I am a newbie to the world of Web3 and everything that comes with it. On the top of it, I am non-technical, which makes all my knowledge sources non-technical too. But there is plenty, for those who are eager to learn. A common advice from Web3 experts for newbies like me is to experience Web3 as you learn. For example, create a wallet, buy some crypto, connect your wallet to NFT exchange, create an NFT (surprisingly easy), pay a one-time gas fee (seemingly complex to understand), mint the NFT, transfer some crypto from your Coinbase wallet to another, join a few DAOs, dabble in what they are doing, volunteer and get involved, learn, assimilate, get excited about a particular area, go more in-depth into it, learn the principles of blockchain, DeFi and decentralised business models for Web3, learn the fundamentals of Solidity and smart contracts etc.
I did all of the above, and my interest and engagement has been captured by DAOs. I don’t think there is a lack of awareness of what DAO stands for, but for the completely uninitiated (which was me a few weeks back), it is a Decentralised Autonomous Organisation. I am now a member of a few, and they are the ones who have the potential to completely transform how we collaborate and work and play together. For me, NFTs, cryptocurrencies, blockchains, blockchain protocols and DeFi are alternatives to capitalistic structures, but the biggest invention of Web3 are DAOs. Software has an unseen ability to push the human civilisation forward in quantum leaps and bounds, and the software behind DAOs will enable the next big leap.
DAOs have started defining how we work, play, socialise, share, collaborate, create, advice, mentor and guide others. The fundamental thread that binds members of a DAO together is a common goal or a passion. DAOs have to be profitable, which is a capitalistic concept, but it is how any form of business endeavour runs. But this is profitability to ensure members are compensated (DAOs don’t pay fiat money but in a variety of crypto or DAO defined tokens). The passion can range from something game-changing (for example, create a country-level treasury in crypto) to something very specific (buying real physical land, copies of a constitutions, create and launch new music, collect and trade NFTs etc.). Why is this different from traditional business models? This is where the quantum jump is — for eons we have created our livelihoods fulfilling the passion of others. While doing this, we have fallen in love and adopted the passion as one of ours, or our interests align with that passion. For example, I loved everything about brands, which is why I like working with brand strategy consultancies and directly with clients on strategic brand objectives. Even for folks joining startups, you are fulfilling the passion of the founders. Without trivialising, DAOs are the working models where you join a group of people who have a common passion, you create systems / models / processes / artefacts / tools / frameworks to realise that passion. You do this while earning (in crypto), devoting time, collaborating, enabling others and raising awareness of the benefits of that passion. Those who wrote the first DeFi concepts and then eventually the protocols have the passion of creating an alternative financial system. At a DAO level, and for many DAOs, you are taking the broad and strategic concept of DeFi and developing passion for a set of use cases.
Traditional thinking around upbringing bangs home a message repeatedly — your hobbies and interests don’t create a livelihood for yourself and for your family. It goes on into subjugation mode, where it evolves into “your interests need to earn you money, everything else should be a hobby”. DAOs have the potential to break this thinking, and create career and livelihood paths for all your hobbies. The only principle is that there should be enough people who share your hobby. For example, you can create a StampDAO, which aims to buy, collect, trade stamps and even create new ones. Similarly, Mirror DAO allows you to mint NFTs of your writing and sell them. If NFTs are going to usher in a new future of creating and holding assets, there is no stopping an author writing a whole book and selling it as a NFT. Out goes the traditional thinking that hobbies can’t provide livelihoods.
DAOs have enabled a different form of ownership — it is a shared ownership of an idea, and not necessarily a financial asset that appreciates and depreciates. It is not like investing in a mutual fund with thousands of others, where even though there is collective investment, the destiny lies in the hands of the fund manager. It is markedly different from owning stocks and shares, and considering yourself as a shrewd investor. Participation and ownership in a DAO reduces human selfishness. Members of DAOs don’t own anything individually (there are no stocks / shares / equity), they are sometimes compensated in crypto and sometimes not (the most popular and biggest DAOs run on significant amount of volunteering time) and there is only collective ownership and evolution of the passion or idea (behind the DAO).
DAOs redefine collaboration because it is chaotic, and also because it is pure. You don’t have to interview to get into a DAO — all you need is the Discord server link. No one asks you for compensation expectations because there aren’t any. You collaborate and create with complete strangers, most of whom you never meet or never see. DAOs have a particular distaste for thrusting people into situations they don’t like. So, no video or Zoom calls unless absolutely necessary. Lots of audio calls, lots of chatter and brain dumps on channels, and lots of threads. DAOs exemplify the fact that creation doesn’t need Post It notes and neither does it need Murals. Common passions can help you create using any platform or collaboration channel.
DAOs are the future of diversity and inclusiveness, and enabling collaboration and creation based on the single principle of a shared passion (and nothing else). Web3 enthusiasts use graphics as profile pics so there is no appearance bias. DAOs are globally distributed and everyone has funky usernames, so there is no name or nationality bias. There is no appearance so there is no racial discrimination. Most DAOs have translation guilds enabling conversations between members who are not comfortable in English. DAOs are simply wide open groups, which anyone can walk into, join, contribute, collaborate and create.
