From chasing profit to cooperating with DAO

The evolutionary history of the crypto world is a hot rotating history. When DeFi, NFT, and GameFi gradually ceased to be sexy, DAO (Decentralized Autonomous Organization) came.

ConstitutionDAO is the main force that detonated this wave of DAO. Although they did not succeed in taking a copy of the U.S. Constitution, many users who participated in the donation chose to keep the PEOPLE exchanged with ETH and continue other undertakings in the form of DAO. This way of decentralized collaboration quickly resonated, and imitators followed one after another.

A few days later, FreeRossDAO appeared under the banner of “Release the dark web “Silk Road” founder Ross Ulbricht”. The organization raised 2836.637 ETH and issued FREE tokens to donors. After auctioning the original artwork NFT (non-homogeneous token) sold by Ross Ulbricht, the community announced that it would use the remaining 1390 ETH to continue to “release Ross” Work towards the ultimate goal.

The risk of hype is immediately apparent. FREE quickly cut in half after rushing to $0.015, and a group of chasers lost their funds. Such projects are compromising the true value of DAO.

Of course, a true “decentralized autonomous organization” is easy to do in the current blockchain and encryption world.

Taking the governance DAO of DeFi application as an example, the rights and interests of members holding governance tokens are mainly reflected in initiating proposals and voting. The specific implementation has to be completed by a centralized development team. DAO members lack the ability to exercise governance rights in all aspects. In addition, due to the lack of a complete collaboration framework and collaboration tools, the entire decision-making, execution, and incentive end of the DAO will have problems such as arbitrariness, opacity, and poor communication between members.

The Prophet Laboratory, who is doing research in the DAO field, believes that DAO should divide a clear organizational function structure in actual operations, formulate incentive systems, elimination mechanisms, etc., and develop appropriate chain collaboration tools to subdivide functional “posts.” And through incentive measures to achieve efficient collaboration.

The crypto world is fascinated by decentralized organizations, but the “DAO” is a hindrance.

“Fundraising DAO” Goes to the Center of Hype 

Not long ago, ConstitutionDAO brought a grand narrative to the crypto world. It hopes to gather the power of People and jointly raise funds to bid for one of the copies of the U.S. Constitution. Anyone can send ETH to the designated address to become a donor. Locally, donors can get PEOPLE tokens at a ratio of 1ETH: 1 million PEOPLE.

In less than 72 hours, ConstitutionDAO raised 11,600 ETH from 17,437 users, worth approximately $49 million. Unfortunately, this auction ended in failure. Subsequently, ConstitutionDAO opened the refund channel. But the story does not end here. PEOPLE is eye-catching in the price market. The “holder” saw the market consensus and decided to continue telling the story in the way of DAO (Decentralized Autonomous Organization).

The phenomenon of ConstitutionDAO’s response to a hundred responses has pushed the concept of DAO to a climax. Although it is not clear what PEOPLE holders can do with it, the high point of the encrypted world’s yearning for decentralized autonomy has been poked again.

A few days later, the DAO in the crypto world for the purpose of “fundraising” and “auction” contributed new plots.

From December 2nd to 8th, Ross Ulbricht, the founder of the dark web “Silk Road” behind bars, launched an art auction on the NFT market SuperRare. These artworks were created by Ross and minted into NFT (Non-Homogeneous Token) form with the help of supporters. The proceeds from the auction will be used to prepare a charity fund to provide assistance to other prisoners and their families. It will also be used to fund a trust fund to help Ross’s early release.

Various illegal items sold on the dark web “Silk Road” accept Bitcoin as payment, and Ross enjoys a certain reputation in the crypto world. Interesting people started to hear the wind, and a new organization FreeRossDAO under the banner of “Free” appeared, and the initiator was unknown.

From chasing profit to cooperating with DAO

FreeRossDAO official website page

The first goal of FreeRossDAO is to get Ross’s NFT, and declares that the bigger goal is to promote prison reform and release Ross.

This project quickly attracted a lot of attention, and KOLs in the circle, including David Hoffman, the founder of the crypto industry column Bankless, expressed their support. In the end, FreeRossDAO raised 2836.637 ETH and issued FREE tokens to donors in proportion.

ConstitutionDAO failed to bid for a copy of the U.S. Constitution, while FreeRossDAO bought Ross’s NFT with 1446 ETH, and the remaining 1390 ETH was injected into the FreeRossDAO vault, and claimed to continue to work hard for the ultimate goal of “freeing Ross” in the form of DAO.

A so-called de-Sinochem fundraising attempt to shake up the implementation of the law sounds very naive, but the story is full of deceptiveness. Under the name of DAO, coupled with profitable crypto assets, the hype factor becomes uneasy. .

