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cutting edge

The operation of DAO is an emerging vertical field of encryption, which is taking shape, and its service functions still need to be explored and improved. At present, there are already more than 1,000 Snapshot spaces, 700,000 governance token holders, and more than 10 billion U.S. dollars in DAO funds… All this shows that there is great value in the operation department of the Internet native organization. Opportunity.

Previously, the Internet was able to empower large-scale human resource coordination; now, web3-based DAO tools help us design and manage incentives to maintain a “positive and harmonious” relationship between stakeholders. With the continuous development of products and communities, it is ensured that stakeholders always share a consistent goal and vision.

In the past year, “Money Lego” ushered in the Cambrian explosion. The total amount of DeFi locked up has soared from 7 billion US dollars to 90 billion US dollars. In contrast, the ecosystem of “Organizing Lego” is still in its infancy.

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DAO Tools Collection (As of December 2021)

Whether DAOs are for building products, investing, collecting NFTs, or providing services, they all face huge challenges as they grow:

(1) How to lower the barriers to entry for meaningful contributions

The types of contributions within the DAO are very diverse, and they can come from anywhere. Therefore, tools such as bounty and DAO specific indicators can be used to certify and quantify different types of contributions, so that members can reach a consensus on the priority of contributions, that is, to clarify which level of reward corresponds to different participation and contribution values. In addition to monetary incentives, DAOs can also use reputation building tools to incentivize participants with consistent values, so that they can assume more ownership and grow with DAO.

(2) How to maintain operational efficiency while decentralization

In the long run, decentralization cannot be at the expense of efficiency. “Incremental decentralization” is a feasible model by which the initial team can find a suitable product market while moving towards credibility and neutrality. In this article, we will discuss some examples of DAOs that operate through a binding delegation and work group model, as well as some tools that provide additional checks and balances to make executors accountable to token holders.

(3) How to face large-scale group coordination and decision-making

With the help of voting tools, users can express their personal opinions, fund projects of interest, and have the right to make decisions and authorize representatives they trust and share the same values. Allowing users to obtain relevant information is critical to making these decisions. Analysis tools and data aggregators play an important role in this. They can improve the human readability of the DAO, and can also mine valuable insights from the original chain and off-chain data.

In this article, I will discuss the above three issues from two perspectives: one is organizational design; the other is the web3 toolkit that is born to solve these problems. It is divided into six sections: contribution management, remuneration distribution, decision making, fund management, front-end analysis and DAO framework. After completing the above analysis, we have roughly summarized the current DAO “Organizational Lego” ecosystem. Compared with last year’s version, this layout has made many additions, but it can only point out the general direction for future development for reference.

Organization design

In the beginning, the form of the organization may be a whole—a chat group with a certain number of participants. Gradually, this whole will be organically divided into multiple working groups or functional committees. Among them, group or committee members will share ownership of specific important projects.

The names and details of groups and committees vary depending on the type of DAO, but can be roughly classified according to their operational functions.

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The picture comes from the original link

In order to ensure efficiency while achieving decentralization, DAO adopts a model of distributed authentication and constrained delegation. The token holders give the group of active contributors the right to implement decision-making in a discrete domain.

Under the binding delegation model, professionals can perform their work independently, but at the same time may be responsible to the DAO. The head of the working group is usually nominated or elected, but can also be elected through community voting.

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The functional committees of yearn, Nexus Mutual, Index Coop

They are “yTeams”, “Hubs”, and “Working Groups”

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Example: the functional committee “workstreams” of ShapeShift DAO

Although many functions in DAO overlap with traditional organizations, the most critical difference lies in core values. DAO’s philosophy advocates full open opportunities for participation and contribution, that is, anyone can initiate an initiative, establish a working group, or change the mode of operation of the project.

In traditional organizations, employees and users must obey the decisions made by the board of directors after closed meetings; in DAO, any stakeholder can take actions and make changes based on personal vision. By publishing proposals and soliciting opinions, DAO has further opened the door to more community members. The implementation purpose, resource requirements, key stakeholders, performance indicators, and final results of each plan in the DAO are all open and transparent, which establishes an accountability mechanism and a power check and balance mechanism.

