So they’re kind of a strong wisdom of crowds idea. The idea is that if the collective makes the decisions, the odds are better that the collectivity will make good decisions."

Noah Feldman (Harvard professor - Tim Ferriss Show Podcast)

🛎️ Primer

DAO (pronounced “Dow”) = Decentralized Autonomous Organisation

• Run by smart contracts (blockchain-based automated digital “if-then” statements).

• The rules of the organisation are encoded into these smart contracts.

• Decisions are made by the majority of participants. So, when a vote passes, actions are automatically executed. For example, funds are automatically sent to the wallet specified in the vote.

• The organisation can operate without the need for a central leader or authority.

• Members of DAOs often buy their way in, most of the time purchasing a governance token specifically for the DAO that gives them the ability to vote on decisions that are made around how the pool of money is spent and managed, access to gated content and other benefits. These groups can be made up of people from around the world, who often communicate on Discord channels.

💼 Jobs To Be Done

• Democratise company ownership and decision-making; shifting the decision-making power towards the members of the organisation with a crowd-sourced pool of funds.

• Guarantee integrity via immutable transparency - every decision made is recorded on-chain.

• Align members toward a collective goal, and build trust.

• More easily raise and distribute money.

💊 Value Proposition

• Decentralisation: DAOs offer decentralised decision-making and governance, allowing a group of individuals to come together and make decisions or take actions collectively without the need for a central authority or leader.

• Autonomy: DAOs are autonomous, meaning that they are not subject to the control of any single individual or entity. This can provide a level of independence and flexibility that is not possible with traditional organisations.

• Transparency — As DAOs function through on-chain governance mechanisms, they utilize blockchain technology. This provides full transparency as all participants generally will have full access to an immutable record of all changes that occur to, for example, a Web3 DeFi protocol. This unchangeable record provides safety to all users and restricts participants from committing fraudulent behaviour.

• Efficiency: By automating certain processes or tasks through the use of smart contracts, DAOs can often operate more efficiently than traditional organisations.

• Innovation: The lack of red tape and bureaucracy in a DAO can allow for more creative and innovative approaches to problem-solving, potentially leading to new and unique solutions.

• Build Community Trust — As token holders are the ones making the decisions, they are the once in power, and they are often the users of a platform. As such, their interests are often aligned, which can boost community trust.

  Target Audience: A recent report on consumer perceptions toward brands builds a strong case for decentralised autonomous organisations (DAOs) as a marketing tool. The report, conducted by creative consultancy Long Dash, found that a majority of Gen Z and millennial consumers (63%) want more influence over how brands make their decisions. 60% of this cohort said they would be interested in using company-issued crypto tokens in order to vote on decisions—a key component of DAOs.

👣 Players

MakerDAO - a decentralised finance platform that offers users a range of services, including lending, borrowing, and trading. What makes MakerDAO successful is its use of Dai, a stablecoin backed by crypto-collateral, which provides users with a stable form of currency. Additionally, MakerDAO leverages decentralised governance models, allowing users to propose and vote on changes to the system.

Uniswap - a decentralised exchange that allows users to trade tokens and other digital assets. What makes Uniswap successful is its decentralised liquidity pool, which allows users to trade assets without the need for an intermediary.

Aragon - a decentralised organisation platform that allows users to create and manage their own DAOs. What makes Aragon successful is its easy-to-use interface and its built-in smart contracts, which enable users to quickly create and deploy their own organisation. Additionally, Aragon's governance model is designed to ensure that all participants are treated fairly, creating a secure and transparent environment for DAO operations.

Developer DAOs

BadgerDAO is dedicated to bringing Bitcoin to DeFi, Gitcoin has distributed over $72 million to Web3 projects, and API3 is building a multi-chain compatible network to incentivize API operators to serve their own oracles.

Worker DAOs

Worker Collectives are a new form of organisation that can fill the gap left by traditional unions. Raid Guild and dOrg are invoking the ancient tradition of guilds to protect their members and uphold high standards in their field. They are able to fund common goods and set global standards for work in their field through shared resources and selective recruitment.

Community DAOs

H.E.R DAO - a woman-led decentralized autonomous organization that is focusing on increasing gender diversity in blockchain ecosystems.

DisCO - a ‘Distributed Cooperative Organization’ that is distinguishing itself from the dispassionate, transactional nature of many DAOs and using an Open Enterprise Governance Model to coordinate commons-oriented work, rooted in feminist economics.