As mentioned previously, DAOs can create career paths that are previously unthinkable. One can argue that careers can only be forged if there are buyers for your skillset. This traditional thinking about a buyer-seller paradigm is also thrown out of the window. There are ServiceDAOs, which can only survive if there are buyers of their service. But there are DAOs who can operate in a completely decentralised, self-sustaining ecosystem. For example, a DAO built around a passion will always have buyers for products of that passion. For example, the DAO that bought the only surviving Wu Tang Clan album for a good few millions didn’t need a buyer to sustain themselves. Going forward they will attract buyers who will invest and buy rare collectibles through the DAO.
DAOs throw the concept of job descriptions, required skill sets and years of experience (as traditional tenets of job seeking) out of the window. Anyone can do anything in a DAO. If you don’t have a skillset (for example, I am not a Developer), you can simply shadow and learn. DAO members do multiple tasks — research, write, create, project manage, community management, growing membership, raising visibility about the DAOs idea etc., interchangeably. DAOs do recruit for specific roles and needs, but these recruitment processes are different from recruiting for a role, within a structure, with a set level of compensation, a defined set of roles and responsibilities and expectations. DAOs don’t follow structure, and they essentially recruit into chaos — “Come and find yourself” can be a motto for any DAO. The absence of structure means there are no set career paths, there are no promotions, there are hardly any title changes and there is hardly any expectations around ownership (it is collective tied by a passion). The amount of interest in DAOs and the thousands (if not millions) who participate in DAOs means that we love this sense of freedom around how we work.
DAOs are one part of the creator economy. You don’t have to be a part of a DAO to create. You can create using conventional modes of creation or through emerging ones (NFTs, Tik Tok, Instagram, YouTube, LinkedIn etc.). In a DAO, you create collectively. DAOs frown upon individualistic creator ambitions, which means that you shouldn’t be in one if you operate that way. Again, the argument could be that in a traditional manufacturing organisation, hundreds of workers in an assembly line create a car (but the parts are pre-assembled). Another argument can be that creative consultancies create in a highly collaborative fashion — we all know it is not true. We need to think about DAOs as creative output ecosystems that create without a creative brief (almost like a free hand). Even for the most hands-off clients, there is always a guardrail and there is always a sign-off process. This brings us to the next bit about DAOs.
DAOs redefine the concept of a ‘flat organisation’. Sign-offs or approvals about a creation or the general direction is not dependent on any individual. Everything is quorum, and there are no minimum or maximum attendance about achieving a quorum. How many times have you experienced the frustration of witnessing a crucial initiative getting stalled because of a sign-off quagmire? This aspect doesn’t exist in a DAO. It probably might emerge if a DAO becomes too big with too many initiatives, but the concept of decision-making is truly democratised. I can become part of a quorum to sign-off a newsletter after just reading it, and not contributing a word. I am allowed and expected to exercise my common sense to not join a quorum voting for or against a new developer-defined feature.
DAOs change the concept of value as we know it from a fiat current POV. Fiat currency allows you to do two things — buy or invest / save. You can always physically touch and feel it, and validate its tangibility by drawing it out of an ATM or a bank. DAO incentive structures are based on crypto, DAO-defined tokens (linked to crypto) or simply cred points. They have a fiat currency value because of pegging, which creates the common currency combination values. But the gratification of a DAO incentive structure is not instant, and neither is it predictable. DAO members don’t earn monthly salaries of a fixed amount of crypto or tokens transferred to their Metamask / Coinbase wallets. DAOs can change compensation structures and mechanisms across initiatives through consensus. Even if you work in the most futuristic startup, you will still draw a monthly salary (along with a share of equity bestowed at joining). The definition of value (or worth) of a DAO compensation scheme by its members is driven by the passion / idea behind the DAO. Because this is an early stage phenomenon, most DAO members will hold a day job paying fiat currency. Consequently, the value attached to their DAO compensation is driven more by a sense of achievement rather than a sense of self-worth (whether measured in fiat or crypto).
The belief and premise behind why decentralised systems are the future and have longer life is captured in this informative piece from Chris Dixon. In short, centralised systems stop being symbiotic over a period of time. In economics, the closest terms for this dynamic is either monopolistic pressure or asymmetric / inefficient markets.
https://onezero.medium.com/why-decentralization-matters-5e3f79f7638e
If we consider DAOs as a use case of decentralisation, then we identify some interesting characteristics — dissipation of power, collective decision-making, trust-less and consensus driven (the Bitcoin principles), evolution of the idea is compensation, high levels of symbiotic relationships, no form of selectivity or elitism, a strong desire to democratise the fruits of progress, enabling large swathes of participants with similar skills and abilities and non-traditional approach towards defining work and play.
Are DAOs going to define how we live, work and play? It is too early to say, but they do have the potential to break ingrained, dogmatic thinking that shapes societies, communities and individuals. If you are part of a DAO, it doesn’t mean that you are unhappy with your day job. But it does indicate that you are curious, which is a core driver of progress of the human civilisation. As mentioned before, software has changed the course of this progress multiple times. But software is almost never created to solve a problem, but is driven by a belief system (which can take thousands of forms). For DAOs, the underlying Web3 software infrastructure is driven by the beliefs outlined as characteristics above, which can be summed up as ‘desire to create a world that can be equally enjoyed by everyone’.