In-depth analysis of the state of DAO tools: “Organizational Lego” ecology built on Web 3.0

September 18    In the encryption industry, DAO Operations is an emerging vertical field, but its truly powerful service functions have not yet been fully utilized. From the current point of view, with more than 1,000 Snapshots, 700,000 governance token holders, and a DAO vault of more than $1 billion, these have given the operating department of the Internet native organization a huge opportunity to create value.

The Internet has promoted the large-scale interaction of humans around the world. Now with the development of products and communities, DAO tools built on Web 3.0 enable us to promote the relationship between stakeholders by designing and managing incentives, so that they can maintain Unanimous common goal. In the past year, the explosion of “Currency Lego” prompted the total DeFi lock-up volume to increase from $7 billion to $9 billion. In contrast, the “Organization Lego” ecosystem is still in its infancy.

Qg6mQhxdsAWi4h4XwuMa9NGZsg9GqkPiom6Q4vjN.pngThe figure above shows the current status of DAO tools (September 2021)

DAO can be used to build products (yearn, Sushi), invest (The LAO, MetaCartel Ventures), collect NFT (FlamingoDAO, PleasrDAO), or provide services (RaidGuild, LexDAO), but with the continuous development of this field, It is easily affected by high-level challenges, these challenges mainly include the following three:

1. How to lower the threshold of meaningful contribution

Contributions to DAO can come from various sources, and tools that quantify different types of contributions (such as bounties, DAO specific indicators) can be used to evaluate the rewards for different levels of participation. In addition to monetary compensation, DAO can also use reputation-building tools to inspire participants with consistent values ​​to take on more builder roles and grow together with DAO.

2. How to maintain operational efficiency while decentralization

In the long run, decentralization should not be at the expense of efficiency. Gradually advancing decentralization can enable the founding team to find products suitable for the market on the road to trust neutrality. By constraining delegation and working groups, we will explore some examples of DAO doing this, as well as tools that provide an additional layer of checks and balances, and make executors accountable to token holders.

3. How to coordinate decision-making on a large scale

Voting tools help people express their opinions, provide funding for new projects they care about, and empower their trusted representatives to execute them in a way that matches their views. The key to helping make these decisions is the relevant and accessible information. Analysis tools and data aggregators play an important role in making DAO human-readable and interpreting the meaning of data on and off the original chain.

In this article, we will explore these effects through organizational design and resolution of these emerging Web 3.0 native toolkit issues. After studying each category separately-contribution management, compensation, decision making, money management, analysis and DAO framework-we now have a certain understanding of the “organizational Lego” ecosystem, and now, the number of DAOs is greater than a year ago More, this may be a signal, suggesting that there may be other changes in the market in the future.

Organizational design of DAO

Any organization needs a certain number of people. In this case, the DAO may start with a group discussion, and the Anhou will be divided into several working groups or functional committees, among which members will assume certain leading responsibilities.

The names and detailed information of these groups can vary from DAO to DAO, but we can roughly classify them according to their operational functions. 

WrRmpKcXtaFfQQARsuQO8Tu7lzWg9XfmPvLNSGzy.pngIn order to strike a balance between efficiency and decentralization, DAO adopts a model of distributed authority and constrained delegation, in which token holders give active contributors the right to execute decisions in a discrete domain.

Constrained delegation allows individuals with professional knowledge and familiarity to complete the work autonomously, but at the same time still need to be responsible to the DAO. The head of the working group is usually nominated or elected, or it can be elected by the community.

Vtrsqta1QZAPkBlZxWi6oaAu5Ntov97PN35PW6Np.pngThe figure above is an example of functional committees showing several projects, namely: year (“yTeams”), Nexus Mutual (“Hubs”) and Index Coop (“working group”).


The picture above is another example of a functional committee (“workflow”) in ShapeShift DAO

Although many responsibilities overlap with those of traditional organizations, the core difference (and value proposition) is: in DAO, contribution opportunities are completely open, and anyone can take the initiative to create a new working group or change the way things work Suggest.

