The subDAOs of Sarcophagus
Optimizing DAO governance and participation
Since the inception of Sarcophagus in the early parts of 2021, it was clear by the founders and early builders that they wanted to create two things: a blockchain-based utility to empower its users as well as a DAO structure to build it from. There are various resources here within Medium and linked below to more information about the utility of the Sarcophagus, but the focus of this piece is about DAO optimization and evolution by Sarcophagus.
A DAO is a decentralized autonomous organization and is a new form of organizational structure that is enabled by blockchain. Through tokens created and maintained on a blockchain, a token can be held by DAO members and then used to participate in the governance of a DAO. Unlike traditional business and organizational structures such as corporations and LLCs, a DAO is constructed such that all token holders can participate in governance activities such as making improvement proposals, voting for or against proposals. In other business structures, these decisions are made by either a board or owners that should make decisions in the best interest of the company on behalf of the company. This is a major difference, wherein in older organizational structures, power is limited to a select few, who have been chosen to represent a company’s interest compared to a DAO, where inclusivity allows all members to have a say in the direction and growth of a DAO. As of today, in a place like the USA, there is a legal grey area that DAOs are able to operate, whereas they operate as a traditional business from a legal standpoint (i.e. LLC wrapper) but behave under the DAO ethos and design. As DAO’s mature, this legal grey will likely be more defined, but in the meantime, DAOs will continue to grow, evolve, and be evergreen since it’s still such a new concept for managing an organization.
DAOs as a method of interaction
As mentioned earlier, the Sarcophagus DAO is the controlling force behind the Sarcophagus project and as the founders and early builders set the groundwork for the project to kick off, the move to a DAO came shortly after. The Sarcophagus DAO is set up such that it controls all the minted tokens that have not been put into circulation in a vault. For any future actions to disperse funds/tokens from the vault this will require a DAO vote. Members of the DAO are all token holders of SARCO and gives them the control to vote on proposals such as pursuing and selling to investors/partners, approving proposals to grow the project, as well as making decisions on improvement proposals that can have an effect on how the DAO is managed.
Particularly for the Sarcophagus DAO, the vault and voting and execution of the DAO are managed by Aragon. Aragon is used to handle the votes, finances, and agent(execution) to process the stream of transactions that get approved by the DAO. You can view the DAO specifics at Aragon at this link: https://client.aragon.org/#/sarcophagus/.
One of the biggest challenges in a DAO setting is to drive and receive high engagement and participation from all token holders or DAO members. Two major components of this behavior come from a combination of a lack of knowledge/education surrounding how DAOs function, which leads to the second component that people are accustomed to business decisions being made by others. Regardless of how headstrong you want to do things “the DAO way” human nature makes us revert to previous experiences with traditional organizational structures.
The lack of education and/or knowledge of DAOs is a relatively easily understood phenomenon given the relatively nascent environment in which DAOs have sprouted in recent times. Everyone alive has grown up around organizations ranging from single-owner businesses to multi-national corporations. Everyone at least has a faint idea of how these organizations are run, via a hierarchical tree with leadership roles and responsibilities increase as you move up in the tree. A DAO is designed more horizontal than vertical where everyone’s opinions within the DAO are equally weighted and valid. Everyone is capable of making proposals to go to a vote.
The second challenge is mostly due to a gap in incentives partially due to the previously mentioned reason. As people may not understand how and/or what they should do to help the DAO progress or improve. Within a DAO the line between an owner/leader and a customer/employee is blurred and they ultimately are one and the same. The mindset of a DAO member versus a traditional employee is starkly different in the approach a person may take when dealing with an organization.
The mindset of Participant in Traditional Organizational Structure:
- I do (or do not) understand that my work in the organization help build up the organization
- The organization and I are separate entities
- I need permission to do things by those in charge
- I’m compensated for just my time and effort
Compare this to the conceptual mindset of a DAO participant:
- All my contributions and effort are towards improving the DAO
- I am a representative of the DAO and self-identify with the DAO
- I don’t need permission to do work, but try to align with the vision and goals of the DAO
- I’m compensated for contributions the help the DAO, if I waste my time and/or effort then I will not receive anything
In order to help with the overwhelming new space that many people may not understand their role and/or how to contribute, Sarcophagus has decided to utilize a subDAO concept to help manage governance over the variety of needs that the DAO has to perform. Many DAO members may not either have the technical breadth to handle some decisions and/or even want to bother handling some decisions and this is where subDAOs come to play. subDAOs can be construed as a sort of delegation of power through the main DAO to enable small groups, the subDAOs, to make more agile and targeted decisions. The main DAO reserves the right to change the bylaws or rules of the subDAOs in the case of abuse or neglect.
Sarcophagus currently utilizes two subDAOs and has plan for a third. The two subDAOs in place are the Ambassador subDAO and the Payroll subDAO. The role of the Ambassador subDAO is to assign a small allotment of tokens and structure for Ambassadors to help manage and grow the community that supports the DAO. With the funds they manage, they have the ability to control, choose, and support efforts to build up the community and the DAO, with the caveat that they are aligned with the visions and goals of the DAO. Membership as an ambassador is decided by contributions and a nomination process through existing ambassadors. Ambassadors ultimately are the glue been active DAO participants and casual and/or non-active members.
The payroll subDAO handles the role of compensating DAO members that contribute and/or build the system. The main idea behind this subDAO was that primary contributors and builders understand when positive contributions are made and they can approve the “payroll” with a simple vote of a few members. This ensures that builders and contributors can be compensated faster and do not need to generate costly (i.e. gas fees) and/or drum up support for DAO members that do not have an active interest in taking part. As with the ambassador subDAO, the payroll subDAO can be dissolved and replaced at any time by the main DAO.
The next and future subDAO will be the liquidity subDAO. The concept behind this one is to look to build and manage a consistent and reliable revenue stream from the available funds that the DAO maintains. The revenue stream coming from this effort will be used to help generate governance incentives and to help drive participation in SIP’s (Sarcophagus Improvement Proposals) as well as incentivize supporting the project over time. Plans for this subDAO are being drafted and finalized and will go through a vote to fund and approve the bylaws of this subDAO as has been the case with the running subDAOs.
Ultimately, the strategy of subDAOs is to assist with the governance of a DAO by allowing delegation of power and funding to smaller groups with approved bylaws and set funding. Sarcophagus is taking these measures to improve the success of the utility, vision, and goal of what Sarcophagus embodies, a decentralized dead man’s switch.