OWN Insights 05: DAOs Are the Next Unlock in Web3
Welcome to the OWN Insights series, where we invite industry leaders to take us on a thought provoking journey through the Web3 space. Throughout this series, industry leaders will be sharing a space, communicating their thoughts, and helping us to better understand the new iteration of the internet. Please enjoy this article from Humpty Calderon, Head of Community at Ontology.
Web3 is a space with tremendous nuance. The revolution that was spawned by DeFi to advance financial sovereignty has taken on a much bigger meaning. People want to make an impact in ways that are meaningful to them, and they want to do so with value aligned individuals.
DAOs (Decentralized Autonomous Organizations), for over a year now, have proven they are a good mechanism for bringing people together along shared values and purpose. People with a shared mission have organized around those beliefs, powered by a variety of tools and methodologies to solve complex challenges together.
Most DAOs can be categorized in the following groups: Service, Protocol, Investment, Grants, Collector, Social, and Media DAOs. As DAOs continue to grow and mature, so do the categories that wish to organize them in neat little boxes.
DAO tools have also evolved from where they were only a year ago. Interacting with a DAO has become more complex; going from simple web3 wallets and social platforms to include multisigs, operating systems, p2p compensation, voting platforms, and more recently task and bounty management tools. Standout tools like Gnosis Safe, Snapshot, CollabLand, and Coordinape are leading the DAO tooling revolution.
It doesn’t seem as if DAOs can be stopped. Quite the opposite actually. The demand for new, novel DAOs is accelerating. Projects like ConstitutionDAO have sparked the imagination of many would-be DAO founders, and accelerated ideas by people who share the same enthusiasm, commitment, and desire to make an impact in the world.
As the types of DAOs and tooling evolves, so too does the demand from communities that comprise DAOs to create more robust mechanisms to manage and support the project and their contributors.
A few areas in which DAOs are hoping to improve is onboarding, incentives, and governance
Member onboarding has for some time been a product of tokens, which DAOs use to govern, and incentivize members. Many DAOs also use tokens to gate communities. To distribute these tokens, DAOs usually perform airdrops to users of their platforms and value-aligned projects and protocols, thus aiming to onboard these individuals to their DAO to participate in community building and governance. A practice that is not perfect but has worked for some time.
Recently, there has been an evolution in the way airdrops are used to onboard DAO members. More comprehensive “checklists” are used to quantify an airdrop recipient’s interaction with a project or protocol. Additional steps are sometimes taken to introduce them to the governance process of the project and begin participating in it prior to accepting the airdrop. The goal is to find individuals who will more likely align to the DAOs mission and become active, valuable contributors.
Once onboarded, a DAO must find ways of retaining high-impact contributors. Whether through grants, bounties, or role-based pay, DAOs incentivize contributors to create value and grow the ecosystem. This process usually allows for anyone that is interested in participating in the DAO to do so without too much effort. Generally, this is a process that works well for accelerating contributions from early contributors. However, as a DAO matures, the incentives are often misaligned to veteran contributors who have generated tremendous value to the ecosystem. Longtime members can find themselves competing with new members for bounties and roles that value their contributions as the same.
Governance in DAOs oftentimes, if not always, is performed through token holdings. The more tokens you own, the larger your voice in a DAO. This process tends to work well in the early days where everyone should have similar footing in a DAO. However, as individuals contribute to a DAO, the value they generate may differ from others. This is especially true with regard to large token holders that may join later and who don’t frequently contribute, or at all. The voices of those avid, frequent contributors who may be more in tune with the needs of the DAO may be drowned out by those with token wealth. This can skew outcomes in favor of those who may be interested in shaping a DAO in ways that are misaligned to the values of the DAO and those who are building it.
What is next for DAOs?
The future is bright for DAOs. Recently, much attention has been brought to self-sovereign identity and reputation as it relates to decentralized communities through articles, blogs and papers written by highly-influential personas. This has spawned a new wave of development using Decentralized Identifiers (DID), Verifiable Credentials (VCs), and non-transferable NFTs (SBT).
Projects are experimenting with these novel technologies to identify their use case in DAOs. The promise is that one, or all, of these can unlock an individual’s reputation and create more dynamic and fair onboarding, incentives, and governance practices.
This clearly marks the beginning of something new and exciting in DAOs, and web3 in general.
Personally, I am excited for the opportunity to explore and build in this emergent space that continues to evolve before our very own eyes.
OWN (Ontology Web3 Network) Infrastructure is a series of blockchain protocols and products that provides the much needed tools to create an interconnected, interoperable global blockchain ecosystem. The infrastructure is bringing trust, privacy, and security to Web3 applications through decentralized identity and data solutions.
Aimed at allowing Web3 developers to quickly build Web3 applications, saving them from creating basic functions from scratch, OWN includes the Ontology blockchain, ONT ID framework and more. Individuals can also seamlessly and quickly access Web3 through products such as ONTO Wallet.