In traditional organizations, employees and users make decisions in a non-open manner. Unlike traditional organizations, any stakeholder in the DAO can come forward and make the changes they want to see. Through proposals and soliciting opinions, DAO can open to the wider community to solicit opinions and suggestions, such as the purpose of the plan, resource requirements, key stakeholders, performance indicators and actual results are all transparent-creating accountability and social checks and balances Floor.

Decentralization does not mean lack of leadership-on the contrary, more people have the right to take action to achieve the common goal, namely: to find the “Polaris” of decentralized autonomous organizations.

The structure of the DAO and the work content of each working group can be seen in detail from the well-maintained documents, which is of great help in helping potential contributors understand their abilities and maintain consistency with the needs of the DAO. Of course, you must first ensure that you have the motivation to contribute. This is the source of all contributions.

DAO contribution management

“Contributors” need to go through a period of development, usually refers to a person who never knows DAO, dives in social channels (such as Twitter, Discord), establishes connections with other members, and makes the first contribution to the organization.

Under ideal circumstances, a sense of ownership and belonging will be gradually cultivated during this “contributor journey”, so that everyone will hope to grow up with the community and have a profound impact on its future development.

In fact, the “contributor journey” is a process design problem, but the eternal question is about what tools to use and how to use them better. Generally speaking, tools can help solve big problems, such as:

1. How to provide the right opportunity or information to the right person at the right time

2. How to quantify, motivate and appropriately reward contributions

3. How to cultivate trust through role and reputation system

0O5OJsi5QjxjUsIViN0wF9kgZk8Blq2WXuKyh0WM.pngMembers can get “upgrades” of tasks and rewards in the DAO. Although this is only the first step for contributors who have just entered the organization, rewards are a good way to solve the “first problem” for contributors because it has a clear definition of deliverables. If it is a task on the chain (Rabbit Hole), the reward can be automatically verified, or the DAO member who owns the reward can decide by themselves (Gitcoin, Coinvise).

Yearn has a dedicated library that can summarize unresolved issues in its code repository, and there is also a Telegram group that provides tasks for interested participants.

cfy9oujF2QLNBFhi6YGWsvmdJzUtksVFPndjxnIY.pngRewards can be as simple as those set by the Telegram group, but a dedicated coordinator is needed to match the right people with the right opportunities. 


Above: Dashboard of unresolved issues across yearn repositories

As game players know, there will be a sense of accomplishment at the moment of “task completion”, which itself can become an internal driving force for the execution of the task. However, the reward itself is not enough to motivate the individual to take on more responsibilities.

Over time, members can gain “XP” and trust with each contribution to improve their reputation in the DAO. If you spend a few hours carefully browsing the DAO’s Discord or Discourse forums, you can find the most influential members. Some of them are founding members, but more people stand out from the crowd by actively promoting DAO.

Every member can play the role of Discord in the “Journey of Contributors”, and if used properly, they can gain trust. For example, if there is a consensus in the community that “golden” members have contributed more than 500 hours of work to the DAO, then what they say will be valued more than those who have not paid anything. Reputation as a basis of trust helps people distinguish who is more important within the DAO. It also tells outsiders who they should contact when they need support or want to explore collaboration opportunities.


The picture above shows that the contributors in Index Coop are closely linked to access rights and rewards

If people or tools become a bottleneck, then the task of the community or people working group should be to eliminate this bottleneck. If the “contributor journey” is working well, it should be the path of least resistance among community members from 0 to 1 or even further.

When someone changes from a Discord diver to a working group leader, the journey of contributors does not actually end. Web 3.0 allows individuals to transfer their identity and reputation across applications and communities. Because DAO affiliations are more diverse and intricate than traditional employer affiliations, DAO is a more powerful tool for individuals to establish and communicate about who they are and what they are interested in.


Compared with tools in other organizational fields, DAO’s payment distribution infrastructure is more mature. DAO can pay contributors through Sablier or Superfluid, distribute tokens in batches through Roll or, and allocate funds through its Gnosis Safe multisig, and track payments through fund management tools such as Parcel and Multis.

DAO can even provide something similar to an employee stock option plan (ESOP) by locking the tokens in an option contract and transferring call options to contributors within a certain vesting period. This is the power of DeFi primitives.

