The company system born in the industrial age is no longer suitable for the information age. The emergence of DAO will change the future work pattern – participants will share the value of the network, X-to-earn will become the trend of future work, and people can Earn income by working, creating contributions, participating in the network, playing games, learning, creating, investing, etc., and more opportunities will be fairly open to everyone. But the DAO is also in its early stages and needs professional coordination tools and reputation systems to support its continued development.
In the future, ordinary people may no longer work for companies. Instead, people will earn income in non-traditional ways: like playing games, learning new skills, creating art or curating content. This shift in working styles was neither unusual nor unexpected—the idea that most people were employed by large corporations seemed crazy to those in 1800.
This new form of work in the future is made possible by networks of cryptographic protocols that are forming a new way of coordinating, measuring, and rewarding the contributions of complex ecosystems. This shift unlocks new earning potential for individuals and also leads to a constant shift in value capture: from organizations to individuals participating in cryptocurrency networks.
The traditional income method is “to make money with work”, but the future income method will become “to make money with X” – to make money by playing games, learning to make money, creating money, and working to make money.
However, none of this will happen miraculously – it will require new Decentralized Autonomous Organizations (DAOs) to coordinate all new activities outside of the corporate system, and the money-making opportunities in DAOs will depend on the various a contribution. This article provides a framework for understanding the various options for future work.
Limitations of Corporate Coordination Mechanisms
First, we want to explain the shortcomings of the existing revenue model. In the information age, the traditional corporate employment system as a means of coordinating activities is rapidly becoming obsolete – we are already seeing this in the emergence of new revenue models, such as influencers, short-term contract workers, creators, gig economy participants and many more. These ways of making money don’t necessarily feel like jobs, but they are all examples of people participating in complex webs as individual value providers and earning income for their contributions.
However, these non-traditional opportunities are limited and, if any, often return insufficient value to contributors. This is because the work is still based on the web2 paradigm, and the company continues to control the business model.
More and more traditional businesses have “external stakeholders,” or actors who blur the lines between members inside and outside the organization. Consider Apple and App developers, Youtube and creators, or Uber and their drivers – participants contribute to the bottom of the company from the outside, but it is difficult for companies to align incentives with these stakeholders .
As companies grow, they cannot maintain a sustainable relationship with these external network participants. The company’s relationship with the participants becomes a zero-sum game, and in order to maximize profits, the company begins to extract value from the participants. According to Chris Dixon, this is “why decentralization is important”.
The corporate system has strict internal and external boundaries, which made sense in the industrial age, but in the information age this model leads to a dislocation and unsustainability of incentive models. In our world of complex information and external stakeholders, corporate systems are no longer appropriate to help us coordinate our activities.
Cryptocurrency networks provide better consistency among participants, and DAOs will be the collaboration layer for this new world.
DAO as a new collaboration layer
DAOs will eventually replace the traditional model. The DAO is an Internet-native organization whose core functions are automated by smart contracts and humans to do things that automation cannot (e.g. marketing, software development). In practice, not all DAOs are decentralized or autonomous, so it is best to think of a DAO as an internet-based organization jointly owned and controlled by its members.
Although DAOs are still in their early stages, they are no longer just a hopeful concept. They are real organizations that manage billions of dollars in capital, provide millions of people with real products and services, and create new ways for people to earn money.
Here’s a nice overview of the current DAO landscape from Cooper Turley:
DAOs come in many different types and sizes: there are DAOs that manage cryptocurrencies (protocol DAOs), DAOs that make venture capital investments (investment DAOs), DAOs that provide services to other DAOs (service DAOs), DAOs that buy NFTs (collector DAOs) ),and many more.
But among all DAOs, there are a few things in common that distinguish them from traditional organizations (these are general, so be aware that they vary on a case-by-case basis).
These factors that differentiate DAOs from traditional organizations are actually what make DAOs more symbiotic with stakeholders and participants. The DAO operates as an open economy that encourages value to occur at all stages, not based on any legal boundaries. Chris Dixon wrote in the article:
“Encrypted networks use a variety of mechanisms to ensure that they remain neutral as they grow and prevent centralized platforms from “hanging on the head and buying dog meat”. First, the contracts between the encrypted network and its participants are in open source code Second, they are subject to a voice mechanism and an exit mechanism. Participants gain a voice through community governance, both on-chain (via protocol) and off-chain (via protocol-based social structures), and participants can leave the network by leaving the network Or sell tokens or even fork the protocol to exit in extreme cases.”
The architecture of DAOs is inherently open and accountable, forcing them to share value with the participants who create it, otherwise, other DAOs will overtake them, or their participants will leave in search of new opportunities.