Decentralization does not mean the complete elimination of core leadership. On the contrary, it means that more people have the right to take action and work together to achieve a common goal, which is the “vision” of the DAO.

It is necessary for DAO to log records to describe in detail the governance structure of DAO and the project content of each working group. This largely helps potential contributors to judge the fit between their own expertise and DAO needs, that is, to think about what they can do for DAO. Of course, the motivation to contribute is the primary premise. This is the source of all contributions and the starting point of the contributor journey.

Contribution management

To become a contributor, you will generally go through the following process: from completely ignoring DAO, to lurking on various social platforms (such as Twitter, Discord), to establishing contact with other members, and finally making the first contribution to DAO and continuing to create value.

Ideally, the sense of belonging of members will be continuously strengthened in this contributor journey, prompting them to grow up with the community, make more contributions, and move towards a common vision.

To achieve this ideal situation, it involves process design issues, the essence of which is to choose the right tools and maximize the value of the tools as much as possible. Good use of tools can help solve some macro problems, such as:

  • How to provide the right opportunities and information to the right people at the right time;
  • How to quantify, motivate and appropriately distribute the contributions of members;
  • How to cultivate a sense of trust through role and reputation mechanisms.

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The picture comes from the original link

“Quests and Bounties” (Quests and Bounties) is a collection of small tasks that help members achieve “upgrades” in DAO. For newbies, completing bounty tasks is a good first attempt because they clearly define the scope and deliverables. If it is an on-chain task, the bounty will be automatically verified, such as Rabbit Hole; or distributed by the DAO members who own the bounty, such as Gitcoin and Coinvise.

Yearn has built a dashboard that integrates all the pending issues in the code base. In addition, it has set up a telegram group to provide tasks for interested participants.

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The form of the bounty is not complicated (such as a telegram group), but a special coordination organization is required to ensure that the right people are provided with the right opportunities

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yearn dashboard: integrated display of all unsolved issues in the code base

All players who have experienced it understand that the moment of “mission completion” will give people a strong sense of accomplishment, which is the internal motivation for members to continue participating in more tasks. However, the bounty alone is not sufficient to motivate individuals to take the initiative to take more ownership.

As members complete more and more tasks, they can improve their reputation in the DAO through the “experience” and trust that their contributions bring. As long as you are willing to 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 there are also many who stand out by proactively advancing projects and creating valuable results for DAO.

A member’s role in Discord is an important indicator of their contribution. If he performs well enough, he may become a “trusted agent”. For example, if there is a consensus in the community that DAO members who have contributed more than 500 hours of work have a “gold medal” badge, then their speeches will definitely have more weight than those without badges.

Reputation, as an indicator of the trust of members, not only helps members focus their attention within the DAO, but also helps people outside the DAO understand who they should contact when they need support or seek cooperation.

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Index Coop’s contributor level is related to access rights and rewards

If a member or tool encounters a bottleneck, what the community or working group should do is eliminate the bottleneck. Assuming that everything in the contributor journey works well, then community members can complete the leap from scratch with almost zero resistance in the process and continue to create value.

When members are promoted from Discord “divers” to working group leaders, it does not mean that the contributor journey is over. In the Web 3.0 era, personal identity and reputation are interoperable and portable among different applications and communities. Compared with traditional employment relationships, DAO’s organizational relationships are more diverse and intertwined. Therefore, DAO is a more powerful platform to help users build a three-dimensional personal image, better tell and communicate “who they are” and what they love.

Remuneration distribution

Compared with tools in other organizational fields, the infrastructure for remuneration distribution is more mature and complete. DAO can make streaming payments to contributors through Sablier and Superfluid, distribute tokens in batches through Roll,, issue funding subsidies through Gnosis Safe’s multisig wallet, and track payments through financial management tools such as Parcel and Multis.

DAO can even provide services similar to employee stock option plan (ESOP), lock the tokens in the option contract, and transfer the call options to contributors within a specific redemption period. This is the original power of DeFi.

At present, the reward mechanism for different types of contributions is unclear. For example, SourceCred quantifies and distributes “reputation” through a series of activities such as Github issues, PR commits, and Discourse posts. On this basis, Govrn further collaborated with several independent DAOs to create an “action model”. Among them, the community can assign weights to different types of contributions according to the set priorities.

