The Building Blocks of DAOs | State of the DAOs
The Building Blocks of DAOs | State of the DAOsYou're reading State of the DAOs, the high-signal low-noise newsletter for understanding DAOs.If you were asked what a DAO is, you probably would simply recite what each word of the acronym stands for, but is that a full capture of the concept behind these organizations and how they operate? Due to the several forms in which DAOs are structured, it's not surprising that it may be quite difficult to have a clear definition of what a DAO is and what we're working towards. But as HiroKennelly writes, "regardless of what a DAO is, they are all built using the same dozen or so building blocks of digital organizations, many of which are akin to social legos". This issue’s editorial delves more into these foundational blocks as the author taps into years of DAO experience to introduce us to the 10 C's of DAOs. As usual, we also feature latest news and updates in the DAO ecosystem. From VitaDAO's latest biotech spinout to governance, incentive structure, and social security issues in web3. This issue is fully packed to help you cut through the noise and get up to speed with the current state of the DAOs. Contributors: BanklessDAO Writers Guild (Quilia, Warrior, ab_colours, Vi-Fi, Boluwatife, Kornekt, trewkat, siddhearta, HiroKennelly) This is an official newsletter of Bankless Publishing, a BanklessDAO-affiliated project. Please subscribe and share to help us grow our audience as we fulfill our mission to build user-friendly crypto onramps. The Building Blocks of DAOsAuthor: HiroKennelly Although DAOs have been around for seven years, they are still pretty hard to define. The term ‘decentralized autonomous organization’ does very little to describe what they are, what they do, or how they do it. Even those of us who work and play in DAOs for hours each day have a really hard time describing just what it is we are doing and how we are DAOing it. Is decentralization a reference to the technology, the people, the workstreams, the organizational structure, or the ownership distribution? Is the decentralized organization autonomous because it historically has not been part of a regulatory or statutory regime, because of the idea that decisions are entirely left to onchain votes and executed by smart contracts, or because these entities enable maximum agency so that people can contribute as they see fit? Are DAOs a tightly run, smart-contract enabled, on-chain voting organization of the future or are they loose collectives of nomads with a multisig and a governance token? The answer to these questions is that it depends on the DAO. Regardless of what a DAO is, they are all built using the same dozen or so building blocks of digital organizations, many of which are akin to social legos. When I first wrote of my experience in DAOs, I had all these ‘C’ words swirling in my head, writing that DAOs “operate at the confluence of contribution and collaboration, coordination and consensus, cohesion and community, all fueled by capital through a tokenized incentive structure.” This is true, but after two years of bear-market building, I would add a few more C’s to the list of seven, namely culture, centralization, and constraints. As the bear gets sleepy and the bull begins to stir, let’s do a brief overview of these social legos to better understand how to get ready for the next great wave of DAO contributors. The 10 C’s of DAOsAs with the DeFi primitives from which the social lego concept derives its name, the many C’s are composable — that is, interchangeable — but the way in which these legos are set and stacked determines the kind of DAO that will be built and maintained. As with DeFi primitives, some of these legos can be amplified or toned down depending on what behaviors the DAO wants to encourage. Unlike with DeFi composability however, social legos don’t just easily slot together; many become embedded only once a solid structure is built. Some would call this stickiness, but it’s also a metaphor for resilience. If we can learn how these legos fit together and how to properly calibrate them, we should be able to build modular, resilient DAOs that will be ready to scale. But like all world-changing acts, first we need a list and a brief description. In no particular order, the building blocks of a DAO are:
This list is obviously not complete, and there are many other ‘C’ words that come readily to mind, let alone the other 25 letters of the English alphabet, but I’m hopeful this short list provides a catalyst to think about how we’re building and why we’re building it. We Can Change the WorldIt’s true, we can change the world, and that is really what I’m trying to figure out – how to build DAOs that will thrive at scale. DAOs are laboratories for new ways of reimagining social relations — human relations — but we have to be certain that we understand what we’re building in order to create the kind of change that only comes through aligning human potential with opportunity. Such alignment is where we will find the sweet spot: the paradigm shift we crave; the move towards a society of self-sovereign individuals no longer fully bound by centralized, hierarchical power structures. These ten building blocks are barely a beginning, but they are helpful to understand some of the core building blocks, the colorful social legos, with which we are building the organizations of a farther-and-closer-than-you-think tomorrow. I’m certain that DAOs can create structures that align humans in ways that will absolutely change the world, but it’s up to us right now to make sure that we are focused on building systems that won’t just change the world, but will change the world for the better. Ecosystem Takes
Pfizer-backed DAO Launches Community-funded Biotech FirmAuthor: James Hunt 🔑 Insights: VitaDAO, a decentralized organization focused on longevity research, has launched Matrix Biosciences, a biotech firm, through a collaboration with Dr. Vera Gorbunova from the University of Rochester’s Aging Research Center.
Manufacturing ConsensusAuthor: Dryden Brown 🔑 Insights: The article provides an important perspective on the challenges and risks associated with the decentralization of crypto projects. It highlights the shift of power from Direct Leaders to Opinion Leaders and argues that this decentralization process can centralize power across the industry, making it more vulnerable to capture and attack.
Social Security for Web3 WorkAuthors: Laura Lotti, Nick Houde, and Tara Merk 🔑 Insights: This article presents a preliminary exploration of the design and deployment of solidarity primitives for web3 social security. It proposes a modular framework to develop solidarity primitives addressing the three dimensions of security for DAO contributors: psychosocial stability, financial stability, and regulatory clarity.
Designing Reward Systems for Web3 GovernanceAuthor: Eliza Oak 🔑 Insights: The author explores the challenges and considerations involved in designing reward systems for online governance, with a particular focus on the comparison between reputation-based and token-based systems in web3.
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