article on the classification of common DAO tools and their importance to community cohesion

1. Write in front

One of the first blockchain trends to gain traction was the concept of Decentralized Autonomous Organizations (DAOs). Vitalik Buterin first wrote about them in 2014, before Ethereum launched in 2015. After a five-year lull since the DAO hack, The DAO is back in the spotlight, in part due to the development of blockchain infrastructure and the growth of DeFi and NFTs.

Today, according to analytics tool Deep DAO, there are more than 100 DAOs with 715,000 members, $11 billion in assets under management, and growing rapidly. Building new DAOs is getting easier, especially with the advent of tools like Gnosis Safe and Discord, which – if combined – allow anyone in the world to create a community with common ownership of capital (like a treasury) , and collectively and trustlessly determine the distribution of its funds.

However, DAOs still face many challenges that must be addressed in order to form resilient communities. As DAOs grow larger and more decentralized over time, it becomes more difficult to organize team work efficiently, track accountability, measure contributions, and keep participants with the same dedication and motivation.

After giving an overview of the current DAO tooling landscape, I will analyze some of the most important issues of DAO management and share my thoughts on the future. I’ll also explain why the most effective instrumentation will be built on enhancing community interaction, coordination, and connection — thereby prioritizing social cohesion.

2. DAO instrumentation landscape

Traditional organizations use bank accounts to manage funds and use numerous enterprise software solutions for effective coordination (e.g. Slack, Zoom, Google Docs, Asana, DocuSign). Likewise, various tools have emerged to address different aspects of DAO governance and ensure the well-functioning of the community.

Below are some of the DAO tools I have come across through personal experience and research.

2.1. Most Popular

Alchemy – Blockchain developer platform that facilitates the creation of new applications and tools

Aragon – Operating system for DAO applications

Boardroom – Comprehensive governance and communication management portal to aid decision making

Collab.Land – System for creating group chats controlled by tokens

Colony – DAO infrastructure for reputation-based task management and dispute resolution

Deep DAO – Analysis and Information Gathering of DAOs

Discord – Messaging app primarily for synchronizing conversations between community members

Discourse – Forum for asynchronous suggestions and conversations, heavily used in governance

Gnosis Safe – Multi-signature wallet for pooling and managing funds

Llama – Financial data provider for financial reporting, asset allocation, budget planning and fiscal policy

Mirror – Publishing platform with a set of crypto-native tools

Rabbithole – an app that allows you to earn rewards for using cryptocurrency apps and educating yourself in the space

Sablier Finance – Continuous and Autonomous Payroll Management

Snapshot – Token-based voting platform where off-chain governance decisions are made

Tally – Dashboard for tracking and analyzing on-chain governance information

2.2. Needs attention

Comity Labs – A platform for funding, engaging and incentivizing communities

Coordinape – Coordinate games to identify and reward the most valuable contributors

Garnet – The app to coordinate and engage with your community

Kleros – Arbitration service to fairly adjudicate blockchain-based disputes

Multis – Multi-signature wallet designed for organizations

Orca Protocol – Open Source Community Management Tool

Parcel – Simplified financial management product built on top of Gnosis Safe

PartyBid – An app for collective bidding on NFTs and split ownership

Radicle – A peer-to-peer stack for code collaboration

SourceCred – A tool for the community to measure and reward value creation

Superfluid – Fund Flow and Reward Distribution Protocol

Sybil – A platform to find potential delegates and track their votes

Syndicate Protocol – Decentralized Investment Protocol and Social Network

Tribute – DAO architecture framework with scalable and modular design

XMTP–Cryptocurrency Native Communication Protocol

If you’re a visual learner, here’s a great visualization of the DAO infrastructure stack by function.

article on the classification of common DAO tools and their importance to community cohesion

3. Challenges to be addressed

Although many tools have emerged to facilitate the creation and governance of DAOs, there are still many important challenges to be addressed that are similar to those faced by traditional organizations or political systems. To gain traction and resilience, DAOs will need better tools to support their tight-knit communities.

3.1. The Dilemma of DAOs

DAOs are sometimes difficult to coordinate, and these coordination costs have been a growing pain. As more experiments take place, a big trade-off emerges. DAOs live on the spectrum between organization and decentralization.

article on the classification of common DAO tools and their importance to community cohesion

The DAO dilemma is why most projects start with centralized governance – there are many decisions to make at the start. Then, once a solid community is formed and some sort of market fit for a DAO is found, some projects choose to decentralize over time. This is called “progressive decentralization”.

While most DAOs try to improve this trade-off by creating smaller working groups or core units to more clearly and efficiently divide tasks, a lot of activity and conversation among members still happens on web2 tools like GitHub, Discord , Discourse and Twitter. As a member of several DAOs, I find it time-consuming to browse these platforms and understand where I can provide the most value.

While managers can help by pointing participants in the right direction, better social and organizational tools are still needed to improve community interaction, information flow, and social cohesion. For example, according to the Orca protocol, pods—“organizations composed of a fixed number of member tokens, each representing a voting right”—would be a great starting point to further improve project governance and community management.

3.2. Governance and Accountability

When studying politics and corporate governance, three things are clear.

1. When there are too many people in command, there is little consensus.

2. Certain decisions require specialization because not all members are best suited to make those decisions.

3. The average user of a product/service doesn’t want to manage what they’re using; they just want it to work.

Empowerment has become a tool to pass responsibility to more qualified and motivated members within these organizations. This system helps eliminate voter fatigue and improves decision quality and execution.