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Meta Gamma Delta’s action model on Govrn

The advantage of this is that it sets a standard for value creation within the DAO. It is up to the community to decide on “what counts as a contribution” and “how much value does different contribution types have”. In addition, the weight distribution can be revised at any time through a proposal.

The action model may vary from DAO to DAO, but this is the beauty. The community should not blindly reform itself according to the indicators of other communities. This bottom-up model is also applicable to reward distribution, bounty creation, and new voting mechanisms (such as the “quadratic trust” model).

Since the contribution opportunities are completely open, the DAO itself may not be aware of such distribution needs before the community members build their own solutions. It is indeed easy for the “compensation committee” and management to ignore marginal contributions.

Coordinape is a peer-based compensation tool. The premise is that the contributors of the working group know who is the biggest value creator . When a certain work phase (or an “epoch”) is over, Coodinape allows the members of the working group to decide for themselves how to distribute compensation among peers. In this way, there is no longer a need to set up a central agency for reward distribution to classify value creation (usually inaccurate).

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Screenshot of Coordinape page

Coordinape is a remuneration distribution tool that allows peers to distribute remuneration by themselves.

For DAO contributors, the human resources field is one of the vertical fields that need to be improved most. Therefore, for project developers, to provide individuals with web3 native solutions-for handling health insurance, 401ks plans, individual retirement accounts (Individual Retirement Account, IRA) and tax compliance and other “real world” benefits- There are huge opportunities in the project.

Today, these benefits are attached to the employer, not the individual employee. Employees must obey the supplier and package services selected by the company’s human resources department for them. If they leave their jobs, they will lose these benefits. In general, this relationship is very abnormal, and freelancers also face this type of problem. The welfare issue is another major reason why people are unwilling to become “full-time DAO members” in addition to the obstacle of “using cryptocurrencies as wages”.

Opolis is one of the first digital employment cooperatives open to independent web3 workers. The platform is a non-employer shared service layer that provides members with employment benefits, wages and tax compliance services. It deconstructs the employment relationship so that benefits are attached to individual employees rather than employers. Opolis increases the freedom of individuals, while retaining the human resource benefits of traditional organizations, allowing individuals to obtain remuneration from different DAOs.

At present, Opolis has reached cooperation with participants from MakerDAO, Gitcoin, BadgerDAO, ShapeShift and other projects. The downside is that now membership is only open to Americans. But it is undeniable that Opolis is one of the few platforms that can link the stability of web2 with the self-sovereign attributes of web3.

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The picture comes from the original link

Decision making

The early DAO framework has built-in governance tools to closely integrate voting and on-chain execution (such as the share-based voting mechanism in Moloch). Members can obtain shares in the DAO by working and express their views and positions by voting on proposals. If the proposal is voted through, it will be implemented immediately on the chain, for example, transfer funds from the DAO fund library to grant recipients.

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A composite DAO framework with built-in voting tools

In the past year, gas fees have caused changes in this ecosystem, and voting has gradually decoupled from on-chain execution. The initial voting is done off-chain, usually using Discord, Discourse, Telegram to initiate proposal voting or Snapshot to allow token holders to vote. Unfortunately, although off-chain voting captures the overall preferences of community members, the final execution power still belongs to a small number of administrators, namely multisig signers.

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Voting tools for different modules

DAOs such as Uniswap and Radicle introduce another set of decision-making mechanisms, the proposal lifecycle. In the initial stage, signal voting is used to revise the proposal, and after the details of the proposal are finalized, on-chain voting is carried out. Under this mechanism, voting results are more “meaningful” because they have a substantial impact on the on-chain composition. The downside is that the whole process can be quite time-consuming, because the community needs to give members time to discuss and vote.

The goal of next-generation governance tools is to bridge the gap between off-chain voting and on-chain execution. By adding a layer of checks and balances to ensure that even on-chain execution initiated by multiple signatures, it can correctly reflect the actual results of off-chain voting.

Gnosis SafeSnap is a plug-in that uses an oracle to ensure that the decision of multisig to execute transactions is indeed voted by the community through signals. Before any transaction is executed, off-chain voting is required to verify the transaction, which can effectively prevent the multi-signature group from violating the wishes of the community and executing decisions without authorization.