You know, ConstitutionDAO’s goal fell, but the price of PEOPLE rose instead of falling, once rising to $0.181. What concept? When I donated 1 ETH, the PEOPLE in exchange can be exchanged for more than 45 ETH. “Fundraising DAO” has a precedent for super high returns, and FreeRossDAO’s fundraising is much easier.

But the speculative risks brought about by profit chasing were immediately apparent. On December 16th, FREE once rushed to $0.015 after it went online. However, profit-seeking players quickly sold off their chips. The next day, FREE fell to about 0.0075 US dollars and cut it in half. Someone must be injured in this DAO story.

On social media, whether it is PEOPLE or FREE, the goal of establishing DAO is not a topic. There are obviously more people discussing prices. DAO is more and more like a variant of ICO (Initial Coin Offering), but fundraising is no longer just a piece of paper. The project white paper instead drew a bloody but difficult-to-achieve goal with ambiguous execution.

Who cares about this goal? Fundraising in the primary market and liquidation in the secondary market are the real goals. How the two DAOs realize their respective ideals, there is no concrete and feasible plan.

How can today’s DAO become an ICO variant?

Why do some DAOs move towards ICO or even Ponzi? Because the hype is blurring the true meaning of DAO.

The DAO concept was first mentioned by Ethereum founder Vitalik Buterin in 2013. Its full name is Decentralized Autonomous Organization, which is translated as a decentralized autonomous organization.

This concept is not difficult to understand. As explained by Linda Xie, co-founder of investment agency Scalar Capital, DAO is a group organized around missions that coordinate and implement a set of shared rules through the blockchain. In the definition, “decentralized” means that it is destined to be anti-monopoly and governed; “autonomous” is because it is based on smart contracts, which are essentially applications running on the public chain network; “blockchain” “Up” determines its transparency and openness; “around the task” means that the members of the organization will plan to achieve a specific goal.

Almost all decentralized projects can be referred to as DAOs, including Bitcoin, Ethereum, and DeFi protocols such as Uniswap. Due to the numerous tracks and scenes in the encrypted world, many kinds of DAOs with various characteristics have been derived. 

From chasing profit to cooperating with DAO

Uniswap governance page

There are typically protocol governance DAOs such as Uniswap and Compound. They often use voting to determine the allocation of tokens, determine the liquidity pool, pledge income pool, and application function deployment; there are also investment DAOs, such as GameFi. Yield Guild Games (YGG), DAO incubator MetaCartel DAO, they are investment-oriented DAOs, members obtain income through collaboration and distribution; in addition, there are Flamingo DAO, Pleasr DAO and other DAOs that focus on NFT collection; There are also vertical application-oriented DAOs such as media, social networking, and talent recruitment.

Although there are various DAOs in the encrypted world, they show immature characteristics in the early stage of development, which is far from the ideal decentralized autonomous organization. Take the governance DAO for decentralized applications on the chain as an example. Most DeFi projects have issued governance tokens, but the development iterations of most projects still rely on the founding team. Previously, Synthetix founder Kain delegated decision-making power to the committee, but there were many problems that were difficult to solve afterwards. The founder who had already withdrew from decision-making had to return to the project and continue to lead. This has led to a centralization-led situation in the development of most projects.

DeFi’s community governance has also exposed some phenomena that are not so decentralized. Previously, a voted proposal of the Venus loan agreement was rejected by the official team using developer permissions.

In addition, it is a common situation that most DAO members who hold governance certificates lack the awareness of exercising governance power and contributing to the project, making the DAO organization a state of slack and slack. Prophet Lab, a blockchain research organization, believes that this is mainly because the community does not fully understand the importance of DAO. “The more emotionally fomo market, the higher the cost of user education, which means that a large number of users do not have Sufficient patience to understand the importance of DAO has also led to insufficient user interest in decentralized autonomy.”

In summary, due to decentralized autonomy and collaboration, DAO inevitably leads to low organizational efficiency and high communication and collaboration costs. This makes it difficult for DAO to complete some complex collaborations; at the same time, DAO does not have an organizational form. On the basis of laws and regulations, the rights and obligations of the DAO have not been fully supervised.

At present, whether it is the recent hot ConstitutionDAO, or Uniswap and other protocol governance DAOs that have appeared for a long time, they have entered the bottleneck of the unsatisfactory implementation of DAOs after the currency issuance and fundraising. When the power of the group is limited to providing funds and not doing everything personally, the current DAO is still a long way from the ideal “decentralized autonomous organization”.

DAO landing urgently needs functional segmentation and “advanced collaboration”

From the perspective of the Prophet Lab, the future of DAO has plenty of room for imagination. It has autonomy. Any determined rules are automatically executed based on a decentralized system and are not transferred by personal will; it is sufficiently decentralized, and any development decision is required. Based on the decentralized ecology, openness, transparency, fairness and fairness.

