Welcome to DAOs Part III
Hello, my dears!
Welcome to our third and the last part of the DAO Blog Series. We will finalize the series with the challenges and the opportunities of DAOs. But don’t worry — we have a bigger thing coming next.*
*You can read more about it at the end of this article.
Just like NFTs were the big thing of 2021, DAOs are going to take over 2022. However, with big promises come also big responsibilities. So, it is no time for DAOs to chill and relax. There is a lot of work to be done.
Here is a summary of what you will find in the article:
- Some thoughts before I started writing this article
- Legal challenges and opportunities for 2022
- Technological challenges and opportunities for 2022
- Organizational challenges and opportunities for 2022
- A surprise…
DAOs are at a very early stage of their growth and one could say that there are countless challenges to overcome. However, I believe that these challenges open the door to many more opportunities. These challenges are there for a reason and in this article, you will see why.
I have asked a few of my fellow DAOists what they think about upcoming challenges for DAOs for the year 2022. What needs to be overcome in DAOs so that their growth accelerates?
Is it the market adaptation?
Hmmm, not really, there are already enough people who want to participate in DAOs.
Is it then the lack of motivation?
That is also not true. Of course, there will be many people who do not interact with the community at all. But there are enough active participants that will keep DAOs running.
There are three things that DAOs need to deal with before going big.
People are trying to find alternative ways to set up a DAO. Why?
Because there is no legal equivalent for DAOs that can officially operate on an international level. So, founders go for an NGO, an SA, or an LLC. On top of that, only a handful of countries such as Switzerland, Estonia, Dubai, the USA, or Malta offer a proper legal environment for DAOs.
There are also a lot of additional side effects of this issue. With the current, twisted solutions DAOs may not be able to buy a product or the members may not be officially permitted to vote. It puts unnecessary limits on those organizations.
What should happen then?
DAOs need the support of lawmakers that would officially validate their existence. Before that, all the DAO entrepreneurs will be like kids playing piñata — at some point, they will hit the target. But it would have been way easier if they could see what they were doing from the beginning.
Nevertheless, it is such a complex and dynamically changing topic, that if you ever want to set up your own DAO or make sure the one you are joining is legit, remember to contact a legal advisor. What I am saying now may be history tomorrow.
Okay, so you know that the legal situation with DAOs is tricky, but why exactly would we want to improve it? What will happen once DAOs receive their own legal entity?
- There will be less worrying about the unstable and constantly changing regulations. We will finally be able to focus on doing business.
- Democratic voting will finally become official.
- DAOs will receive the right to operate like real companies.
- More people will be encouraged to not only create DAOs but will also feel safe to join them.
Simply speaking — less worrying, more work.
If you ever had anything to do with crypto-related activities, even setting up a Metamask wallet, you will agree that well…
The user experience is complex, messy, and disintegrated on many levels.
Doesn’t sound very inviting, does it?
There is so much to be improved when it comes to decentralized applications and their user experience.
- The ecosystems are disintegrated.
- The tools are not usable for people who are not tech-savvy.
- There are many solutions but rather in the phase of development.
So, it is not like the current technology is making it *impossible* to run a DAO.
But it is decreasing DAOs’ efficiency. There are a lot of steps that need to be followed to complete a task. Very often, we need to wait for a system update that will finally make the product complete.
How is a business supposed to blossom in such conditions?
I mean, yes, we are at the very start of DAOs and there is still a lot to uncover about them. But in such a fast-growing industry we are thirsty for high-quality products. For now, there is a lot to choose from, but there is nothing that would fulfill our needs 100%.
There is, however, a light at the end of the tunnel.
Once we go through this kinda rusty moment, where it is more about trial and error method, we will enter an amazing era for DAOs.
We say that it is necessary this year to improve their user experience. But we need to accept the fact that now we are going through a crucial process. A process that determines the future of DAOs. What is being invented now will shape the whole post-capitalist economy.
3. Organizational structures
Finally, my favorite part. We need to establish organizational structures for DAOs! Why is it my favorite part? Because I feel like for today we have the most influence here compared to legal or technological difficulties.
Let me quote a very inspiring comment from the RE-ORG group on LinkedIn written by Isai Guerrero:
“DAOs need to identify the difference between contributors, members, and followers. They need to implement a soft level of structure and a core team. Otherwise, all you get is a group of people passionate about a cause with no action.”
So we already have an idea of what members we want to have in DAOs. But it is all over the place. We are still trying to figure out who does what and make the best out of the learning experience.
Here comes my crucial remark.
We are learning so much in this space, but who is there to take the notes? Who is there to observe, research, and make scientific conclusions based on what is currently cooking in all these DAOs?
In my opinion, there is a big potential in blockchain governance research.
We have a lot of doers, which is amazing, but we definitely need more observers. Once more official research is done, we will not have to only rely on the word of mouth, our gut feeling. Even the amount of press that is released on the daily basis is overwhelming and it becomes counterproductive compared to its initial goal — bringing clarity.
So let’s sum up the learnings!
- DAOs are becoming the next big thing in 2022, after NFTs in 2021.
- There are three big aspects that DAOs will be dealing with this year: law, technology, and organizational structures.
- Currently, there is no official legal entity that would be equivalent to DAOs.
- The user experience needs to improve because at this point it is possible to use the available tools, but they are not efficient enough.
- We need to determine the difference between member types to improve the organization.
Here comes my question for you.
What will you do this year to improve DAOs? What are you going to do to help them grow?
Let me know your thoughts in the comments!
My goal is to participate in research projects of DAOs, therefore providing legitimate knowledge on how we could organize ourselves better. Stay tuned, as you will hear from me about the project I am starting with some very inspiring people.
This was the last part of the DAO Blog Series, but also a start to another big thing.
Why? We are officially releasing an article series WTF: Web Three Friday!
Every Friday we will be posting an article from the blockchain world. It is not only going to be about rookie topics — but we want to also discuss the juicy parts of the web3 world.
All I can say now is — see you next Friday!
And in the meantime, I encourage you to join our Discord channel 🚀 for more blockchain (and marketing) related discussions.
Stay tuned and stay safe,
Your UFOstart Marta