DAOs Are Poised To Scale In 2020…& 7 Other Takeaways From Our “Current State of DAOs” Conf. Call on 3/18/20
On March 18th, CryptoMondays and DAOfest co-hosted a conference call on Decentralized Autonomous Organizations (DAOs) that featured four thought leaders:
Aaron Wright — Co-Founder of OpenLaw & The LAO (download his slides here)
Matan Field — Co-Founder of DAOstack (download his slides here)
James Waugh — with MetaCartel and Founder of AxiaLabs
Griff Green — Co-Founder of The Common Stack
It was a super interesting and informative call as they shared their views on the massive potential of DAOs. You can watch a replay of the call below:
While I encourage everyone to listen to the call, as it’s time well spent. I’ve also taken the time to highlight my major takeaways:
#1 — With Each New Era Of Innovation, We’ve Seen New Ways To Coordinate Human Activity
Aaron started the call by putting DAOs in to context relative to the history of innovation in organizing humans. For instance, the railroad boom birthed preferred shares, which are the cornerstone of venture capital and private equity today.
Aaron’s hypothesis is that the emergence of blockchain technology is what’s leading us to a new form of human organization, DAOs.
#2 — There Were Multiple Predecessors TO DAOs
Matan discussed how he had worked on cooperatives for 20 years. And when he read Vitalik’s white paper, he believed that the DAO structure is what would enable cooperatives to finally scale.
Matan also shared his perspectvie that DAOs learned from open source culture and collaboration; as well as social networks (which popularized open discussions in large groups), and common-based peer production (where the inputs and outputs of the process are shared).
#3 — Not Surprisingly, The Consensus Was That DAOs Are Simply A Better Way To Raise Money For Decentralized Projects
The bottom line belief is that DAOs are a better way to raise capital and align incentives than ICOs that raised a bunch of money and then went on their merry way trying to build something around the token, with minimal levels of transparency.
Now there’s a system to hold founders accountable and give contributors, or investors, more protection. For example, rage quitting gives people greater comfort that they can get money back if they don’t like the direction of a project.
#4 — The Moloch DAO Was The Beginning Of The Rebirth Of DAOs
After the implosion of The DAO, in 2016, Aaron believes that the Moloch DAO, created in January, 2019, was the catalyst for the rebirth of DAOs. The core innovation was the incredibly slimmed down smart contract, effectively creating an ERC-20 like standard for DAOs.
The LAO, is a Member Managed VC fund, like The DAO, leveraging a MolochV2 smart contract, wrapped in a legal entity.
#5 — MetaCartel Is Scaling Ethereum Based DAO Communities (to 50 or 100 People)
The premise of MetaCartel is that what the Ethereum ecosystem needs a way to effectively coordinate humans to build cool things. They believe that the best method to do that is to scale communities, in a permissioned fashion, to 50 or 100 people, and then optimize the impact of individual members.
MetaCartel itself is a grant giving DAO, and the slide above highlights a number of DAOs that MetaCartel members have created and/or MetaCartel has given grants to. While the grants aren’t significant (around $4k on average), the real impact comes from the signaling to the marketplace that the project has been vetted by, and is supported by, MetaCartel.
For example, the Raid Guild is service provider of service providers. So rather than working in a silo, service providers to DAOs can become Raid Guild members and get feedback from other members on the work their doing. The Guild itself can also provide services in a more holistic manner than any member can individually.
#6 — Common Stack Creates Programmable Communities By Leveraging Bonding Curves
Common Stack is creating programmable communities to incentivize the behavior communities want, while solving for the tragedy of the commons. They do that in small communities by leveraging bonding curves.
Common Stack’s insight was that normal two-sided markets (e.g. a stock market) only functions for large regulated liquid markets. Bonding curves solve for liquidity for smaller entities by providing buyers at any time at specific prices set algorithmically for both buyers or sellers.
#7 —The Thing That’s Working Best Today Is The Passion Of The Community
Matan is most excited about the passion of the community in these early days, even with the limited success to date. At the moment, DAOs are capable of making simple decisions on the blockchain, as well as enabling basic voting and financing. But a multitude of challenges remain. Matan believes that the largest challenge is that the UX enabled by the blockchain today is not usable by the mass market. In addition, while simple small DAOs are proliferating, DAOs don’t yet work at scale or with more complex challenges.
The bottom line is there is no product market fit…..yet.
#8 — Existing Solutions Coupled With New Solutions Will Enable DAOs To Begin To Scale In 2020
One area where DAOstack has made good progress is holographic consensus, which enables large communities (e.g. 1 million people) to make decisions by creating smaller decision making subsets (e.g. 100 people) and enabling prediction markets to forecast if those decisions actually reflect the will of the larger community.
Matan also believes, in the near term, better UX can be enabled by allowing some level of centralization, that can lessened over time.
Most importantly, Matan believes that the solutions he outlined, as well as others being implemented across the DAO ecosystem, will result in DAOs beginning to find product market fit, and gain early mainstream adoption, by year end 2020.
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Personally, I came away from the call even more excited about the possibilities of a DAO driven future, with a better appreciation of the challenges that remain, and even greater resolve to work with the community to meet those challenges.
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