-profits and helps with fund allocations would make this much more transparent and allow for better reporting of funds to government entities. A template for this type of a DAO would be a great way to connect cryptocurrency tax collection and tax relief to good causes.
DAOs with Delegated Yield – If the DAO has a set of tokens that it stakes back into a pool to receive yield, then your DAO technically earns interest with its appreciated value without degrading the principal fund. With this model, the yield itself could be distributed evenly to the DAO participants for payments like a dividend or directly placed into a separate fund for a special purpose.
Recognized Namespaces for DAOs – Similar to “.edu” and “.org” domain names are reserved for university or government entities, it would be great to create recognized namespaces for DAOs to fit their specific roles. If this is coordinated properly then I should technically be able to restrict funding of DAOs only to specific types of companies that are registered for XYZ non-profit or educational purposes.
DAO for payroll and benefits – I’m super pumped for Opolis as a decentralized Trinet. Instead of working for companies, imagine working for DAOs and getting streamed payments
Crypto Trust / Deadman Switch DAO – Those who know me know that I can’t stop talking about Digital Legacy and Estate Planning. The Crypto Trust as a DAO aims to provide transparency to government taxation actions for passing on digital funds. Creation of the DAO is meant to be a transparent fund that invests and provides allocations to my beneficiaries. If I pass (!alive), then the corporate actions for giving ownership of the DAO to the new members (who have to vote to change allocations and investments) will be similar to passing on a company as an asset to a heir. I believe the taxation of changing ownership of a company is different from directly sending cryptocurrencies or giving some passphrases wrapped by a legal will. I’ll keep exploring this and let people know how it goes.
~See Lemons Love DAOs