1 year DAO learnings
bias opinions and takeaways
Context
After coming back from DAO Tokyo, had a lot of reflection and thoughts on DAO ideologies overall and its trade offs. I want to share some learnings from a year of DAO-ing and building in the space, with some high level lessons learned.
I’m deeply involved in Bu Zhi DAO, a collective of people who love Taiwan and web3, trying to build the Taiwan web3 ecosystem on the global stage. Some learnings come from here, some elsewhere, many from inspirations in the space I participate in such as da0 or nounsDAO.
As a pretext, I think DAOs are amazing ways for people self actualize and contribute to many causes they care about at the same time with freedom and autonomy. A beautiful way for people to reach their full potential and improve how humans coordinate and collaborate.
DAO Trade Offs
Every DAO structure and decision is a trade off. The classic centralization vs decentralization, privacy vs transparency, execution vs consensus, and web2 vs web3 are some examples. There isn’t good or bad, everything is a spectrum for what’s most fitting based on what context, scale, and maturity your DAO is at.
Centralization vs Decentralization
Centralization is not a bad word. Something Ben Huh from OrangeDAO and Origami said that I liked really resonated with me. :
Decentralization is a direction, not a destination
Full decentralization is chaos, there always needs to be a balance. In the early stages, centralization is needed for mission and vision alignment, so everyone knows where the train is headed and all efforts can be pointed in a cohesive direction. As the DAO matures, the more leadership should decentralize to specific project or pod leads that run the show. The pace to progressively decentralize is an art.
Privacy vs Transparency
I’m a huge fan of radical transparency inspired by Audrey Tang. But in reality, not everyone operates best in that paradigm, and it took me a while to learn to not assume more transparency is better. In a larger group chat, people are less likely to share their opinions and thoughts freely, just like giving a speech in front of a crowd is more nerve racking than chatting at a small dinner table. There are often times where private conversations work better even for matters that arguably should be public. An easy way to balance this is have smaller meetings/chats but keep the invite open or record it.
Execution vs Consensus
It’d be really slow if everything needed consensus and a vote, there are many situations after decentralized governance or guidelines are passed, the execution should be purely centralized for speed, efficiency, and full autonomy. Overly seeking consensus can often create a lot of noise and slow things down. The best way to balance this is have well thought out execution plan and share widely for any feedback to reach consensus on specific items rather than an open discussion that is difficult to do with a large group. Brainstorming sessions are great to build camaraderie and to kick off each season or big idea - but specialized teams should form for planning and execution that actively seek feedback
Web2 vs Web3
Is on-chain always better? Not necessarily. Lots of DAOs start off with a lot of great tooling and smart contracts in order to scale and do things the web3 way. While you need this for large protocols that handle a lot of liquidity, for smaller mission/community driven DAOs, web3 tooling can often be a huge source of friction. on-chain is great when you need to scale, but premature optimization for scaling can backfire.
We used snapshot at first but just ended up using Telegram polls where we saw a 10x voter turnout and engagement on each proposal, it’s a trade off we’re willing to make at least in the beginning.
Everything is a tradeoff, be strongly opinionated and open to trying different approaches. Don’t feel discouraged if something doesn’t work - it’ll bring you closer to what will work.
Incentives
The best incentives are intrinsic, rather than extrinsic.
We started Bu Zhi DAO with IDK tokens that was modeled after OrangeDAO’s orange token. We loved the tokenomics design and thought it fitted what we needed well. We had members self report hours and dispersed tokens for 2 seasons. As we got busy with planning Taipei Blockchain Week, we stopped issuing tokens and no one seemed to cared. We think people cared more about working on a strong mission with people they like and having fun doing it.
My dear friend and inspiration Noah from da0 once taught me:
The best way to motivate someone is aligning their personal ambition and passion with the DAO’s mission.
At Shibuya.xyz, a platform to help creators fundraise for high quality short films and offer interactive storytelling tools. We care a lot about our creative and talented community, we set up programs where creators can learn the latest tools from each other and have a chance to contribute to our IPs. Not only does that help our creators in their own careers and get highlighted, it also helps our platform become a place where creators not only hangout but gain value.
In the hectic web3 incentive crazy world, the most basic question of “are you actually creating value” is often and sadly overlooked.
Scaling the DAO
With all that being said, starting small and having a strong mission is great, but at some point you run out of momentum and need to grow/scale to continue delivering value. This is the hardest part for any DAOs in my opinion and growing pains is a challenge but a good problem to have. In order to scale, how do you design a flywheel where contributors are rewarded fairly, feel recognized, have the stage to create value in a way that aligns with their passion and ambitions. All while accruing value back to the DAO and furthering the DAO’s mission?
At Bu Zhi DAO, we just passed a proposal that goes from one time mint lifetime membership to seasonal free contributor membership, hoping to solve some of the efficiency and scaling challenges and bring in more contributors to help further the mission. After a year of DAO-ing, and a successful inaugural Taipei Blockchain Week, scaling the DAO and contributors to be mission aligned, and long term sustainable will be the next fun project that’s top of mind
^membership NFT designed by Andy An
Conclusion
There is so much to learn in the DAO space, and we are so young and early in this journey. Some takeaways here for DAOs starting off are
Focus on achieving the mission rather than what tools/tech you use
Focus on what you do rather than what you are (A DAO or not is irrelevent, a buzz word or ideology at best)
It’s always about the people, onboarding is the most important feature, your members are your customers
Trust-less tools are only needed after 150 people, work on building trust before that, the right tools will follow.
Most DAOers are wonderful idealist and dreamers, that’s why I love learning from you all. Let’s keep experimenting and trying new things but not lose focus on creating value and being there for one another.
Towards decentralization and web3 together, onwards.