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Gnosis SafeSnap model verifies transaction decisions

Voted by the Snapshot signal

Recently, the Gnosis team released Zodiac and Reality modules, which makes the above concepts no longer restricted by the framework. In addition to turning signal voting on Snapshot into secure transactions, any off-chain event that can be reported to the oracle (such as Discord willingness survey, Discourse voting, etc.) can trigger the execution on the chain where the DAO is located.

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The picture comes from the original link

In addition, the judicial infrastructure also provides an additional layer of checks and balances for the DAO, which not only allows the working group to execute transactions autonomously, but also leaves room for the community to refute and ensure that the working group is accountable to the DAO. Kleros Court serves as the DAO’s “Supreme Court” to check whether the proposal is consistent with DAO’s values, or to verify that the approved budget is properly used in accordance with the results of the original proposal. If a certain number of token holders believe that the signer’s decision is improper or unfair, Tally’s SafeGuard allows them to cancel transactions initiated by multisig or recover funds.

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DAO Judicial Tools

The composite DAO framework has a series of unique checks and balances. For example, Moloch proposals will go through a grace period (Grace Period), during which members have the right to directly “abandon” their shares if they disagree with the results of the passed proposals. Colony introduces a reputation mechanism. If the community believes that members’ behavior is detrimental to the DAO’s interests, their reputation will be affected.

Money management

The DAO’s treasury is its lifeblood, which explains why multisig and finance committees are everywhere in the entire ecosystem. The DAO framework is embedded with “out-of-the-box” fund management solutions (such as Moloch Guild Bank, DAO Stack Avatar), and Gnosis Safe has become the first choice of multisig for those seeking more lightweight solutions for DAO. In addition, DAO also has a complete stablecoin and DeFi ecosystem to achieve diversification of shareholding, make risk-adjusted investments, and obtain benefits from it.

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The picture comes from the original link

At present, the challenge facing DAO’s fund management is how to improve the transparency of the asset allocation and expenditure process in order to reasonably evaluate performance and financial status. Llama provides a mechanism to categorize fund income and expenditures, and link expenditure flows to related proposals.

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Overview of JAMM community transactions on Llama

The advantage of Parcel and MultiSafe is that it allows one-click to complete large-scale payments in ETH or ERC-20 tokens. It is mainly achieved through four ways: csv import, regular payment, member expenditure limit, and dashboard to provide an overview of current asset allocation.

Front end analysis

Query tools such as Etherscan are indispensable tools in encrypted network infrastructure. It helps us infer and analyze network traffic patterns and the nature of activities on the chain, and can even be used as an initial front-end tool for interacting with smart contracts.

As the number of DAOs has exploded, so has the demand for human-readable DAO activities. Query tools such as Etherscan can be used as data aggregators and visualization tools to provide useful information related to governance and expenditures, and regularly capture discussion topics in the DAO, for example, a large funding proposal, or a question about how to be included in other agreements The voting debate.

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DAO front-end analysis and governance platform

Tally and Boardroom are front-end management tools. Among them, members can vote on proposals and view voter information and governance activity information. Ideally, query tools such as Etherscan will evolve into a governance tool that provides people with meaningful information, such as the delegation relationship between voters and candidates, qualitative data (explaining the source and basis of how voters vote), and the community’s opinion Views of these proposals.

The delegation of power between voters and candidates can reflect the socio-political dynamics within the DAO to a certain extent. For example, a DAO funded by VCs with voting rights under the full control of the company, and DAO consisting of individuals and entrusting power to the community, the social dynamics of the two are bound to be different.

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Voter rankings in Gitcoin and Compound

DeepDAO is a DAO analysis platform that ranks DAOs based on indicators such as voter participation, membership size, and wealth holdings. It can also rank DAO members and analyze their activity in the DAO based on membership, proposals created, and voting participation.

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Ranking of governance participants in DeepDAO

These “DAO performance” obtained by aggregation analysis can serve “protocol politicians” for them to use as reference data when they become community leaders (such as Gitcoin butlers). Potential clients can view the candidates’ personal information to learn about their past voting methods, actions taken, and other community activities they participated in.