In fact, the best DAOs will reward participants as the basis for an economy of ownership. This emerging positive-sum dynamic is fundamental to the X-to-earn trend shaping the future of work.
The future of working in DAOs
To better understand the choices people have in the future, we need to go inside the DAO and explore:
From Brian Flynn, Zakku and the Orbit team
The DAO as an open economy will fuel the X-to-earn trend, which will make work more flexible, fluid, and fun than the 9-to-5 we are used to.
The openness of these crypto-economies allows people to participate in several DAOs and crypto networks simultaneously, mixing and matching different income streams and returns on ownership (remember, the best DAOs distribute ownership to participants through their native tokens) .
In the future, people’s income will be a combination of the following forms: daily life (such as playing games), traditional jobs in our impression (such as bounties/contracts), and income currently only available to a few people (such as investment income and passive income) . On the other hand, DAOs will give better and higher quality opportunities to different participants, including token holders, bounty hunters and core contributors.
For example, a token holder can earn income from passive earnings of their various tokens by receiving grants from mainstream DeFi protocols such as Compound; Time appreciation to obtain income returns; bounty hunters earn income by completing on-chain incentive behaviors; network participants earn income by playing Axie Infinity or other play-to-earn games.
In the future of work, jobs will become more temporary and dynamic – switching costs between jobs will be lower, opportunities will be more apparent, jobs will be reduced to more atomic units, and the world will be divided into separate Unified in the workforce, all job opportunities will open up. We will discover new opportunities based on on-chain history, ownership and reputation, matching individuals with opportunities to contribute where they have the greatest comparative advantage.
The following will describe in detail how participants seek money-making opportunities through DAOs.
Core Contributors: Make Money With Your Work
A core contributor is what we commonly understand today as an employee – a full-time focus on one (maybe 2-3 in some cases) projects or organizations. This focus enables individuals to embed themselves in projects and accumulate background and strategic knowledge. Imagine a group of paid people working together whose sole purpose is to drive economic growth in a company that generates their primary income, and that also includes hundreds or thousands of workers.
The need for dedicated and embedded workers will never go away, but at web3 this team will be much smaller than it used to be. Software and smart contracts largely enable this small group of people to create a huge impact. Instagram was acquired by Facebook for $1 billion with a team of just 13 people, a situation that will become more common in the future, with the help of software automation, smaller contributors can form larger networks, making Reduced number of core contributors.
In the future, there will be no discernible difference between working for such an organization and working for a company – DAOs will still have core contributors whose interests are directly related to the health of the organization. However, since DAOs are more transparent than corporations and can be held accountable by a larger community, there is also additional pressure (think scrutiny of government officials).
Bounty Hunter: Earn money by contributing
“Bounty hunters” do well-defined work for an agreed-upon price and duration. These people are usually experts in career fields such as finance, development, design, etc., who serve multiple DAOs at the same time, and complete specific tasks with clear boundaries.
Bounties are usually posted publicly for anyone to claim, and sometimes there is competition: rewards are distributed not based on bids in the initial application process, but on the value and utility they generate later on. The bounties for these are usually decided by grant committees or decentralized working groups, which are granted some power by the larger DAO (part of a trend known as Governance 2.0).
Many bounty hunters will also join forces to form a service DAO of their own — outsourcing services to DAOs that don’t have the required expertise on hand. These service DAOs are emerging that require specialized knowledge and skills, such as financial management (like Llama), software development (like RaidGuild), governance (like Fire Eyes), and more.
While these bounty hunters and service DAOs may sound like contract contractors or professional service firms, they are different and more popular among DAOs for a few reasons:
- Smart contracts automate a large part of the DAO’s core functionality, leaving more peripheral work that is well-defined, functionally specialized, and well captured through bounties.
- DAOs will deliberately push work to the periphery in order to maintain decentralization and avoid large hierarchies, and the bounty system can continue to achieve this goal.
- The transparency of the DAO will reduce the coordination cost of bounties.
Network Participants: Earn money by participating
This is the newest and most exciting part of the future of work, and it’s where most people end up in any DAO.
The network benefits from more participants and activities. Over the years, users, consumers, and participants have been contributing value to the network without capturing the value that belongs to them (such as the programmers developing apps for Apple, the creators of YouTube, and the drivers of Uber).
DAOs operate more like open economies than closed organizations, and DAOs will reward everyone for their contributions to the organization based on the value they provide, no matter who they are. This means that everyday actions that are valuable to the network will be turned into opportunities to earn income.