Social DAOs

While there is no team of people moderating content, you still can’t say anything you like. The other members of the DAO do not need to tolerate anyone’s hateful or oppressive views; they can put up a proposal to vote them out of the DAO.

Friends With Benefits - a community of “creators, rebels, artists, thinkers, and doers” who aim to shape the future of content creation in the Web3 space. organized a rave in Paris for the DAO’s members on the evening of Europe’s largest annual Ethereum conference. Besides parties and exclusive NFT art, FWB members get access to closed-off sections of the community, including the learning, lifestyle, culture, trading, and governance areas.

Bored Apes (BAYC) - made up of people who hold one of the 10,000 Bored Ape NFTs. Your Ape NFT acts as your yacht club membership card, giving you access to a shared digital canvas as well as the DAO's private discord channel, where you can socialise and network with other successful Ape holders. Hosts some incredible real-world events, one of which was an IRL yacht party, featuring a show headlined by comedians Chris Rock and Aziz Ansari, followed by a music performance from the Strokes!

Krause House - a social DAO centred around a single sport: basketball. Fundraising to collectively buy an NBA team.

Bright Moments DAO - focuses on IRL events; in particular, live NFT minting experiences. The DAO centres around a growing NFT collection called Crypto Citizens.

Cabin Dao - built two IRL community spaces designed for live professional networking retreats. The idea is to provide an opportunity for a group of friends or colleagues to collaborate on a project they’ve been dreaming about away from all the distractions of modern life.

Investment DAOs

Meta Cartel Ventures - aims to allow for broader investments in new dApps by lowering entry-barriers for fresh investors.

BitDAO - aims to build a decentralized token economy and support a broad range of crypto projects.

DAO.vc - focused on creating a curated marketplace of crypto startups for investors to fund.

Syndicate - allows users to create investment clubs as well as legal entities for their investment clubs.

📈 Trends

• Growth in DAOs continues despite the crypto turbulence

• No-code DAO building platforms: Upstream; DAOHaus; Aragon

• DAOs buying sports teams

• Sports teams restructuring as DAOs

• Make music with your favourite artist: Stems

🪢 Constraints

• DAOs exist in a regulatory grey area. The decentralised nature of them may require the development of a new legal framework to ensure that the rights and obligations of the organisation and its members are respected.

• The UK's Law Commission has launched a call for evidence asking users and other experts for information about how DAOs can be characterised, and how the law might accommodate them now and in the future.

• The structure of DAOs is potentially problematic. Those who wield their wealth and buy a lot of tokens get a greater say, which is not as democratic as some of the proponents of DAOs say.

📖 More in-depth reads/videos/podcasts

• A Beginner's Guide to DAOs - BeInCrypto (article)

• How To Join A DAO - Bankless (article)

• Beyond Bitcoin: DAOs - dOrg (video)

• DAO Talk by Tally (podcast)

“If crypto succeeds, it's not because it empowers better people. It's because it empowers better institutions."

Vitalik Buterin, Founder, Ethereum

Please note: this report contains information regarding cryptocurrency-related platforms. In now way is this meant to constitute investment advice.

🛎️ Primer

A Layer 1 is the base infrastructure of a blockchain network. Different layer-1 protocols have distinct functionalities such as processing and finalising transactions on their own chains. As the main network within their ecosystem, they define the rules. Choosing your protocol is one of the first main tasks of a web3 project; it is (for now) a laborious and potentially risky process to set up a new wallet and send (or bridge) funds to a new chain.

💼 Jobs To Be Done

• Address a mistrust of centralised organisations

• Prevent identity theft

• Make transactions secure

• Record a public, permanent ledger of activity

Blockchain technology is solving the biggest problems which were not possible by any other technology before, and the Layer-1s are at the very foundation of this.

💊 Value Proposition

You can look at a blockchain as a "digital ledger" that records information about transactions and who owns what, and this digital ledger is stored online in a decentralized manner. This means that the "the ledger" is stored over a network of participants.

This means that the "the ledger" is stored over a network of participants. Instead of having one copy stored in a central place, all participants have a copy of the same ledger, and it is only when they agree that the content is correct that the information there will be valid.

So - it addresses all the related Jobs To Be Done better than any other technology.