DAO framework

The DAO framework is a set of smart contracts and data interfaces that enable users to start and operate an on-chain organization with just a few clicks of the mouse, and provide a series of “out of the box” core functions, such as fund management, membership management and Voting function.

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DAO framework

With the aid of these frameworks, DAO creators can configure their own parameters, such as the length of the voting period, the quorum required for the proposal to pass, and the number and share of existing members.

Here are some examples of frameworks, in parentheses are DAOs that use these frameworks:

  • DAOStack (dxDAO, dOrg)
  • Colony (ShapeShift)
  • Aragon (BrightID, PieDAO)
  • Moloch (LAO, MetaCartel)

Since DAO’s needs and vision are different, there is no universal governance solution . Due to the limited available frameworks, the early DAO had to forcefully adapt to the framework template, instead of flexibly combining various tools to suit its own needs.

Although new toolkits are constantly emerging, their compatibility with old frameworks is very limited. Therefore, the community must either compromise to endure this inconvenience, or work hard to coordinate and migrate to the new system in its entirety. In view of this current limitation, the goal of the next-generation DAO framework (including an updated version of the earlier framework) is to focus on enhancing the modularity, flexibility, and scalability of the tool.

Orca Protocol is designed based on “pods”. Pod is another name for working group and can also be regarded as sub-DAO. It has its own membership and governance mechanism. At the same time, different Pods are also “members” of DAO.

Tribute DAO  is an upgraded version of the Moloch framework, which is extensible. It adds adapters and extenders based on the core contract, which can be added or deleted at the DAO’s discretion.

In the past year, the number of DAOs based on the Moloch framework has surged, and DAOHaus  has been the main driving force behind it. As a front-end platform, in addition to allowing users to deploy DAOs and vote on proposals, there is also a set of add-ons called Boosts, which can integrate DAO activities into external applications such as Discord, Discourse, Gnosis Safe, etc., for any contract Request a proposal to vote.

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The Boosts component of DAOHaus:

Allow users to integrate on-chain activities with external servers

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Discord plug-in for DAOHaus:

Push the latest developments of the proposal process in the channel

Compared with the single rigid first-generation framework, this set of modular and arbitrarily combinable tools can meet the development needs of the community more flexibly.

When the framework is modularized, DAO can flexibly install plug-ins such as DAOHaus Boosts, Gnosis Zodiac, etc., saving the trouble of foreseeing requirements in advance before deploying DAO. Under the open standard, as long as the code is connected to the shared interface, anyone can build their own exclusive “expansion package” when the community has corresponding needs. In this paradigm, DAO plugins will be similar to open source software packages. In this way, if you want to adopt a new tool, you only need to click a few mouse pointers on the front end, or a simple sentence of [npm install organization-lego] code can be achieved.

Concluding remarks

We are at the dawn of the DAO. Just like the previous DeFi and NFT, once we have the key to the core technology, the innovation gate of DAO operation will open.

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Comparison chart of traditional organization and DAO architecture and tools

(The picture above is a general overview, for reference only)

Although DAO tools provide us with a theoretical basis for reorganizing design, we still need to test it through repeated practice and continue to update and develop. Many of the mental models used in organizational design today are the legacy of the 20th century assembly line work model. Innovations around DAO should abandon these outdated views and explore new organizational and coordination models. It is particularly worth noting that you must not blindly introduce some of the “usual practices” in traditional organizations and place them in the Zhenghe ecosystem that we are creating.

Unlike earlier tools, the web3 organization toolkit will be compatible with many-to-many relationships and mobile participation. Most importantly, it can also solve ownership-related issues.

In the future, we will see more and more people active in multiple DAOs, using their own skills and expertise to deal with matters they care about. For example, a DeFi protocol strategic technologist can use her skills to predict the value of the portfolio in the NFT collector DAO, and grant DAO grants to start-up creators. She can also transplant her virtual identity and reputation to different applications to demonstrate the value she creates in the entire ecosystem.

Today, pioneers, builders and some lucky people are stepping towards and witnessing this future. The projects mentioned in this article (and some of the missing projects) are lowering the barriers to entry every day, and are committed to making DAO a large platform that millions of people around the world are eligible to enter, rather than just a few people holding admission tickets The heights.

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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