At this point in time, anyone reading this has almost definitely heard the term DAO. You may have also heard about the untimely demise of DAOs. But what even is a DAO? The literalists out there are probably already reciting the mantra in their heads right now:

Decentralized, Autonomous, Organization!

There. We did it! DAOs are defined. Blog over....

Just kidding! We all know nothing is ever that easy! Ok, let's try a little harder— but sticking to the vein of being literalist: let's define these terms!

• Decentralized: The simplest definition for me is no single points of failure. Everything else expands out from there, based on context.

• Autonomous: This is the trickiest one, I think. I commonly hear this means automated. While automation is one way of achieving autonomy, it's not the most applicable definition of it as I see it. To me, a more helpful definition is self-directed actions not controlled or gated by a centralized authority. This may require automation, but it is not fully encapsulated by automation.

• Organization: This one is probably the least confusing. A collective body of separate parts functioning together as a whole. This implies some kind of collective purpose, as well as some kind of authority structure. Beyond that, things get murkier! Anything from flat hierarchy/anarchy to C-Suite fits, when it comes to role structures within the organization.

OK, so now we have a bit of a baseline of what a DAO is from a literalist standpoint, simply from breaking down the words to their definitions. That doesn't really help other than getting us together on a mutually understood launch-point to dive into what a DAO really is!

If you really want to dig into terminology, this classic piece from Vitalik is a no-brainer (well, it's a big-brainer, but you should definitely start here!). I'll share with you a relevant quote:

in a DAO collusion attacks are treated as a bug, whereas in a DO they are a feature

This is hugely significant, and a point I often see lost with most organizations masquerading as a DAO, when in reality they are just a DO (Decentralized Organization). To have autonomy, an organization must have robust enough capture resistance to prevent collusion. Almost every single example of a DAO I've seen has failed to achieve this feature. It's not the DAO's fault, but rather just the immaturity of the space combined with the nature of human behavior. But it does explain why so many people have left with a bad taste in their mouths about a DAO they've participated in! At some point everyone's experienced a DAO embracing collusion to get results, and it often disillusions one's belief in the promised features of a truly Decentralized Autonomous Organization.

To continue deeper into the topic of DAOs of the future, let's look beyond the simplest definitions of these terms and start to explore the specific context in which they apply here.

Why Decentralization?

Starting from the baseline of no single points of failure, it's easy to recognize the value here and to simply say that nothing within the org is reliant on any one single individual, agent, or entity. In practice, however, that is extraordinarily difficult and the value is not always so clear, when in fact it can be far more efficient and effective to simply take the risk and let driven individuals get results without hampering them with oversight.

So why is decentralization worth the cost? For this, I'll start off with a reference to a greater mind and point you to Spencer Graham's foundational work on AntiCapture.

The promise of capture-resistant governance is managing shared resources in a way that prevents capture of those resources by bad actors.

Decentralization, when combined with the A and the O, creates a system of capture resistance that is essential for DAOs to operate and make/execute decisions in an unmolested manner.

Autonomy vs Automation

When describing Autonomous Organizations, it's not about things simply happening on their own, because if control of the automation is dictated by a centralized entity, it's not really effective for the goals of a DAO. So, it is rather about the authority structure that dictates what/how individuals can participate. So automation, yes, but automation controlled by decentralized forces. Permissionlessness is essential in so far as individuals can be self-directed in what they choose to contribute, or if they choose to exit entirely. This does not mean there can't also be gating in the form of the organization providing rules around who can do what— if it is controlled by a properly decentralized governance system. There absolutely can be roles and responsibilities assigned to individuals with this premise of authority. There is a tricky balance to find here, maintaining operational functionality while preventing centralization of power and/or collusion potential. I don't think we've fully cracked this nut yet! The Hats team has been busy building primitives to help DAOs manage these complications, but there is much to be done in terms of making these primitives a part of a casual business workflow.

To continue exploring the reference to Hats, check out their ProtoDAO to get a sense of how far along we are with the tooling side of what is necessary to build Autonomous Organizations.

Headless Organizations and How Shit Gets Done

There is so much room for exploration in the definition of an Organization. To give the voracious readers something to chew on, I highly recommend reading this summary of Headless Brands. It gives a good context for thinking about how different these things can be to what we're used to seeing.

Traditional organizations have had their heyday— DAOs are a new type of organization that has the potential to change the way that we work and live. However, in order to reach their full potential, DAOs need to be built on a foundation of specific core principles in order to actually achieve escape velocity.

Punks Point the Way

To get a clear overview of the Core Principles of the Punk movement and the foundation of crypto/web3, I'll point you to my article The Way of the Punk.

To summarize:

CyberPunk - We must decentralize authority or we will be owned by it!

CypherPunk - Without Privacy we cannot have freedom.

SolarPunk - Life without Culture is empty.

LunarPunk - Culture without Humanity is dead.