It is not clear how to reward different types of contributions. Tools like SourceCred can solve Github issues, PR submissions, and Discourse posts by quantifying “reputation.” By drawing inspiration from SourceCred, Govrn has further collaborated with various DAOs to create a “mobile model” in which the community will assign weights to different types of contributions according to their priorities. 


The picture above shows the motion model of Meta Gamma Delta on Govrn

The advantage of this is that you can obtain standardized value creation in the context of DAO. What counts as a contribution and how valuable each type of contribution is depends entirely on the judgment of the community, and this weight can be modified at any time through a proposal. From one DAO to another, the motion model may look completely different, but this is just an assumption. The community should not reform itself according to the standards defined elsewhere. A bottom-up model like this also inserts novel voting mechanisms such as reward distribution, bounty creation, and secondary trust.

Since the opportunity to contribute is open, the DAO itself may not know its own needs until community members voluntarily build solutions for them. “Compensation committees” and even governance institutions can easily ignore the contribution of edge networks.

Coordinape is a compensation tool based on reciprocity, based on the premise that the contributors of the working group know best who creates the most value. Since the contribution comes from the edge, the value knowledge added by each contributor is also on the edge. When a certain working period (a “period”) ends, Coordinape allows the members of the group to decide for themselves to whom the rewards are allocated. This eliminates the need to determine the centralized authorization to reward distributors for value creation. 


Above is a screenshot from Coordinape. This is a reward distribution tool that allows people who work closely with each other to reward their members.

Human resources is one of the most overlooked vertical areas for DAO contributors. The project provides individuals with web3 native solutions to deal with welfare issues, such as health insurance, 401ks, IRA, and tax compliance.

Today, these benefits are determined by employers rather than individual employees, who are subject to the benefits providers and packages selected by the company’s human resources department for them. In addition, once they leave the company, they will lose these benefits. This is an abnormal relationship for ordinary freelancers, but in addition to obtaining salary in the form of cryptocurrency, this is a complete obstacle for people to engage in “full-time DAO”.

Opolis is one of the first digital employment cooperatives for independent workers in web3. The platform acts as a shared service layer that has nothing to do with employers, providing its members with employment benefits, payroll and tax compliance services. By splitting the employment relationship and giving the choice of benefits to individuals instead of employers, Opolis provides individuals with freedom and flexibility to get paid from different DAOs while retaining the human resources benefits of traditional organizations.

Opolis currently collaborates with individuals from projects such as MakerDAO, Gitcoin, BadgerDAO, and ShapeShift. Although membership is currently restricted to Americans, this platform is one of the few platforms that links the stability of web2 with the autonomy of web3.


decision making

Early DAO frameworks have built-in governance tools that tightly couple voting and on-chain execution (such as shared voting in Moloch). Members can obtain DAO tokens through work and express their opinions by voting in the proposal. If the proposal is passed, it will automatically be converted into on-chain actions, such as transferring funds from the DAO’s treasury to fund grant recipients.


The figure above shows four DAO frameworks with built-in voting functions

Over the past year, the Ethernet Square on the network gas prices pushed the overall ecosystem will perform separate vote on the chain. The basic voting is done through the token signal voting of Discord, Discourse, Telegram poll or Snapshot and other tools. Although off-chain voting captures the sentiment of the community, the executive power is ultimately left to a small number of managers (multi-signers).


The picture above shows some popular DAO voting tools currently

Another decision-making process adopted by DAOs (such as Uniswap and Radicle) is the proposal life cycle, which involves signal voting at the initial stage of the proposal to improve the proposal. Only after the details of the proposal are finalized, will the on-chain voting be conducted. With this method, votes are more meaningful because they affect the state of the chain (at the protocol level). However, the entire process can be time-consuming because the community needs to allow time for members to discuss and vote on proposals.

The next generation of governance tools will bridge the gap between off-chain voting and on-chain execution-providing a layer of checks and balances to ensure that execution, even if initiated from a multi-signature, can actually reflect the results of off-chain voting.