But with that comes accountability. Delegates want to make sure their representation is aligned with their beliefs, and their actions reflect that. Tracking and managing “protocol politicians” is extremely important to the resilience of a project and its community (many existing political systems are built on these principles, such as representative democracy in the US or UK).

Other tools have also been created to incentivize smaller token holders to vote, such as the one released by Andre Cronje (founder of Yearn Finance), which allows DeFi protocols to offer token rewards to veCRV holders in exchange for them votes, effectively bribing them to achieve greater CRV reward distribution and higher user yields. These new forms of “ticket-buying” could be exploited by dangerous attackers — a complex problem that current token governance systems grapple with.

The community needs better tools for assessing the responsibilities of individual participants with positions of power within it, putting appropriate checks and balances in place, and going beyond token voting governance.

3.3. Measuring Contribution

DAOs have two main sources of capital that they can use to achieve their goals: internal and external.

Internal capital is mainly financial capital and exists in the treasury department of the DAO. This is probably the most important part of DAO development, as internal capital is used to encourage participation and improve core products or services.

External capital is made up of humans living on the fringes. While rewards are a great tool for incentivizing contributors who provide the most value, the appropriate mechanism is not fully understood (by far the most common method I’ve seen is to enter your work into a spreadsheet, so that it can be tracked and evaluated). Gitcoin, Coordinape and SourceCred are working on interesting ideas to capture and quantify contributions.

To achieve meaningful work and retain top talent long-term, DAOs must have more user-friendly tools, assign ownership to small working groups with dedicated goals, and use KPIs to measure their progress.

3.4. Legal

As with the broader cryptocurrency industry, the DAO’s regulatory clarity and implementation of an effective tax form will be a fulcrum for community adoption and engagement. Core contributors and engineers are concerned about the legal risks when working for The DAO, as there is a great deal of uncertainty about the possible repercussions. While some progress has been made on the legal front, such as Wyoming’s DAO law, which legally recognizes DAOs as LLCs, there is still a lot of work to be done.

Some ideas have been proposed for DAOs to work together on a technical level. Since most DAOs are trying to figure out the same issue, legal or not, there are many opportunities to cooperate at the social level and reach a conclusion that is beneficial to both parties. We are already starting to see this in DeFi, such as the DeFi Education Fund, whose mission is to “educate policymakers on the benefits of decentralized finance and achieve regulatory clarity in the DeFi ecosystem.”

3.5. Implementation

From an operational and management perspective, DAOs still have many problems to solve, which require a lot of innovation in DAO tools. Focusing on building out the means to help DAOs achieve their goals is imperative.

Various tools are being built to ensure effective governance and voting, which promotes many good ideas and suggestions from the community. But there is a lack of people who actually implement them. This could take weeks, or even months, depending on the content of the proposal. Implementing instrumentation must be emphasized to facilitate the continuous development and improvement of DAOs.

4. The future of DAO tools

Today, DAOs face many administrative, organizational, and legal challenges. While many tools are being built, from analytics to voting platforms to multi-signature accounts, there are still many areas of opportunity.

4.1. Automation

Compound’s autonomous proposal, which allows members to delegate voting power to ideas rather than just people, gives us a glimpse into the future. Building processes to enforce outcomes without relying on humans to enforce the will of the community (going towards automation) will make DAOs very powerful. This is especially important for protocol DAOs to scale as they reduce the need for governance and enable greater network effects through automation.

4.2. Composability

It is especially difficult to predict how DAOs will evolve and which use cases will be pursued by participants. Therefore, using a combination of developer platforms and composable tools – such as connecting your Gnosis Safe multi-signature account with the Snapshot voting platform – will allow DAOs to develop their own specialized tools to achieve their goals and address design and Project matching problem. This is especially important for constantly experimenting with different organizational structures and practices for the different purposes the DAO was built for.

4.3. Incentives

The distribution and distribution tools of economic rewards must be emphasized to improve stakeholder engagement and community building. Incentivizing those intrinsically motivated actors who provide long-term value from the outset, such as builders and active community members, rather than speculators, is fundamental to success. In addition to in-game mechanics such as token vesting, limited transferability, and early contributor rewards, more experimentation must be done with different tools to join smaller token holders and encourage them to make significant contributions, even though they may not have a large financial interest in the project. Perhaps this can be done by creating tools that allow participants to exercise power and governance through reputation rather than token ownership.

4.4. Community

The most successful projects have a core team focused on building their community around their core mission and actively engaging with members, inspiring them by making them feel part of something real. Tools that facilitate coordination and social interaction on a more human level will allow for stronger relationships between participants and improve the quality of the community. This is extremely important because the success of a community is determined by the bonds between its members and the strength of their shared beliefs.

Final Thoughts

Current DAO tools have played an incredible role in driving the explosive growth of DAOs and their communities by reducing many technical and operational frictions. It will be interesting to witness how these tools evolve to overcome current and future challenges, especially those related to social cohesion.

At the end of the day, it is the DAO’s community that drives its success. Most importantly, the community has always cared about their shared mission. The best DAO tools will be those built to optimize well-functioning communities and ensure that communities remain happy and consistent over the long term.

Given that the DAO revolution is just beginning and the pace of innovation in the field shows no signs of slowing down, I believe that exciting new tools will be built to help shape and support these communities and redefine the way we collaborate online. Perhaps, as virtual reality develops further, it will become one of the most important tools for DAOs to improve interaction, coordination, and connection among community members.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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