Governance is Messy
A brief DAO history and a call for better UX.
Note: I recently joined as SZNS product manager. Thus the use of DAO SZN-X, etc…
DAOs (decentralized autonomous organizations) are the most exciting innovation in the world. They feel like the Internet and the American Revolution had a baby.
Smart contracts and applications enabling these digital native organizations provide novel paths for fundraising and decentralized decision-making, recently igniting a Cambrian explosion of experiments implementing democratic ownership of protocols, products, digital assets, and other things (like the Constitution).
Communities using a DAO to coordinate rally around a variety of missions, from organizing a local working group to developing a multi-billion dollar token network (eg. Bitcoin and Ethereum). They allow for collective action and decentralized decision-making in a digital, crypto-native way.
While DAOs serve as a pillar of value for web3 technology, democratic management largely functions in contrast to delightful UX. Building a transaction for a DAO to execute if a vote passes requires some level of technical expertise and then asking token holders to make decisions via voting asks a lot from each individual.
Inevitably DAO governance results in information fatigue and low participation. Casting an opinion on-chain is as (or more) difficult as any action within the crypto space. So, how can we make governance simple? How can anyone involved with a DAO make a thoughtful proposal to leverage the collective resources in benefit of the whole? I believe development of standard proposals will result in governance becoming more fun and less exhausting as we iterate with time (this is why I joined SZNS).
To move forward thoughtfully, let's look at the past. Why do DAOs matter and where are we in development of these new forms of organization today? I share a brief history below to shine some light.
DAO SZN-0: "The DAO" Rise and Fall
In 2016, The DAO was the most important project in the Ethereum ecosystem. More than 18 thousand people around the world participated in raising over 100 million dollars in ETH to develop the next phase of monetary management using the "wisdom of the crowd". The idea captured the ethos of decentralization, web3, and transcended nation-state governance. The DAO held 14% of all ETH in circulation.
Weeks after funds were collected for The DAO, a malicious actor found a contract vulnerability and proceeded to drain a third of the funds in the contract. The fall of The DAO prompted the most challenging event in Ethereum history, resulting in the hardfork that created Ethereum Classic and many years of "PTSDAO". The term "DAO" became something to generally avoid for years to come.
DAO SZN-1: Moloch Rises from the Ashes
Note: there were many DAO frameworks building in this "PTSDAO" period, some of which raised millions in tokens between 2016 and 2019 (Aragon, DAOstack) but none of them held the same cultural context and significance as Moloch.
Fast forward to 2019, Moloch DAO came to reignite the space with the mission to solve coordination failures innate in human organizations. This DAO framework came from the ashes of the original DAO contract (a "DAO Framework" refers to the smart contracts structuring the ownership and decision-making systems for a DAO). Ameen Solemani and James Young stripped the contract of as many lines of code as possible, and added two mechanisms that would have prevented the hack from happening (a grace period for proposals, and the meme-famous "ragequit" function). From here leaders of the Ethereum ecosystem coordinated to raise more than $1M with the mission to push forward research for ETH2.0.
Note: The visionary behind Moloch, Ameen Solemani, was inspired by the poem Meditations by Moloch published by Slate Star Codex. Recently at MCon he said on stage something to the effect, "it's not about us beating each other, or another outsider. It's about us defeating our own inability to coordinate. That evil is Moloch."
From Moloch came MetaCartel, which spawned many of the most interesting DAO projects and communities seen today. MetaCartel formed to compliment Moloch, instead of only focusing on ETH 2.0 R&D, the MetaCartel mandate aimed to support Dapps. The community formed from a mixture of builders, designers, and entrepreneurs who believed in a decentralized future. Peter Pan assembled such a community via months of zoom calls. DAOs stemming from or tangential to this community include MetaCartel Ventures, the LAO, Fire Eyes DAO, the MetaFactory, MetaGammaDelta, and many more.
DAO SZN-n: The Cambrian Explosion of Messy Governance
So, where are DAOs today? Well it's a wildly explosive landscape that continues to evolve. They are everything from a simple telegram chat to a multi-billion dollar token network. Most recently a DAO style group raised $40M from 17,000 accounts to purchase the constitution (average participation size of $200!).
Another post can tackle the details of each of these protocols / DAOs / networks above. This is what I can come up with from the top of my head and I know it’s only the tip top of the iceberg.
The landscape continues to evolve with new projects and protocols every day. "DAO" went from a term avoided post DAO Hack to today being the zeitgeist and corner of value for any tokenized project in the world.
One common theme with DAOs: decentralized coordination is a messy and unsolved problem. Specifically, the idea that everyone can participate in governance doesn’t mean that everyone a) wants to participate, b) has the context to participate, or c) has the time to participate. As stated before, asking people to participate in governance generally equates to bad UX.
DAOs aim to give democratic access and ownership to a broad group of stakeholders, and in doing so, risk the ability to move efficiently. Teams building DAO tools need to move toward increasingly efficient processes with a backstop of decentralization. Reducing the frequency of collective decision-making and offering recognizable patterns will assist in finding efficiency.
Note: Organizations with a flat hierarchical structure suffer from the issues defined by Joe Freidman’s article “The Tyranny of Structurelessness”.
SZNS Approach: Opinionated Patterns for Efficient Decentralized Governance
When I started working with SZNS in August the assumption was that Albums (DAOs using governance tokens to manage baskets of NFTs) would want two specific functions for their NFTs 1) a Buyout to sell the basket, and 2) an Add NFT function to allow people to contribute and join the Album without purchasing tokens directly.
Quickly we realized this will not suffice the complex needs of a community building with NFTs at their core. Additionally, the process for making decisions defaults to a two-week voting period which does provide a degree of security for transactions, but does not equal a fun nor simple experience.
With two Albums launched ($DIVINE and $MBBT) we’re able to gather direct feedback on the types of actions needed to be performed by these communities. We aim to unlock new potential in community ownership of these assets by building standard interfaces for critical actions these communities need to execute.
SZNS leverages the Gnosis SafeSnap architecture which is the most flexible and gas efficient system for Mainnet governance available. Our team plans to iteratively develop on top of this primitive to create efficient and opinionated governance systems for Album communities. More can be seen in our SZN-0 governance post.
As the protocol and communities using SZNS evolve, new patterns will continue to emerge and the SZNS team and community will work to develop more effective paths of decentralized decision-making.
Note: SZNS is not the only new governance primitive available today, just the one I am most familiar with. Also checkout Juicebox, Orca Protocol, and Olympus.
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