💡 DAOs are a universal technology

Truth be told upfront, there is as of today no standard definition of DAOs. Various organisations with different mechanisms claim to be a DAO in 2022. This is also what makes the current timeline very unique: the end state of DAOs is being defined and will be shaping the future of the space. Time to get excited!

We have identified 6 criteria that the community refers to when talking about DAOs. There is a consensus among the first three ones. There is yet no clear standard regarding the last three ones. We propose our definition below.

6 criteria, no clear consensus

The community currently uses 6 criteria to refer to DAOs in 2022

💡 1-A DAO is a human collective.

It requires at least two individuals.

💡 2 - A DAO is an internet collective. 

This collective can either be internet native or may have started in the real world (before it transitioned into a DAO).

💡 3- A DAO is a collective which shares a wallet and uses the Blockchain as a trustful system of ownership. 

Cooper Turley asserts that DAOs are simply “internet communities with a shared bank account and a shared cap table”. We have nevertheless, not identified a non-crypto community which claims to be a DAO.

💡 4- A DAO is a community-led collective. Decisions are made collectively. 

There is no consensus among the crypto community as to what that degree of decentralization should be. “Purists” would assert that DAOs’ hierarchy should be totally flat. In reality, most DAOs encompass a degree of central leadership for specific functions.

💡 5- A DAO is an autonomous collective. 

There again, there is no consensus as to what the degree of autonomy should be. DAOs core functions, governance mechanisms, are automated through smart contracts. As such, DAOs are autonomous since agreed upon decisions are directly executed through code, embedded contracts on the blockchain. They are “software governed”.

💡 6- A DAO is a collective with a common purpose. 

There is no consensus within the community as whether this is a requirement. Some DAOs started with no specific clear goal.

The real nature of DAOs: a universal technology

A DAO is a new universal mechanism: a mutualised treasury on the blockchain leveraged by internet collectives.

To define DAOs, we must first make the distinction between a mechanism and a system of relationships. For example, a corporation is a mechanism, a firm is a system of relationships between individuals who work for the corporation.

DAOs are a new form of organisational mechanism. DAOs are like a machinery. A DAO is a mutualised treasury on the blockchain leveraged by internet collectives

The degree of autonomy and decentralization will vary across DAOs

• The goal of the organization - for profit/not for profit

• Its purpose - build a product, distribute grants

• Its system of relationships - people who already know and trust each other vs. a new community of people.

As such, for example:

• Some DAOs may choose to take decisions centrally through central administrators and to give the power to members to off-board administrators if they turn out to be incompetent -they have a decentralized overseeing body. This could apply for NGOs DAOs for example.

• Some DAOs may make all decisions at a decentralized level. For example, grant DAOs - DAOs that provide grants - may vote together on every grant that will be provided.

• Some DAOs will take key decisions at a decentralized level (e.g., they will vote on budget allocation) and will give power to centralized bodies - sub-DAOs - to spend the budget that has been allocated to them to reach a certain goal. This is the case for MakerDAO for example and for many DAOs whose goals is to build a product/protocol.