I am beginning to see the start of a mature DAO landscape. DAOs are being taken seriously, and the model is proving it can work in executing complex strategic business decisions.

For instance, The Arbitrum Foundation DAO, one of the largest DAOs by treasury size, recently voted positively to experiment with a feasibility study for an M&A arm. If successful, with its massive cash chest of over ~$3 billion, it could go on a shopping spree. This is unprecedented, as no other business has done this in a decentralized space before. This development validates that DAO models can indeed work in formulating and executing complex business decisions.

Also, I find a few trends that are helping the rise of DAOs:

1. The maturing DAO platform ecosystem: The emergence of more advanced DAO tools than ever before is enabling more efficient DAO operations. Nowadays, there are adequate tools for infrastructure, governance, treasury, analytics, AI-enabled tools, and more.

2. The growth of sub-groups led by subject matter experts within DAOs: In our Arbitrum case above, a sub-group called the "Arbitrum M&A working group," comprising M&A subject matter experts, is taking charge.

3. Positive moves by regulators regarding DAOs: A couple of months ago, the governments of Wyoming and Tennessee passed new legal framework for DAOs. This is great because it provides a blueprint for other governments across the globe to follow.

It wouldn't surprise me if every Web3 brand eventually create its own DAO. It gives their community members more purpose and puts their skin in the game.

But will DAO disrupt traditional businesses?😉

Let me know in the comment.

If you find this post useful, please show me some 💙👍🙏

#DAO #Decentralized #Web3 #Blockchain #crypto

So, based on my findings, AIs are used in DAOs the following ways:

1. AI for Stakeholders: Currently, most DAOs are using AI for this purpose. Essentially, AIs are used for governance, creating proposals, delegation, scoring, security, attention management, etc. I particularly find the use case of AI delegates and AI scoring of proposals very useful. This would not only increase general participation but also save a lot of time for everyone. From what I have seen, the sensitive parts such as treasury management are not experimented with AI now.

2. Swarm Intelligence & AI Agents: Expanding on the above, what if a network of AI agents is interconnected within DAOs and Intra DAOs for specific purposes? For example, a DAO that raises funds for upcoming startups can be connected to an AI agent of an ecosystem DAO that gets triggered every time a startup successfully raises funds and automatically sends out potential partners and talents to collaborate.

3. Microservice DAOs: This is a very interesting model where all the specialist service providers of the DAO would be completely AI-driven. For example, marketing agency services AI will be integrated into the DAO. An example: If a proposal related to increasing TVL is passed, it triggers the AI marketing microservice DAO, which would execute the needed marketing activities including budgeting, planning, executing, and reporting.

Here are some tools you could add to your DAO tech stack:

1. Humans.ai - AI Agent

2. Valory - AI Agent

3. Project LION - Suite of AI tools for managing DAO

4. Aragon : It provides AI governance too. All in all, DAO building platforms offer an array of AI integration options.

👉Also, I highly urge you to listen to this 1-hour video on how AI could transform DAOs

I'm truly excited to learn the ways how AI (Super intelligence isn't far off) could take the existing DAOs to the next level and exploring how we could use for our TheBrotherHood DAO.

Let me know your thoughts.

If you find the article useful, please leave a comment/like. Thank you 🙏💙!

#DAOs #decentralizedautonomousorganization #web3 #crypto #blockchain

Some Observations:

1. Lower vote participation: Participation among holders/delegates in DAOs is lower across the board, averaging less than 20% (excluding outliers in the data). DAOs need to do more to promote greater participation among their members. This is clearly an area for improvement.

2. Only few proposal creators: I also noticed that only a very few people in every community create proposals, with an average of about 24 creators. I cannot say if this number is bad, but I cannot say it is good either.

3. Less than 50% of proposals get approved: Except for Galxe and TheGraph, where it is over 80%. A lower percentage is not necessarily a bad thing, as it could mean that their community is vetting proposals carefully. On the other hand, a high score does not necessarily mean good either. For Galxe, where only a handful of people control the voting power, this explains what might be happening there.

4. The Gini Coefficient and Nakamoto Coefficient: These are way too low for all these DAOs. These are important metrics where the Gini Coefficient measures the inequality in token distribution, whereas the Nakamoto Coefficient tells us how many wallet addresses control 51% of the voting power. As a rule of thumb, aim for a lower Gini coefficient and a higher Nakamoto coefficient. In our data, almost all DAOs have a Gini coefficient of 0.9, indicating a higher level of inequality in wealth distribution, and a Nakamoto coefficient averaging 0.05%. ENS is relatively better.Ideally, anything above 50% is considered good.

5. Aevo has the lowest success rate, and proposals are created by only 7 creators. Looking at their Nakamoto score of 47 addresses, I am sure there are a lot of conflicts of interest among the vested holders there.

6. DeXe needs to work on participation rate and voting power distribution. I saw a recent thread from them; they are working on it already, I believe.

From the data, ENS is the only DAO that scores better and has better governance relatively. Let me know what you think?

Comment below if you need my raw data for your analysis.

Data source: DeepDAO, bitquery (data as of 9-May-2024)

#DAO #Web3 #Blockchain #crypto #Decentralizedautonomousorganization

1. Lack of better voting power distribution logic: Most DAOs follow a Plutocratic system, "One Token One Vote," drawing parallels to traditional businesses that follow a "one share one vote" method. However, in our space, only a handful of token holders control the DAO. For example, Uniswap has 368,000 holders, yet only about 30 wallets control the voting power.🤯 I plan to write a follow-up post detailing other DAOs too. But it's concerning because we're essentially a CAO (Lol)pretending to be a DAO. How can we ensure a more democratic level playing field for all?

2. Lack ways to better manage member conflicts: DAOs have been plagued with the challenge of reaching consensus. We have examples from NounsDAO and Arbitrum. Personally, I see this issue as connected to #1. Given that only a handful of whales with vested interests control the voting power, nobody will prioritize the greater good but themselves. So, this problem will persist unless we increase genuine community participation and make it truly democratic.

3. Rise of the garbage proposals: In most DAOs, there is an increasing number of unwanted or irrelevant proposals being created, accounting for up to 17.5%. While it's important to make platforms easier for the community to participate in governance, we must control against abuse. Having a better process to submit proposals helps.

If you are into DAOs, I would love to hear what challenges keeps you excited to solve. If you need the report, leave a comment and I shall share.

Image Courtesy: Abstracted from the report "An Empirical Study on Snapshot DAOs"

If you want to know more about DAOs, follow my social handles

X: @electro_nft

Linkedin: @raja.ramachandran

#DAOs #Web3 #Blockchain #Web3 #Crypto #Communities