👣 Players

Many Layer 1 blockchains have carved out their own space in the rapidly expanding Web3 ecosystem. Some of the most popular are:

Bitcoin - biggest and most secure "Proof of Work" blockchain; token is most widely used cryptocurrency

Ethereum - very first, and biggest, smart contract platform

Solana - blockchain platform with smart contract functionality

Cosmos - blockchain ecosystem of separate chains

BNB Smart Chain (aka BSC and Binance Smart Chain) - EVM (Ethereum Virtual Machine) compatible - i.e. apps built for Ethereum are also supported; part of the Binance ecosystem

Polkadot - enables cross-blockchain transfers of any type of data or asset, not just tokens.

Avalanche - smart contract blockchain; "blazingly fast, low cost, and eco-friendly".

Near - a blockchain built to be simple, secure and scalable; code in Javascript or Rust

Algorand - smart asset blockchain, simple smart contracts

Zcash - privacy-focused blockchain

Fantom - EVM-compatible chain, smart contract layer 1

Cardano - aims to be an Ethereum competitor; focus on scalability and ease of use

Spotlight

• SUI - a Layer 1 which maintains security in a different way, and has a new consensus model. Sui doesn’t waste block space for simple transactions. Instead, it validates individual transactions. So, transactions are not batched together in a block. This saves space, and time, and leaves fewer security risks on the chain.

  

  Sui Analytics

  @SuiAnalytics

  

  🔥 #Sui & #Aptos Ecosystem compares
  
  After the $300 Million investment, the #SuiEcosystem has exploded. Currently, there are almost 50 projects under construction on #Sui and it is continuing to grow rapidly
  
  Like & Retweet to support us! #LFM

  

  322

  04:28 AM • Sep 21, 2022

SUI is also super dev-friendly, which is no doubt a big reason behind its growth:

It promises to help developers build:

• On-chain DeFi and traditional finance (TradFi) primitives.

• Reward and loyalty programs.

• Complex games and business logic.

• Decentralized social media networks.

• Asset tokenization services.

• More valuable and upgradable NFTs.

SUI is the brainchild of Mysten Labs. They closed a $300 million Series B funding round in September 2022, valuing them at more than $2 billion.

📈 Trends

• Developer Experience (DX) is becoming an increasingly important factor in blockchain choice.

  • Kaleido’s Marketplace: within a few clicks you can add a token swap service, store data on IPFS, or pin a state proof to a public network.

• Niche-specific blockchains are emerging:

  • chains like Fantom and the 200+ dApps built on top of it - are focused exclusively on decentralized finance.

  • the Wax blockchain focuses exclusively on blockchain gaming and NFTs.

• Some of the newer blockchains are working on different consensus algorithms. Besides proof of stake and proof of work, there's proof of spacetime, proof of location, proof of history and more.

• Interchain operability is becoming increasingly important. Most dApps only work on a single blockchain, leading to a need for interoperability between different chains. Interoperability solutions like bridges and protocols like Cosmos and Thorchain enable dApps (the apps built on a decentralized network that combines a smart contract and a frontend UI) to interact with multiple blockchain networks.

  • some companies have attempted to solve this issue through the use of bridges (which “bridge” tokens from one chain to another). Sadly, bridges are highly vulnerable to security exploits, with hackers stealing more than $1 billion from them in 2021 alone.

  • On the flip side, protocols like Cosmos and Thorchain - and the dApps built on top of them - are engineered from the ground up to interact with multiple chains.

🪢 Constraints

• Layer 1 blockchains aren’t big on scalability. Why? The ‘Blockchain Trilemma’ is the theory that says a blockchain can only provide two out of the following three benefits – security, decentralisation, and scalability – but not all three. Layer-1  focuses on solving this problem at the blockchain or infrastructure level.

• Blockchains need to access the system’s entire database to verify a transaction and add a new block. The process is computationally intensive, limiting processing speeds to just a few transactions per second.

• The cost of storing smart contract data on-chain can be exorbitantly high, so most dApps (decentralised Apps) typically rely on centralised servers and cloud providers such as AWS, Google Cloud, Microsoft Azure, and Alibaba Cloud.

📖 Extra reading

A Beginner’s Guide To Understanding The Layers Of Blockchain Technology - from Blockchain Council

A framework for evaluating Layer 1s - from Bankless

Modular vs Monolithic: a beginner's guide from Celestia

Blockchain Developer Count - a reasonable guide to developer sentiment

The Blockchain Trilemma - a detailed explanation from Alchemy

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