In the previous blog, we talked about DAOs as an example of positive-sum games and value-based incentive systems. Today, we will talk about where DAOs are in reality compared to their vision. We will also talk about the paradigm shift of how DAOs compete with one another.

Today, we will be covering 3 main ideas:

• DAOs Value-based System

• DAOs Success Metrics

• DAOs Competition

Let’s dig in, shall we?

DAOs value-based system:

DAOs are like digital villages. Every village has an old-school kind of village community where everybody knows everyone. They have common values and trade together, bringing a kind of old money system, but in a digital form. Anyone can join a community based on their values regardless of their ethnicity, location, and identity. This encourages the concept of global citizenship where you can choose which community to belong to based on your values.

The values are a two-layered system: the values of the DAO and the values of the blockchain on which the DAO is built. For example, Bankless DAO is built on the Ethereum network. Bankless Values education, integrity, decentralized governance, and culture. They aim to educate and empower people to adopt decentralized finance by sharing truthful information. They operate transparently, build trust through public discourse and financial auditability, and put decision-making in the hands of the collective. They also reward action and embrace risk, empowering the community to drive new initiatives and self-organize.

While the Ethereum network is guided by a set of values that reflect the principles and beliefs of its community. Some of the key values of the Ethereum network include:

1. Decentralization: Ethereum is built on the principles of decentralization, which means Decentralization: No single entity or organization has complete control over the network.

2. Openness: The network is open to anyone who wants to participate, regardless of their background or level of expertise.

3. Transparency: All transactions and smart contract codes are visible on the blockchain for anyone to inspect.

4. Community-driven: The Ethereum ecosystem is powered by a passionate and collaborative community of developers, entrepreneurs, and enthusiasts.

5. Innovation: Ethereum is designed to enable developers to create new and exciting applications and use cases on top of the network.

As you can see Bankless and Ethereum values match and complement each other. This makes the community stronger as they have a common vision and mission and work towards similar goals.

DAOs success metrics:

The success of DAOs is often measured by their ability to generate revenue for contributors, with some DAOs finding product market fit and taking a percentage of revenue into their treasury, which can then be used to support the organization. Success metrics for DAOs could include revenue generated, user adoption, product market fit, and community engagement.

Here are some additional details on potential success metrics for DAOs:

1. Revenue generated: One of the most important success metrics for DAOs is the amount of revenue that they are able to generate for their contributors. This can be measured in terms of cryptocurrency tokens, which can be used to fund ongoing development and operations.

2. User adoption: Another key metric for success is the number of users that are using the DAO's products or services. This can be measured by tracking the number of active users, the frequency of use, and other engagement metrics.

3. Product market fit: DAOs that have found product market fit are often the most successful, as this indicates that they are meeting a real need in the market. Product market fit can be measured by tracking customer feedback, user retention, and other engagement metrics.

4. Community engagement: The success of a DAO is also closely tied to the level of community engagement that it is able to generate. This can be measured by tracking the number of active contributors, the quality of community feedback, and the level of support and collaboration among members.

5. Token price and market cap: Another key metric for DAOs is the price and market capitalization of their tokens, as this can provide a rough measure of the overall value and potential of the DAO.

6. Governance participation: For DAOs that are focused on decentralized governance, the level of participation from members can be a key success metric. This can be measured by tracking the number of votes cast, the level of debate and discussion among members, and the overall effectiveness of the governance process.

Ultimately, the success metrics for a DAO will depend on the specific goals and objectives of the organization, as well as the nature of the products and services that it provides to users. By tracking these metrics over time, DAOs can gain insights into their performance and identify areas for improvement and growth.

Here are a few examples of DAOs that have performed well on some of the metrics I mentioned:

1. Revenue generated: The MakerDAO project is one of the most successful DAOs in terms of revenue generated, as it is responsible for creating and managing the Dai stablecoin. As of September 2021, there was over $6 billion worth of Dai tokens in circulation.

2. User adoption: Uniswap is one of the most widely used decentralized exchanges built on the Ethereum network. As of September 2021, Uniswap had over 2 million unique users and a daily trading volume of over $1 billion.

3. Product market fit: Aave is a decentralized lending and borrowing platform built on the Ethereum network. The platform has been successful in finding product market fit, with over $10 billion in total value locked in the platform as of September 2021.

4. Community engagement: Yearn.finance is a decentralized ecosystem of DeFi protocols that have been successful in engaging its community of users and contributors. The project has a vibrant community of developers and enthusiasts who are actively involved in the governance and development of the protocol.

5. Token price and market cap: Chainlink is one of the most successful DAOs in terms of token price and market capitalization. The project's LINK token has been a top-performing cryptocurrency, with a market capitalization of over $15 billion as of September 2021.

It's important to note that success in one area does not necessarily guarantee success in others, and different DAOs may have different strengths and weaknesses depending on their goals and objectives.

The Bankless DAO is a relatively new DAO that was launched in mid-2021, so it's still too early to definitively say whether it's successful or not. However, the DAO has shown promise in terms of community engagement and participation. The Bankless DAO is focused on supporting the growth and adoption of the decentralized finance (DeFi) ecosystem, and it strongly emphasizes education and onboarding new users to the space.

One notable achievement of the Bankless DAO was the launch of the Bankless BED Index, which is a basket of Ethereum-based assets that are curated by the DAO and designed to track the performance of the broader DeFi market. The BED Index has gained traction in the DeFi community and has been listed on several major cryptocurrency exchanges.

Overall, while it's still early days for the Bankless DAO, it has shown promise in terms of community engagement and innovation, and it's worth keeping an eye on as it continues to grow and develop.

DAOs Competition

Successful DAOs may also compete with each other, such as in the case of decentralized exchanges built on the Ethereum network.

DAOs are organizations that operate based on open-source code and are stored on the blockchain. This means that intellectual property, which is typically a closely guarded asset of companies, cannot be used as a competitive advantage in the world of DAOs.

For example, Sushiswap copied the code from Uniswap, changed the name, and deployed it as a separate contract. Although the underlying code was the same, the two organizations had different communities due to the differences in values and the separate identities created by the different names.

Next time you order sushi, remember that sushi.com is an app that belongs to Sushiswap and not a place to order your meal. Welcome to the world of crypto where bizarre names are the norm and the best way to keep things fresh.

The world of DAOs operates differently from traditional companies. As the intellectual property cannot be used as a competitive advantage, DAOs compete based on other factors, such as community and values.

So who will win Sushiswap or Uniswap?

Today, regulators work with all industries to make a single contract regulation, so essentially regulation is a contract that the state writes and executes. But the problem is that we don't know if this contract, as it's written, is the best. Because it's the version that everyone agrees with but that's not the same as the best version.

So what you can do in crypto is that you can have N number of apps and they can essentially take the same contracts, slightly modify it, and then reuse it. But then all these contracts are competing with each other. So now you don't need a single regulation for the industry. There are N regulations and they all compete with each other for product market fit. So the contract that wins is the one that has product market fit and then is the best contract. This way, it's stressing the system to produce better contracts. So it's a healthier way of competition.

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Host & Author DJCheetah aka Ines Illipse