So let's just brainstorm on what the core principles of a DAO might be, based on this knowledge:

• Capture Resistant

  • Hard for collusion to influence Governance

• Embraces Change

  • A powerful minority cannot override a majority consensus

• Revolutionary

  • Majority consensus cannot silence minority voices

• Permissionless on/offboarding

  • Contributors cannot be forced to stay against their will

• Impact Driven

  • DAOs serve an obligation to achieve a result

• Builds Culture/Reputation

  • Participation is a part of one's identity, not just a means to an end

• Low Code/Configuration

  • If operating a DAO requires a CS degree, that is a barrier to entry that is unacceptable.

With this all as background, I have put together what I consider to be the 6 Core Pillars of a DAO. These are the foundational infrastructure primitives that need to exist in order for these organizations to actually function as intended and not just be a larp.

6 Core Infrastructure Pillars

1. Digital Self Sovereign Identities

None of this is possible if participants in a digital organization don't have fully sovereign digital identities. This means that their digital identity is owned privately by them and can be taken anywhere. Organizations do not own a contributors identity, and cannot prevent them from leaving with it. Nor can a user's identity be impersonated by another actor. Without this key foundational pillar, DAOs can never be truly trusted..

2. Secure Communication Platform

Contributors must have assurance of secure access to communications. If a centralized entity controls the front or the back door to all of your communication, then a DAO will never truly be resilient. Almost nothing on the market actually fits this bill, currently. There are a technical hurdles to overcome, as well as social hurdles. Most governments demand backdoors to monitor for things like national threats and other such dangers. Every popular communication platform relies on a closed source front end run on centralized infra. Not all communication needs to be private/encrypted, but all communication needs to be resilient and accessible.

3. Social Engagement Layer

At the end of the day, DAOs are still for people. Automations might be necessary, but if there is no connection between the people being affected by the DAO, then there is no room for the humanity necessary for DAOs to be better than what they're replacing. There needs to be a layer for social engagement that doesn't violate the other principles necessary for DAOs, whatever that may look like. True consensus isn't possible without some kind of social engagement.

4. Collaboration Tools

This is the drivetrain of the the DAO. Without proper tools for contributors to collaborate, the DAO will not be empowered to reach its potential. Actors operating in silos will waste effort and efficiency to the point where centralization will be demanded in order to get things done. Without collaboration tools DAOs will not be productive.

5. Knowledge Sharing Tools

This is by far the least attended to pillar necessary for DAOs to succeed. Knowledge sharing, or another way I like to look at it— context sharing— is absolutely crucial to successful decentralization and autonomy. Contributors cannot be empowered to take up and put down responsibilities if there is no way for the accumulated knowledge of past contributors to be disseminated. Some knowledge may need to be gated, and some knowledge might need to be updated. In order for DAOs to sustain over time, knowledge sharing has to be a living, breathing part of the DAO.

6. Consensus Mechanism

This is the popular kid in high school, when it comes to Blockchain. Everyone loves building tools for consensus mechanisms! The irony is that they are almost always voting mechanisms, usually in the form of a financialized token (it's just a governance token, I swear, Mr. Howey!). It's ironic because voting is only necessary in the absence of consensus!! Voting is the last ditch effort to push a decision through that just simply can't be decided in any other fair way. It is, however, necessary to enable voting to accomplish the purposes of DAOs, so thankfully we have tools like DAO DAO. DAO tools built by a DAO. What could get more DAO than that?!

But when we're talking about Consensus Mechanisms, we're talking about so much more than just tools for token based voting. I'll refer back to the amazing article by Connor McCormick on The Death of DAOs as a great read on some of the failings of simple token based voting and why DAOs suck, in their current iteration (not really DAOs yet, by my definition!).

There's more than just conviction voting, quadratic allocations, or prediction markets, however. Another great read by fellow onchain explorer, Matt The Birdman Arnold, explores the ideas of holarchies. In this piece we start to see the roles of reputation as contributors move between communities. Consensus mechanisms start to get much more complicated when you start viewing a larger picture. Simply saying dollars=powers has proven its limit of usefulness. We have to start evaluating less tangible values that are far more applicable analogs to social tools for consensus we're all used to in traditional organizations/life.

The Immortal DAO

As was alluded to in the beginning, the supposed death of DAOs has been massively overreported. In fact, we have yet to see the full birth of DAOs! Until the 6 pillars are fully available in a low code/configuration platform, communities trying to build a DAO will always struggle to overcome key chokepoints.

Anyone who's read this and has found themselves thinking This is what I'm building!— I can assure you that you can only be building a part of it. We're all building a part of it! What I'm describing is the future of blockchain/the internet. This is why we're all here. In order to actually achieve success, however, everything all of us are building has to become composable with each other. Projects working in silos are doomed to repeat the centralizing mistakes of our predecessors.

I guarantee you, nobody will DAO it alone. At least not yet! (Hint to future solo-DAOs powered by AI Agents, but that's not yet!)

I do, however, want to hear absolutely everything about what your building and how it solves these problems! Hit me up in the comments or on Farcaster to tell me what you're doing, what I got wrong, and what you think is even better!