Decentralized Autonomous Organizations;The New Coordination Frontier
In recent years, there have been an increasing shift towards part time employment. Workers want more time, more flexibility and less work. With discrete tasks and burgeoning gig economy, both workers and employers are realizing that work is modular. The digital age created an environment where creative work can be done anywhere. We’ve seen the gig economy adapt itself to Web 3, termed the creator economy. The Web 3 ushered in a myriad of opportunities, reshaping how we look at the future and its impact on the way we live our lives , there have seen more calls into decentralization where the centralized figure ( the big brothers) will become less important and eventually be obsolete. This is the promise of the internet when it came but it never materialized and was hijacked.
DAOs are typified by the use of blockchain technology to provide a secure digital ledger to track financial interactions across the internet, hardened against forgery by trusted time-stamping and dissemination of a distributed database thereby increasing coordination between members which in turn creates growth in the system.
Decentralized autonomous organization (DAO) is a term that has been here for a while. According to Wikipedia, a decentralized autonomous organization (DAO), sometimes called a decentralized autonomous corporation (DAC), is an organization represented by rules encoded as a computer program that is transparent, controlled by the organization members and not influenced by a central government is an entity with no central leadership. Decisions get made from the bottom-up, governed by a community organized around a specific set of rules enforced on a blockchain. Decisions are made via proposals the group votes on during a specified period.
A DAO gives everyone a voice, the freedom to earn, express your mind and it champions equality, irrespective of races and societal status. It creates an effective way of organizing with other people around the world, establishing rules and making decisions autonomously through blockchain. This is already becoming real, though its still in its infancy and has seen a lot of growth lately. We have seen its implementation in some decentralized applications like MakerDao and sushiswap where its members to vote to make decisions on its policy implementations.
DO WE NEED DAOs?
DAOs tackle an age-old problem of governance, which political scientists and economists refer to as the principal-agent dilemma. This occurs when the agent of an organization has the power to make decisions on behalf of, or impacting, the principal — another person or entity in the organization. Examples hereof could be managers that act on behalf of shareholders or politicians that act on behalf of citizens. In such setups, moral hazard occurs when one person takes more risks than they normally would, because others bear the cost of those risks. More generally, it occurs when the agent acts in his own interest rather than the interest of the principal because the principal cannot fully control the agent’s actions. This dilemma usually increases when there is underlying information asymmetry at play.
Decentralized Autonomous Organizations (DAOs) are digitally native communities that center around a shared mission. DAOs are decentralized , because they are community-owned , grassroots-driven, and loosely organized contrary to the hierarchical, tightly -structured centralized organizations. Shared rules and shared treasuries are encoded and automatically enforced on ethereum blockchain, this makes it autonomous. DAOs are a new internet-native way for communities to efficiently and securely coordinate funds and labor. DAOs are simply units of coordination. Any group of individual can create a DAO to execute their mission with minimal barriers to entry , whether that be to buy and manage a basketball team, create a decentralized Business, or offer services to other DAOs.
DAO treasuries are north of $7B worth of assets under management and somewhere in the ballpark of 1m members, respectively speaking. All these happened in just 5 years.
DAOs are autonomous because they have no human dependencies; they operate as autonomous software on ethereum. Most DAOs lack sufficient tooling to move their decision-making and execution from the social layer to on-chain but that hasn’t stopped the massive wave of DAOs that embedded the values of decentralization and permission less execution at the social layer.
HOW DAOs WORK?
In traditional organizations, decision making happens through top-down hierarchy with a small group of executives dictating each macro-level decision. DAOs operate through a bottoms up follow where decisions are made through community consensus and rely on the perspectives of peers. this does not mean that every person is necessary involved with every single decision , but rather decisions making happens within concentric rings , starting from soft consensus and moving toward hard consensus.
soft consensus achieved through some implicit signal of preference depending on the scope of impact and Hard consensus achieved through a collectively accepted signaling mechanism.
DAOs need a combination of soft and hard consensus unless they want to get bogged with bureaucracy (only hard) or divisiveness (only soft). Infact, consensus mechanisms can have both softness and hardness both.
HOW TO GET STARTED?
Getting started in your DAO journey can be daunting and tasking. there are no much resources out there on step by step into getting up to speed. forums and discords are the best way for beginners. you get to participate in discussions and an enormous wealth of information. attending community calls and providing input on governance proposal will help you in learning the ropes. after this, you can start contributing to the system by helping out with the DAOs core projects or serve as a resource for new members. over time, with consistencies, more opportunities will arise and you can get a part-time or a full time gig in the community. There are usually a handful of rules that DAOs could always use to help with. here are few:
Developers: In crypto, technical talents are always needed. Whether its developing new smart contracts, back-end development, building aesthetic user interfaces, audits etc, there’s never a shortage of opportunity. As a technical person, opportunities are enormous.
Community managers: Community management is a great place to get started if you cherish building relationships, talking to people and creating an active engagements. DAOs are digital communities , they need moderators to manage the activities.
Content creators: A lot of DAOs need content creators to keep the communities engaged, create awareness campaigns to help market their products and services. Just start creating contents, publishing on your own accord and sharing with your community.
Designers: Just as developers are always needed, designers are not exceptions. They create designs for the user interface , imagery for content creators and dropping hot new NFTs to propagate crypto culture. if you are a designer, you are sitting on a gold mine.
Operations & Facilitator: DAOs grow more complex with time. operators and facilitator serve a key role in ensuring the overall organization works efficiently.
Treasury Management: DAOs have a lot in capital and they need to find a way to allocate it. People with good financial background are always in demand to mange and grow their treasuries to billions.
SUMMARY
DAOs represent this shift in thinking . People in DAOs work at their own leisure , whether that’s five hours a week ,or fifty, at one DAO or three. in fact the majority of contributors within a DAO are part-time , which inverts the usual model found in traditional organizations. and guess what? lots still get done. It doesn’t stop there. The future of work doesn’t mean only working your own hours, but it also reflects the meaning behind that work. DAOs are digitally native communities that center around a shared mission. That mission isn’t marketing fluff. Unlike incorporated companies that have financial obligations to shareholders, DAOs can activate around a more diverse set of goals that are not necessarily financially motivated. Combine meaningful missions with flexible working hours and people find themselves wanting to contribute, rather than being compelled to contribute.
RESOURCES
Emboldened by a growing sense of collective empowerment, the DAO ecosystem has been surging with activity lately as more and more people discover how these organizations are pointing to new scope of work in the 21st century. They are already enabling dense P2P network of value exchange & participation. DAOs are a worldwide trend & an emerging part of the ethereum ecosystem. They are still in their infancy and yet to actualize their full potential.
Getting up to speed on DAOs can be daunting as i have said above. we decided to do some little work for you by listing and putting the link to their respective projects.
DAO operating systems
Investment DAOs
Grant DAO
CollectorDAO
Protocol DAOs
Service DAOs
Originally published at https://viralies.com on October 21, 2021.
