The structure that governs shared economic resources and/or protocol rules, each DAO may operate differently. Some DAOs are private, while others are open to anyone to join and contribute. For some DAOs, active contributors can get paid from the DAO.
The DAO has always been one of my favorite spaces to spend time in crypto. The ability for people from all over the world to come together to achieve a common mission is exciting, especially because of a variety of arbitrary barriers (eg location, age, part-time jobs, non-traditional education/work experience), the same group cannot be under a traditional company when established. For more information on the potential of DAOs, see my Beginner’s Guide to DAOs.
This article covers some of the main takeaways from my DAO work. Most of my DAO work experience has been as a delegator for the Gitcoin DAO, but I have also participated in and observed many other DAO projects. There is no perfect DAO structure, and each DAO has its own culture, so what works for one DAO doesn’t necessarily work for another . The following are my personal experiences and opinions, others may have different opinions. The entire field is also constantly iterating to find out what works and what doesn’t.
When initially starting a DAO:
- Establish a clear mission .
This is critical to keeping a diverse and growing community aligned over time and guiding decision-making. If someone comes to the DAO with an out-of-scope funding proposal, it should be easy to say no. If the DAO’s priorities are unclear, it will be more challenging to keep the team focused on getting things done.
- Consider progressive decentralization or decentralization .
While the intent of many DAOs is to fully decentralize operations and decision-making, putting a community into a DAO structure without direction or leadership often results in a lack of effective coordination. The founding team almost always has the most background information and ideally sets the course for the DAO to gradually empower the wider community over time. For example, the newly formed Optimism Collective has a work charter that defines the Optimism Foundation’s early role as steward and how the foundation will help guide the Collective through a plan to gradually spread its role over time.
“3. The Optimism Foundation will be the steward of the Optimism Collective and its early governance model. The Foundation is a Cayman Islands organization that guides the growth and development of the Optimism Collective. Through its Board of Directors, the Foundation can:
· Promote the governance of the Collective Governance;
Allocate Treasury assets to fund public goods, incentivize participants in the Optimism Ecosystem, or otherwise advance its (and Collective’s) purposes;
Modify this Charter of Work; and
Take other action in favor of its governance role .
The Optimism Foundation will take on all of these responsibilities in a manner consistent with the Collective mission, with an eye toward increasingly decentralizing its roles over time.”
Optimism Collective Work Charter
- Smaller workgroups are more efficient .
Not all DAO members vote on every decision the DAO requires. Trying to keep up with everything is impossible and not the best use of everyone’s time, especially as DAOs scale. For this reason, I like the delegation model in DAOs like Gitcoin and ENS, which allow token holders to delegate their votes to individuals or groups who can invest their time and make informed decisions. Likewise, delegates will not and will need to be involved in all aspects of day-to-day DAO operations. Representatives won’t all be experts on every subject, from finance to technology development to economic design, and may not care about reviewing highly specific details. It is more efficient to create small professional groups that can specialize in specific areas. For example, each quarter in the Gitcoin DAO, working groups share the work they have done in the previous quarter and the budget they need to vote on by delegates for the next quarter. ENS DAO has been working with Orca, a DAO implementation dedicated to enabling small working groups called pods. Another example is Aave V3, which allows whitelisted addresses to update parameters without going through a governance vote. However, governance will have the ability to revoke these whitelisted addresses or add new ones.
Gitcoin DAO workflow for requesting a budget (Image credit: Annika Lewis)
- Explore ways to build accountability .
It is important to state the level of involvement of each delegate and working group contributor. One attempt to measure delegate engagement in the Gitcoin DAO is to use Steward Health Cards to measure things like polling activity and forum engagement. The Gitcoin DAO is building a Workflow Health Card and is also starting to quantify DAO contributions so that some Workflow contributors can become top representatives by participating and participating in the DAO. These metrics should improve over time so that it’s not playable and doesn’t encourage misbehavior, such as voting just for the sake of voting, without regard to knowledge or expertise. Delegated metrics may be helpful for members deciding where to delegate votes. Sometimes people may just delegate to someone they know but may not actually be an active representative. I’m also open to the idea of a delegate election cycle that could be a way for people to step out of the DAO when they no longer want to work, and get delegates thinking about whether a DAO is something they want to keep committing their time to.
Gitcoin DAO Butler Health Card
- Discuss compensation structure .
Compensation structures should be openly discussed when significant work commitments from members or representatives are required. Not everyone can afford to work part-time on the DAO for free, so they should be compensated for their work. In a delegation model, I think all major delegates should be compensated at least for the gas they spend voting and submitting on-chain proposals. This provides every delegate with an equal opportunity to participate. Ideally, the DAO will also work on standardizing compensation so that the DAO does not significantly underpay or overpay.
- Setting up a DAO for long-term sustainability .
Consider diversifying the DAO treasury, either publicly funded or privately moving funds to more stable assets like USDC or DAI (example of Forefront’s public funded diversification financing). Crypto is a volatile space and not unlike a company, it is important to ensure that the DAO can operate for the long term. Strictly control the fee paid from the DAO, especially if it is a recurring fee and there is no clear funding replenishment.
- Cultivate a culture of openness to rejection and difficult conversations.
With no CEO as the ultimate decision maker and inability to quickly say no to things that are not in line with the company’s goals, DAO members and representatives have a responsibility to protect the DAO’s resources (time, attention, money). This can quickly get out of hand when anyone can publicly use the DAO’s treasury to make funding proposals. When you may be working with a lot of friends and people you respect, it can be hard to say no and have difficult conversations when requesting resources for some project that is not in the best interests of the DAO. Help foster a culture early on where everyone knows that decisions are made in the best interest of the DAO and that “rejection” is not in personal interest.
- Set up structures so members can rest.
Encryption is 24/7 and a DAO that communicates asynchronously with people all over the world, with no rest or rest standards, can be exhausting and lead to burnout. Set up a way for members to let others know they’re on vacation. In a delegation model, it would be ideal if there were liquidity votes so that delegates themselves could delegate their votes to others if they were inactive for a period of time (or if the content of that vote was not within their expertise) of. It’s no different than letting a company colleague take over someone’s job while he’s on vacation.
- Experiment early.
Try different systems and processes to see what works for DAOs and what doesn’t. As long as there is transparent communication, early experiments can be done. The larger the DAO, the harder it is to experiment, change or introduce processes. One area that might be worth exploring is governance Lego bricks from the Element voting library, enabling many use cases such as providing voting rights to GitHub contributors or allowing members to vote on their tokens for staking or providing liquidity.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/how-to-do-dao-work-its-all-from-experience/
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