However, if DAO’s vision is to be fully implemented, it must, like all mature organizations, divide a clear organizational function structure, formulate an incentive system and elimination mechanism and other institutional content. More importantly, since DAO runs on the blockchain, it is also necessary to develop comprehensive collaborative management tools on the chain.

The Prophet Laboratory divides DAO into three categories: elementary, intermediate, and advanced according to the complexity of collaboration.

Primary collaboration needs mainly include donations, crowdfunding, group buying, etc. This is very easy to achieve, and ConstitutionDAO is an example. The need for intermediate collaboration is mainly for the referendum system for a single project, involving parameter changes, treasury management, etc. Typical examples are DeFiDAO, public chain governance committees, etc.; high-level collaboration mainly exists in corporate autonomous organizations, Crypto communities, etc., such as Initial project initiated by DAO, open and decentralized developer collaboration organization, etc.

Currently, many types of DAO tools have appeared in the market, such as Gnosis Safa, a multi-signature wallet for managing community treasury, Snapshot, an off-chain voting platform, Discourse, a forum for discussing governance suggestions, and SourceCred, a platform for tracking community participation and rewarding active members. , Create and track the Sybil platform for on-chain governance commissions, etc.

However, in the eyes of professional developers, most DAO tools are still only for some simpler and single needs, such as voting donations, fund management, etc., and it is difficult to handle advanced collaboration needs. When the collaboration framework and collaboration tools are not perfect, there will be gaps and poor communication in DAO’s entire decision-making, execution, and incentives.

The Prophet Lab took the creation of an initial DeFi project as an example, and made a detailed DAO organizational structure division (shown in the figure below). It can be seen that it builds a structure based on the decision-making layer and the executive layer, and subdivides the team’s operation decision makers, Technical decision makers, market operation decision makers, product managers, project managers, UI designers, technical developers and other specific functional “posts.” It seems that this is like an extremely segmented centralized technology company’s architecture, but it is worthy of DAO to learn from, divide labor, and achieve goals more efficiently.

From chasing profit to cooperating with DAO

Example of function division of DeFi project (Source: Prophet Lab)

The YGG Chain Game Association derived from the chain game Axie Infinity has made certain explorations in this regard. The community has formulated a main structure including technology implementation, products and projects, token distribution, governance structure, and established multiple roles such as founders, consultants, treasury, investors, and community members. At the same time, the guild already has a set of tried-and-tested incentive mechanisms, including bonus rewards for game winners, upgrade and loyalty rewards, contribution rewards for DAO management, pledge rewards, etc.

A typical DAO collaboration scenario is that the guild provides a loan channel for players who want to enter the Axie Infinity chain game but are unwilling or unable to purchase the NFT required for the game. Players can borrow 3 Axie wizard NFTs from the guild to participate in the game. Gold, the follow-up gold profit will be distributed by smart contract, 70% of the profit will go to the players, and the rest will go to the guild and the community.

At the same time, for different games, YGG has developed a more subdivided “sub DAO”-subDAO. A sub-DAO is similar to a specialized, micro-economy. Each YGG subDAO is customized to focus on specific activities and assets of a specific chain game. For example, there will be a subDAO exclusively for Axie Infinity players, a subDAO exclusively for Kingdom League players, etc. Each subDAO has different rules and conditions, but the ultimate goal is to contribute revenue to the “main DAO”.

This DAO, which is hierarchically governed by different business scenarios to achieve efficient collaboration, has brought a more in-depth and practical example of DAO construction. This may be the reason why the YGG Chain Game Association can attract 15 million US dollars in venture capital. Capital has also seen it. The fortune of DAO.

In the opinion of professional observers, any DAO that wants to grow should pay attention to the strength of each member, and based on the on-chain collaboration management platform classified by function, assign tasks according to needs and set up incentive mechanisms. In this way, members can choose the tasks they are good at in a targeted manner to perform, so as to achieve the vision efficiently.

Currently, relatively complete on-chain collaboration tools are insufficient, and the awareness of collaboration and contribution of DAO members has not been fully enlightened. Take the representative Uniswap as an example. In theory, every UNI holder is a member of its DAO, but the way they can participate in governance is mainly reflected in the initiation of proposals and voting. The specific implementation needs to be completed by a professional team. This form is obviously not the most ideal form of DAO.

It is foreseeable that DAO will gradually mature with the support of capital and the exploration of practitioners. During this period, there are many challenges, including tool development, membership authentication, reward and punishment mechanism formulation, and simplified collaboration processes. Only these are implemented, DAO In order to move from a profit-seeking project to a high-level collaboration.

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.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2021-12-19 08:23
Next 2021-12-19 22:47

Related articles