What makes a DAO #1: The killers that make you fail
Author:Typto
In the middle of last year, Dashuo, Shalou and I with some other DAOSquare members determined to produce some original content about DAOs and share our experiences and insights with everyone, but it has been delayed by DAOSuqare’s business. Half a year has passed, and once again, we have seen many of our friends experiencing failures on DAOs and heard many of their confusion. So I thought I must take the time to sort out the contents related DAOs, and push myself to reflect on it, as it could help those who are confused by it perhaps. ‘What makes a DAO’ will be a series of discussions on DAOs that will be updated at irregular intervals. This is the first article, where we talk about the “killers” that can make you fail.
Founded on things, thrived on people
‘Things’ is the premise of DAO and the original vision of the Summoners, those who call on the consensus (people) to join in through the ‘things’ that need to be undertaken, and involve more people in to make the vision a reality. This is a relatively healthy building logic (we can’t rule out the possibility of ‘Founded on things, thrived on people’, but this is a much higher challenge for any DAO and not for most people). Every DAO should be a product, whether a good or a service, a business or an NPO, even if it is a hobby group for knitting woolen socks, each one is based on ‘things’.
Another question we need to think about and reflect on is whether this ‘thing’ has to be a DAO? As a DAO is a solution to a problem, not a veneer to show that the organisation is ‘cool’ or to add leverage to the organisation. It needs to be clear about what the purpose of building a DAO is, and how this ‘thing’ relates to the need for a DAO. For example, we set up a DAO for donations so that we can help funders better participate in the management of their funds. We don’t need a DAO for the sake of a DAO.
🎈 The person you ‘summon’ determines a DAO’s success
Anyone who is enthusiastic about DAO is a person needs to be respected, but not necessarily the right person you’ve been looking for. Enthusiasm is merely a prerequisite, ‘values’ and ‘capacity matching’ are more important criteria.
Values determine whether you keep the same pace, especially in terms of direction. Imagine the disaster caused by a big crowd at a different pace. A mismatch of values would lead a DAO into irreconcilable chaos. A flock of sheep without a shepherd doesn’t mean a group of people of average ability; the elite could fail as well.
Capacity matching determines whether the people you summon would fulfill the objectives of the role as you expect. We don’t summon someones to increase the DAO members, but to work on the ‘things’ actually, so it is crucial whether their abilities are matched or not. Don’t try to increase the numbers rather than capacity matching, as this will only multiply your coordination costs. Keep your members as lean as possible and put quality before quantity. Especially in the early stages of a DAO, try to keep it small and lean. Finding the “right” person is better than a swarm of people.
Summon your members carefully and then trust them completely.
Ten to one, idealistic DAO will fail
Usually, we are infected by the DAO that is described in books, but that is the essence of thought experiments and numerous examples, the “perfect theory”. If you take this as our platform, you will be frustrated. The enthusiasm for DAO proves that we are all more or less idealistic. It is the large number of idealists who drive the world forward, both in terms of technology and the whole society, but there is sometimes only a slight difference between idealism and Utopianism, so it is easy to go into the swirl of idealism. Those distilled essences are our ultimate goal, and to reach that goal we have to tread a thorny path. We will face a vast number of problems and obstacles, and if your DAO is not composed of “ the Chosen Ones”, then the only way lead us there is “Evolutionary”.
There are two parallel paths to progress:
- The degree of decentralisation
- The control of scale
People are the most unquantifiable in the world, and also human coordination is the hardest thing in the world. If you start a DAO with a “perfect theory” of operation and governance, ten to one, your DAO will have no “hope of survival”.
Not everyone is comfortable and skilled at using decentralised thinking to guide their actions from the outset, nor can all organisational matters be implemented smoothly using decentralised thinking at the beginning. So we need to balance the degree of decentralisation at each stage, and to work through it to achieve perfection.
On the other hand, control of scale is also an important route to implementation. It is easier to achieve decentralisation by starting with a minimalist approach.
One thing that is unassailable, however, is the core interests of the members. We cannot deprive any member of their interests in the name of evolution. Openness, transparency, openness, and equality of opportunity will always be the unchallenged rights of members.
🎈 A DAO is not a headless organisation
On the gradual path, especially in the early stages, we need a leader.
Recently, James Young retweeted a tweet by louis, who said that communities need leaders to give pace and direction.
Perhaps it deviates from DAO at a “perfection theory” perspective, but it is a very important aspect of DAO. DAOs are groups that gather consensus and express it, and unless your DAO has reached a certain stage of maturity, the gathering and expression of consensus requires a leader,especially in the early stages, to ensure that the organisation is moving forward in the right direction and at the right pace, and at the right pace. A DAO is not a headless organisation. In the early stages, the ‘head’ may be a human being, at the ‘ mature’ stage, the ‘head’ may be the consensus itself.
The core of the mechanism is not for refinement, but to link more excellent people
Every DAO needs its own mechanism, including membership access, decision-making and governance, etc. But it is important to note that the purpose of the mechanism is not to restrict people, but to link people better, which is the essential difference between DAOs and traditional organizations. We should never copy the “perfect theory” to make those rules and regulations to restrict people, we should consider more about what kind of mechanism can attract and link more excellent people. This does not mean that you need to relax the standards as much as possible, Please rest at ease because the better the people are, the higher the requirements for you. So consider people, not the mechanism itself.
🎈There are no fish when the water is too clear
Any organization needs to distribute capacities across multiple dimensions to satisfy the requirements of different scenarios. Each dimension has its own irreplaceable importance. If your members are all in the same dimension, then you will not be able to deal with the complex matters in the world. Just like the community, there are thinkers, there are loquacious ones, there are advocates and there are questioners. It is the diversity that makes up a complete community. Maybe you are not comfortable with a member of a certain dimension, or you feel that he may bring you some so-called negative effects, please help him rather than resist him. Play the positive role of each dimension, and if there is a reverse, then find a way to make it positive.
This is the first article of “What makes a DAO”, I will record some thoughts and experiences about DAO successively to share with you, hope to inspire you and help you. DAO is still in the very early stage, we can hardly find any reference, only trials and errors in practice and summary. Welcome to join the discussion on DAOs, let’s promote the development of DAO together.
🌟 🌟 🌟
About DAOSquare
Born in the well-known West Ethereum community MetaCartel, DAOSquare is dedicated to building a Web3 incubator which aims to be the Y·Combinator in the Web3 era.
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