DAOs - The Future of Decentralised Work
Dan Smith
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3.14.22
“Web 3 will revolutionise the internet”
“DAOs are the future companies that will rule the world”
“The underlying technology behind NFT’s will affect everyone”
“The metaverse will change how we interact with society”
These are all statements that seem to be made on a daily basis at the moment, but how can we possibly know if DAOs and web 3 will be the future without first understanding exactly what they are and how they work?
Don’t worry if you have no idea what a DAO is, trust me I didn’t either!
DAO is essentially a community with a shared bank account, all working towards a common goal or interest, everyone is incentivised as they all have a stake in the outcome of the organisation. Classic organisations involve a central founder or group who develop a product, then over time use this product and large amounts of marketing to build a community.
The difference with DAOs is that the community comes together first, a community of people who have a common set of values and focus, and the community then builds the product together. This is a subtle but very powerful difference, as it provides the benefit of social and economic capital from the very start of the process, accelerating progress and streamlining lots of the inefficiencies found within conventional businesses.
We all know about the convenience of Uber, a fleet of freelance taxi drivers working flexible hours to provide cheaper and quicker service to customers.
Sounds great right?
Well, it’s not so great for the taxi drivers, who work tirelessly for a mediocre wage, whilst most of the profits are accrued by a centralised company, a company which is actually doing none of the valuable work.
But it doesn’t have to be this way, imagine if Uber was simply a community of taxi drivers, who offered exactly the same service, but all of the profits went to a community bank which was then shared fairly between the workers. Okay, so that wouldn’t exactly work because Uber still needs an app, but imagine within this community there were taxi drivers, software developers and anyother staff as required, who all shared the profits and everyone would have a say on the direction of the company going forward.
The thing is, this vision of a decentralised and democratic Uber is most definitely achievable, this concept is essentially the principle of a DAO. Working for a large, typical organisation certainly has its benefits, but you are essentially a small cog in a big machine, and as that machine gets bigger and bigger it has no impact on you.
You don’t own the machine, someone else does. Within a DAO you may still be a small cog in a big machine, but the whole community owns the machine, so as it gets bigger so does the value of your cog.
This ensures a strong community buy-in with everyone benefitting from the DAO getting bigger and better, creating a sense of purpose.
One major problem is control.
With certain tech titans owning a large part of our life all the control lies with a few key people. Imagine if tomorrow you were banned by Meta (the new name of Facebook’s parent company), no more WhatsApp, Facebook or Instagram.
What’s to stop that from happening?
Hypothetically nothing, maybe this is slightly sceptical, but centralised companies have a single point of failure; remember a few months ago when all those apps crashed and were not working for most of the day?
How did that affect you?
A DAO itself is simply a framework, a structure that can be adapted in its own way for a variety of specific goals and use cases, think of it as an operating system which can be used to achieve a variety of different things.
The DAO is simply the ‘how’, the ‘why’ is then up to the community. It is also important to note that DAOs are only a recent development and therefore many of the
uses which may be prominent in the future might not have even been thought of yet.
Currently, though, some of the most used types of DAO include:
- Grant DAOs - Communities of people who donate funds to a variety of different projects
or causes, since they are DAOs, they are much more agile than formal bodies.
- Protocol DAOs – Project driven communities, that issue a token to generate capital and use this to achieve their project.
- Investment DAOs – They allow groups of people to pool their funds and then democratically choose different projects to invest in with this money. This allows purchases of items that individuals could not afford e.g. Bored Ape Yacht Club NFT’s.
- Social DAOs – These evolve a group chat into a success-driven community, allowing you to meet people and create contacts with similar interests, this can range from a general social club e.g. Friends with Benefits (the benefit being the community) to a reading club DAO where you all vote on the book to read in the following month.
- Creator DAOs – Although they have not been fully explored yet, they provide a celebrity or creator with a platform for two-way consumption, turning their fanbase into a community and allowing fans to experience a unique connection with exclusive events etc.
The term autonomous can be interpreted in many ways, one way to think about this is that DAOs automate all of the central, laborious processes within a business, and allow humans to add value in the way that they are best suited to do so.
The centre of the DAO is autonomous, with humans adding value at the peripheries. It is not to say that DAOs can function without humans, this is absolutely not the case, and community defines what the DAO stands for, it simply allows for a more efficient structure and improved productivity.
Since the DAO is simply a tribe of people who are digitally native (i.e., comfortable with the use of technology and its role in improving our lives), autonomous can also be thought of as the collective consciousness, the fact that there is no single weak spot, and the DAO can function without any single individual. Its power comes from the many, not the few.
Such drastic changes in business ideology are hard to fully convey in one simple blog post, so I encourage you to go and explore more about the world of DAOs, and how they provide a shift from a competitive to a collaborative environment.
The fact they aim to flatten the hierarchal structure within companies and create fluid workstreams. The fact is that they provide all of the community members with a voice through varying methods of governance. I have included a list of some resources below which may be interesting, and if you want to talk more about DAOs and their impact on the future, let’s have a chat on LinkedIn!
CoopahTroopa - They have been involved in over 80 DAOs and is an expert in DAO governance, this blog is very insightful and easy to understand.
Vitalik Buterin - Is the creator of Ethereum, and this provides a much more technical and clear description of what a DAO is.
Coin Bureau - A great source for educational Crypto content and this video covers crypto governance and in particular DAO’s.
Medium.com - An article which talks about different types of social DAOs and provides plenty of examples that you can explore.