Almost everyone earns some income from their day-to-day online life, using products, and being a user. For those who get paid for participating in the network, making money is more of a game.
In this exciting field, a few categories have emerged (check out this great article by Stephen McKeon for a more in-depth look):
Earn while playing
Play-to-earn is a new game mode that rewards players for their performance and achievements in the game. The traditional game model transfers value one-way to the game developer or platform, but the Play-to-earn model will return value to the user at the same time.
The Play-to-earn model is like an economy: players provide labor (their time and energy), money (often buying NFTs to join), and earn rewards based on their progress and achievements in the game. Tokens traded as a reward. Making money from games is not new, but the currency earned in Play-to-earn can be traded with other digital currencies or fiat currencies in addition to spending in games.
This means that gaming video players can really pay the bills through their in-game achievements, especially those living in countries with low wages, low cost of living, which have become a source of income for millions of people, the most Worth mentioning is Axie Infinity.
Axie is a popular blockchain game where players buy pet NFTs (Axies), breed them, make them fight, and then trade them. This all happens in-game, but each user actually owns the Axies they create or buy. The game has exploded in popularity over the past few months, earning a combined total of over 200,000 ETH (currently worth $860 million) in July and August (a figure that has since declined, sparking heated debate, will be explained in detail below).
This explosive growth is due to the alignment of incentives between Axie and its users, which Axie describes:
” Axie has a real money economy system that is 100% owned by the player. Rather than selling in-game items or quests, game developers focus on growing the player-to-player economy and charging a small fee to make money. Players use the game Internal resources (SLP & AXS) Axies are created and sold to new players or other players. AXS token holders act as government departments to receive tax from them. In-game resources and items are tokenized, meaning they can be used anytime, anywhere Peer-to-peer marketplaces are sold to anyone. ”
learn and earn
Learn-to-earn is a new educational model where people don’t pay to learn, but instead get paid for proving what they’ve learned. This is all possible when a person learns skills, knowledge or information that can add value to a network that is willing and subsidized for learning.
At RabbitHole (where I work), cryptographic protocols pay for tasks, incentivizing users to perform specific actions on-chain. When users complete these actions, they receive bounties provided by the protocol. Bounty hunters generally contribute to the establishment of the protocol, and these on-chain actions take place within the protocol.
This new positive-sum interaction helps parties:
- Users learn new skills or ways to use cryptocurrencies and earn tokens for doing so
- Cryptographic protocols gain new, knowledgeable users
- RabbitHole earns a percentage of revenue for facilitating interactions
This new model is akin to Google sharing some of their ad revenue for learning about a new product, or a university paying you for strengthening their alumni network. In both cases you provided value without getting something in return, but now, you can get something in return.
Since its inception, RabbitHole has given out over $750,000 in rewards offered by some of the largest crypto protocols (such as Uniswap, Aave, Compound, The Graph, Pool Together, and Polygon), and while it’s still early days in the field, if The potential for Learn-to-earn is huge, given the revenue from education and advertising that is not currently captured by users.
make money by creating
Cryptocurrencies have created new wealth and digital scarcity, paving the way for the explosion of the NFT market over the past few months. This provides artists around the world with the opportunity to earn a living and, in some cases, even a fortune that can be passed on to the next generation.
On an operational level, it’s no different than any artist getting paid when his work is successful. What’s more interesting is that in addition to earning income from their own works, creators can also earn income by creating value for the network.
For example, NFT marketplace SuperRare recently airdropped 15% of its tokens to early users, collectors, and artists on its platform, acknowledging the role these value creators played in its early network success.
Earn tokens by uploading music and making playlists. Because creators bring value to the network, Audius gives them a stake.
High-growth investment opportunities will be open to anyone with a digital wallet on the web.
In a world where every network has tokens, tokens are earned by participating in the network, no approval is required, anyone can buy tokens, and anyone can become an investor.
Investment will become the main source of income for more and more people. Not every investment will appreciate in value, but individuals can gain access to opportunities previously only available to a few, and overall income earning opportunities will be unlocked.
What does it take to start a DAO and future work?
The opportunity to make money with X (X-to-earn) will only become mainstream when DAOs become mainstream. DAOs show a bright future, but it’s still early days and there’s still a long way to go before they become the future of work. In a recent Gitcoin and Bankless survey of 422 DAO contributors, less than 45% of respondents said DAOs are their main source of income.
In order for the DAO to become a true center of work, we need to develop the infrastructure, tools, and systems that can support the DAO and its members.
Most DAOs currently use tools that are either web2 software (not specifically designed for DAOs) or very naive web3 software, in both cases the DAO’s needs are not fully met.
