In 2021, we have seen an increase in the popularity of Decentralized Autonomous Organizations (DAOs). From (nearly) buying the US Constitution, to making venture investments and buying art, building products, and supporting creators, internet strangers from around the world have come together to collaborate through these smart contract backed, member-owned communities.
The early success of these DAOs coupled with growing participation is reshaping how we think about "work" in a web3 economy.
https://twitter.com/itsparaj/status/1464835200542724097?s=20
The majority of us working web2 jobs follow a fixed employment model. Employees generally work for a single employer, have a defined role and set of responsibilities, and work with a relatively static group of folks organized as a team. There might be some project based fluidity, but the organizational hierarchy is generally static, with infrequent updates (when people get promoted, or employees leave). In return, employees get cash compensation (+ illiquid stock if you are at a startup), and access to aggregated benefits such as health insurance. However, most employment contracts have strong wording against moonlighting, and some even have non-competes to truly lock employees into this rigid fixed employment model.
In contrast, web3 DAOs unlock composable employment. Contributors can work across DAOs, participating in working groups across different functions based on their interest, getting paid in tokens that provide both liquidity and governance.
Contributors have greater agency over DAOs they want to participate in, and specific projects they want to spend their time on. They are not confined within a four walls of a particular function, or traditional definitions of "work". For example -- a contributor might be writing code for a protocol DAO for part of their time, and the spend the rest of their time getting compensated for making memes for an NFT platform DAO. Getting paid to do things that might have been previously considered leisure (play to earn games say hello).
Greater odds of financial success through diversification. Currently, employees take concentrated risk by joining a startup and taking a pay cut and are compensated in equity. Their financial success relies heavily on the success of one startup. In addition, even if the startup sees early success, employee financial rewards are illiquid. In contrast, participating across DAOs enables contributors to have a diversified exposure, through governance tokens, to a basket of high upside projects. If the projects take off, contributors can lock in financial upside more easily through the liquidity of their tokens.
DAOs allow strangers to quickly organize in teams across the world, collaborate asynchronously, and get paid proportional to impact. In a web2 world, compensation is mostly static -- some employees over perform (and maybe get a bonus or a promotion a year later), while others can underperform for a while. The DAO model makes it possible for contributors to get paid proportional to the impact of their contribution. For example -- if a developer builds a revenue generating feature on top of a protocol, the developer can continue to earn a % of profits from that feature in perpetuity. This impact based compensation model unlocks financial upside for high value contributors.
Yes...and no. Today, tools like Discord, DaoHaus, Aragon, and a host of other DAO infrastructure tools have made it easier to spin up, manage, and scale DAO operations. However, from a contribution perspective, the space is still fragmented. Today, contributors need to join multiple DAOs, and then track every announcement and discussion in disparate Discord groups to identify contribution opportunities. This is currently a terrible experience (have you tried keeping track of more than 5 Discord groups?)
In addition, project specific contribution and compensation operations are managed on 3rd party tools like Notion and ClickUp. A composable employment model requires tooling that enables efficient just-in-time recruitment. Instead of a three month job post -> resume submissions -> interview -> hire process, DAOs need a streamlined way to reach the right contributors, verify their credentialing, contribution history and track record, and availability in a short period of time before the project starts.
Bounty marketplaces like Layer3 and Rabbithole have built an aggregator platform to surface contribution opportunities and coordinate, track, and reward contributors.
For example, I went on Layer3 and saw this opportunity from EnterDAO, looking for some content creators to create Web3 gaming market maps on their behalf. I decided that was an interesting project, spent an hour researching and putting together this graphic.
https://twitter.com/itsparaj/status/1461705412751892480?s=20
At the end, EnterDAO picked two contributors who received 420 $ENTR each (~$800). Other open projects on the platform range from technical content creation, referral based hiring, influencer marketing introductions, technical code writing and everything else in between.
As bounty based marketplaces scale, they give rise to three main tooling opportunities:
Credentialing: A platform to track and verify contributor credentials, as well as prior track record of contributions through a a verifiable on-chain "resume". For example: BuildSpace gives its graduating students an NFT for each class they complete. Holding this NFT (in theory), is proof that the holder possesses the skill denoted by the NFT.
Benefits infrastructure: In the US, insurance infrastructure relies on traditional employment. We need to aggregate benefits infrastructure for composable contributors.
Aggregation and workflow management: Enabling contributors to seamless find and connect with contribution opportunities across DAOs and enabling DAO members to manage contributor recruitment, compensation, and quality of work analysis workflows.
We are only beginning to scratch the surface of composable work. If you are building something in the DAO space, reach out to me at pmathur@panoramic.vc and lets chat!