Gnosis SafeSnap is a plug-in that uses an oracle to ensure that the decision is indeed voted by the community through a signal before the multi-signature transaction is executed. Requiring transactions to be verified in this way prevents multi-signers from violating the wishes of the community, because any transaction requires off-chain voting on the transaction before execution.


The figure above shows that the Gnosis SafeSnap module verifies whether the transaction from the multi-signature has been passed through the Snapshot signal voting

Recently, the Gnosis team released Zodiac and its Reality module, which makes the above conceptual framework irrelevant to the framework. Not only can the signal vote on Snapshot be converted into a secure transaction, any off-chain event (Discord poll, Discourse vote…) that can be reported to the oracle can be used to trigger execution on the chain wherever the DAO is located.


The judicial infrastructure creates an additional layer of checks and balances within the DAO, allowing the working group to execute optimistically, while leaving room for community “challenges” so that the working group remains accountable to the DAO. Kleros Court acts as the DAO’s “Supreme Court”, checking whether the proposal is compatible with DAO’s values, or verifying that the approved budget is used in accordance with the original proposal. Tally’s SafeGuard allows a quorum of token holders to revoke transactions initiated by multi-signatures or recover funds if they believe that the signer has acted improperly. 


The picture above shows several DAO judicial tools available on the market

The integrated DAO framework has its own unique features to enforce checks and balances. For example, all Moloch proposals will enter a grace period during which members can “angrily withdraw” their shares if they disagree with the passed decision. Colony uses a reputation mechanism. If the community believes that a member’s behavior is against the interests of the DAO, their reputation will be affected.

Money management

The DAO vault is the lifeblood of a decentralized autonomous organization, which is why multi-signature and vault committees are ubiquitous in the entire ecosystem. The DAO framework comes with out-of-the-box fund management solutions (Moloch Guild Bank, DAO Stack Avatar), and Gnosis Safe has become a multi-signature option for DAOs looking for more lightweight solutions. In addition, DAO also has a complete stablecoin and DeFi ecosystem to diversify its holdings, make risk-adjusted investments, and generate returns. 


Now, the challenge for DAO’s fund management is to provide greater transparency in its asset allocation and expenditures in order to evaluate performance and financial status. Llama provides a way to classify capital inflows and outflows, linking expenditures to related proposals. 


The picture above is a summary of JAMM community transactions on Llama

Parcel and MultiSafe have one-click bulk payments in ETH or ERC-20 imported based on csv , regular payments, membership spending limits, and dashboards that provide an overview of current asset allocation.

Front end and analysis

Block explorers like Etherscan are valuable infrastructure for encrypted networks. They allow us to infer network traffic patterns, the nature of on-chain activities, and even serve as a rough front end for interacting with smart contracts.

With the proliferation of DAOs, there is also a need for human-readable DAO activities. “Etherscan for DAO” will be a data aggregator and visualization tool that can provide insights into governance, expenditures, and capture the latest discussions in the DAO, such as a large funding proposal or an opinion on how to vote in other agreements Controversial debate. 


The above picture shows some DAO governance front-end and analysis platforms currently on the market

Tally and Boardroom are governance front ends, where members can vote on proposals, and view voter information and governance activities. Eventually, we will have an “Etherscan for Governance” that can reveal meaningful information such as voter delegation, qualitative data (why voters vote in their way), and the community’s views on specific proposals.

The voter delegation relationship reveals valuable insights into the social and political dynamics of the DAO. For example, a DAO funded by VC, in which voting rights are dominated by the company, and have different social dynamics from the DAO. In the DAO, individuals unite with the community to delegate to them. 


The picture above is a comparison of the top voters of Gitcoin and Compound

DeepDAO is a DAO analysis platform that ranks DAOs based on indicators such as voter participation, membership size, and treasury holdings. It also looks at individual DAO members and shows who is the most active in the DAO through membership, created proposals, and votes. 


The picture above is the ranking of DeepDAO’s top governance participants

Aggregated “DAO scores” like this can be used as data points for “protocol politicians” when they become community leaders (such as Gitcoin butlers). Potential clients can view the candidates’ personal profiles to learn about their past voting methods, the actions they have taken, and other communities in which they have influence.