DAOs have incredible potential to harness the power of decentralized networks and collective intelligence, but they need better software to collaborate. A DAO needs tools to support its governance (eg Snapshot, Orca), software collaboration (eg Radicle), financial management (eg Parcel, Multis, Gnosis), discussion (eg Discourse) and access (eg CollabLand).
Of particular relevance to this post, an interesting area that needs solutions is rewarding contributors. There is no Chief Executive Officer (CEO) or Human Resources Department (HR) in a DAO to decide who should get what, so a new, decentralized way of judging a person’s contributions and what he deserves is needed. Early interesting solutions include having colleagues judge each other to determine rewards (Coordinape), and using algorithms to build a rating system to calculate rewards (SourceCred).
DAOs are open and permissionless, but new ways of determining who it can trust, collaborate with, and reward to are still needed.
The traditional corporate solution is to conduct extensive interviews, but this goes against the spirit of the DAO. Complicating matters is the fact that many of the people involved in the DAO use pseudonyms. In this new world, DAOs need a new way to determine who to allocate scarce resources to.
This underscores the need for an on-chain reputation system. An on-chain reputation system will capture what we do on the blockchain: our contributions to the DAO, our governance voting history, our token holdings, and more. Ultimately, the reputation system will predict our future behavior based on these on-chain behaviors to judge who is trustworthy and reliable. On-chain reputation will replace the system of certificates, resumes and interviews that companies currently use.
However, there are many privacy and security concerns when tracking public ledgers related to personal identities. Blockchain identities today are mostly wallet addresses, but in order for these reputation systems to work, we need more robust decentralized identity solutions (like Ceramic/IDX) and identity management systems.
Notes: About creating value, and the pitfalls that may exist
In the long run, it’s unclear how much revenue can be earned through these channels. Making money with X (X-to-earn) does not mean that everyone can live by creating art and playing games.
X-to-earn means giving back where value is created. DAOs make these non-traditional pathways sustainable and make it available to more people, but the market won’t reward everyone. Market dynamics are still relevant, and in order to be rewarded, you need to provide value. Creators need to find audiences, gamers need to achieve results, and bounty hunters and contributors need to create impact.
However, discussions about sustainability and the size of the money-making opportunities do not affect the thesis of this article: creating value in the network should be rewarded, and the DAO will coordinate value-rewarding mechanisms in the encrypted network to provide new money-making opportunities .
More broadly, the future of work will not be perfect. As with any major technology shift before, there are both positives and negatives. The crypto world, or more specifically, DAOs, leads to the same situation. Here are some areas to focus on:
Competitiveness and Differentiation
Measuring and rewarding all contributions to the network will result in a more meritocratic allocation of resources. The flip side of merit-based admission is that DAOs actually enhance the laws of power in a web2 world, such as at Spotify, where the top 1.4% of creators earn 90% of royalties. Furthermore, true labor globalization and lower switching costs will only increase these competitive dynamics. If DAOs exacerbate this trend, how should people respond to these widening gaps between rich and poor?
The information that the human brain can process is limited. The famous Dunbar’s number is the limit of the social relationships that the human brain can process. The DAObar’s number is its corresponding DAO version: how many DAOs a person can meaningfully participate in ? Each addition to a DAO requires you to add a piece of data processing power to understand everything that’s going on in that DAO. DAO tools for communication and collaboration (discussed above) will try to alleviate this dilemma, but people may still struggle with additional information overload.
out of touch
On the one hand, DAOs allow people to choose how they work and connect with communities that share the same values. On the other hand, by reducing work to small units and pure economic incentives, we have the potential to reduce human meaning to pure economic reward, we have the potential to reduce work into discrete, meaningless tasks, and labor is simplified for a commodity service.
A common saying is that “the future is here”, it’s just not being distributed equally everywhere. The same goes for DAOs and future jobs of course. Every day more people join the DAO and work full time at web3. DAOs are growing rapidly and need a lot of talent to help them achieve their mission. Whether full-time or part-time, there are ways to work, learn, and get involved – use Station to find web3 opportunities, participate in Mirror’s writing contests, curate on Yup, vote on proposals on Snapshot. The future of work is emerging, and it’s moving in unexpected and fascinating directions.
Thanks to Brian Flynn, Jesse Walden, and everyone mentioned above, for the inspiration your conversations and vision have provided.
Ben Schecter is the Director of Operations at RabbitHole, a crypto platform that helps guide users on their Web3 journey and rewards them with tokens and vouchers for their on-chain actions.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/a16z-future-jobs-come-from-daos-and-crypto-networks-rather-than-corporations/
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