The DAO framework is a set of smart contracts and interfaces that allow users to start and operate an on-chain organization with a few clicks, providing core functions out of the box, such as fund management, membership management, and voting. 


The picture above shows several DAO frameworks currently on the market

Using these frameworks, DAO creators can configure parameters such as how long the voting period should be, the quorum required for the proposal to pass, and the existing members and their shares. Examples of frameworks and DAOs running on them include DAOStack (dxDAO, dorg), Colony (ShapeShift), Aragon (BrightID, PieDAO), and Moloch (LAO, MetaCartel).

Because the needs and purposes of DAOs vary, there is no universal solution to manage them. Due to the limited options available, early DAOs had to shape themselves into rigid templates, rather than being able to freely combine the tool stack that best suits their needs.

Despite the rapid growth of toolkits, it is sometimes difficult to integrate them with old frameworks, so the community has to either endure this friction or make a lot of coordination to migrate to the new system. Learning from current limitations, the next-generation DAO framework (including updated versions of earlier frameworks) focuses on modularity, flexibility, and scalability. Here are three typical examples:

1. Orca Protocol is designed around “pods”, which is another name for a working group. Pod is regarded as a child DAO in a sense and has its own membership and governance. A single Pod can also become a “member” of the wider DAO.

2. Tribute DAO is an extensible version of the Moloch framework. On top of the core contract are upgradeable adapters and extensions, which can be added and deleted at the DAO’s discretion.

3. DAOHaus has been the main driving force for the proliferation of DAOs based on the Moloch framework (at least in the past year). In addition to being a front end where individuals can deploy DAOs and vote on proposals, the platform also has a set of add-ons (“Boosts”) that can integrate DAO activities into external applications, such as Discord, Discourse, and even Gnosis Safe. Sign the contract through the proposal.

9QuFsLFbLlar4Pq6qJLcGwT7Z7E4bt5BvWA5MDBO.pngThe image above shows the promotion of the market on DAOHaus, which allows members to integrate on-chain activities with external services. 


The picture above shows that DAOHaus’ Discord plugin will notify the channel when there are new activities in the proposal.

Unlike the more single and rigid first-generation framework, modular and composable tools flexibly meet the evolving needs of the community.

Modularity allows DAOs to install plug-ins such as DAOHaus Boosts and Gnosis’s Zodiac suite without having to foresee their needs when deploying DAO. Open standards allow anyone, as long as their code adheres to a shared interface, to build their own “extension pack” when there is a need in their own community. Under this paradigm, the ecosystem of DAO plugins will grow into an ecosystem similar to open source software packages. Adopting a new tool is as easy as a few clicks on the front end, or npm install organization-lego.

We are in the dawn of DAO. Just like the previous DeFi and NFT, once we have mastered the core primitives, the innovation gate of decentralized organization operations will open. 

cQyHPkCwhUMx0Xx9K3b7quqdfALZ9tUxzfdaPnIN.pngSummary of DAO structure and tools compared to traditional organizations. Please note that this is a very general description and should be reserved!

Although DAO tools help us redesign the organization from the first principles, we still need to iterate on best practices and learn through experiments. Many of the mental models we use for organizational design today are the legacy of the assembly line-centric workplace of the 20th century. The innovations surrounding the DAO will also discard outdated ideas about how human coordination works. We should be careful not to blindly introduce what we take for granted from traditional organizations and transform them into the positive and ecological system we are trying to create.

Unlike its predecessor, the web3 organization tool stack will accommodate many-to-many relationships, smooth participation, and vital ownership.

We will see more people divide their time among multiple DAOs, using various skills on different things they care about. The strategist of the DeFi agreement may borrow her skills to predict the value of the portfolio in the NFT collector DAO and support emerging creators through the grant DAO. She will be able to transplant her (pseudo) identity and reputation into different applications and point out the value she creates for the entire ecosystem.

The future has come, and pioneers, builders, and some lucky people are living in this future. The projects mentioned in this article (and other projects I’m sure I missed) are lowering the barriers to access to decentralized autonomous organizations every day, giving millions of people around the world who still cannot access the DAO have a viable path.


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 2021-09-18 15:15
Next 2021-09-18 15:17

Related articles