Hello, from The DAO Kit!

Welcome to our second conversation with the DAO Kit crew, if you missed our first one on “Coopetition in DAOs ', check it out here. Who are we? This post was written by @victoriakimse based on our recent Twitter Spaces discussion in a series co-organized by a group of DAO tool builders: @wonderverse_xyz, @guildxyz, @SnapshotLabs, @otterspace_xyz, @utopialabs_, @coordinape, and @clarityteams. At our core, we believe in interoperability and collaboration. We decided to refer to our collaboration as ‘The DAO Kit,’ capturing the idea that DAOs can compose their toolset by combining our products rather than reaching for an all-in-one solution.

What makes a DAO a DAO?

DAOs are often defined not by what they are at this moment but by what they aspire to be. Aspirational values revolve around distributed power, ownership, and transparency. It is the idea that no central body is dictating and operating an entire group. DAOs, we envision, are on the horizon and we are continuously defining it by working toward that future. 

But where did it all start? Formally, a “DAO” spells out to be a “Decentralized Autonomous Organization.” The initial inception of the concept is most commonly attributed to a group of developers, Stephan Tual, Simon Jentzsch, and Christoph Jentzsch. A DAO, as they described in 2016, is an organization formed on top of the Ethereum blockchain with smart contracts to execute and make decisions autonomously. A smart contract is a “collection of code (its functions) and data (its state) that resides at a specific address on the Ethereum blockchain.” (Ethereum Org) 

The measure of how much an organization operates via these smart contracts, still to this day, is heavily used to delineate Decentralized Autonomous Organizations. A tangible example of this is organizations that utilize a multi-signature wallet, a wallet composed of smart contracts to enable multiple ownership, and those who may decide to use a hot wallet with a singular owner.

As we examine how far these DAOs are technically on-chain and autonomous, it is essential to additionally question the culture and values of the people applying these technologies. For example, on-chain voting still has a lot of opportunities for improvement. Today, on-chain votes replicate Web2-like voting, where a single token equates to a single vote. In other words, being “on-chain” is not always synonymous with embodying the cultural values of what it means to be a DAO. 

Navigating the idea of a DAO means challenging our technical boundaries and the values that make up our culture. En, the Head of Community from Wonderverse, prefers to define a DAO as a “Democratic Asynchronous Organization”, claiming that these words are a much better descriptor of what we’re trying to achieve in the web3 space. Essentially, that is an entity structure where our opinions feel valued, there are no authoritarian CEOs backed by a board of directors who make decisions, and there is space for work to be done wherever and whenever. 

Should my project be a DAO?

The evaluation of whether your project should be a DAO should begin with questioning your goals and objectives. As you can imagine, forming a DAO has both technical and cultural implications. There are a few tactical questions that may help guide your decisions. 

Do your project goals have emergent outcomes? 

In this scenario, your project does not require a hard set of expectations and your community will likely act as agents of change. You can continue to iterate and decide on what success means for you. Your project would thrive in an environment where lots of experimentation is encouraged. You could leverage consensus-based decision-making and channel ambiguity as inspiration. This type of project may be suited as a DAO. 

Do your project goals have deliberate outcomes?

These are the types of projects that require strict rules and expected outcomes. Projects like these require an environment where decisions are made quickly, and processes are streamlined. In this case, forming as a DAO may not necessarily be best suited for your project. 

In short, your project doesn’t need to be a DAO; your project's goals can help you understand whether it may be best suited for one. 

Conclusion

It’s been over a year since we witnessed the Cambrian explosion of DAOs. Since then, we’ve continued to understand better what it means and what it takes to become a DAO. We’ve rigorously been working on improving the technologies that become the backbone of DAO functions while simultaneously evolving our values and cultural practices. Being a DAO means becoming comfortable with sitting in this gray. It means resisting the urge to adopt definitions and rules imposed upon us and letting the community come to its own understanding in an autonomous and decentralized fashion. At this stage DAOs, their structures, best practices, and successes are still changing rapidly. It may take a few years until there is a universally adopted definition of what DAOs are. Those comfortable with this process will be best equipped to see their project to fruition as a DAO.  

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Who are “we”?

Introducing The DAO Kit

This post was written by @emthemaker based on the discussion in the first Twitter Spaces in a series co-organized by a group of DAO tool builders: @wonderverse_xyz, @guildxyz, @SnapshotLabs, @otterspace_xyz, @utopialabs_, @coordinape, and @clarityteams. We came together several months ago to regularly meet and discuss how we can collaborate to create positive sum outcomes for our respective projects. We decided to refer to our collaboration as ‘The DAO Kit’, capturing the idea that DAOs can compose their own toolset by combining our products, rather than reaching for an all-in-one solution.

Why does cooperation matter?

As humans, we have both an innate competitive response when we feel threatened, and a natural propensity toward cooperation when we feel safe. On a personal level, it is exhausting to constantly have to one-up everyone around you. Our experiences in Web2 and the traditional corporate world taught us to always be looking over our shoulders and anxiously rushing to outrun our competitors to the holy grail of the “winner takes all” market domination. This state is no more ‘natural’ than the cooperative state, but we have been conditioned to accept it and pursue winning at all costs.

However, there is another way, and the conditions in Web3 make this path more feasible than was previously possible. There are three elements that drive cooperation in Web3: technology, culture, and business models. These three elements are intertwined and contribute to an increased level of cooperation between projects like ours, relative to what would be expected in Web2.

Technology

The first driving force behind cooperation in Web3, especially for those of us building on Ethereum, is the technology underpinning it. The Ethereum blockchain has built-in transparency and interoperability, which encourages cooperation between developers.

In Web2, competition is possible by maintaining ownership and control over the software and user accounts. Smart contract code, on the other hand, is public and can be run by anyone. It resembles a public good more than a proprietary resource. When the code developers write is transparent to the public, this encourages a more cooperative mindset - rather than re-building the same functionality as someone else and ‘competing’, it becomes more attractive to extend existing functionality and produce a greater whole.

Interoperability is also intrinsic to the Ethereum ecosystem, as the blockchain can be likened to a single global computer that everyone is programming based on a set of accepted standards and rules. Applications are compatible with each other and often integrated ‘out-of-the-box’. This inherent interoperability makes integration and extension of functionality straightforward, which once again encourages cooperation over competition.

These properties of blockchains make possible the concept of a ‘Hyperstructure’, which Jacob Horne of Zora defines as “Crypto protocols that can run for free and forever, without maintenance, interruption or intermediaries.” A Hyperstructure creates a positive-sum environment by disincentivizing the re-building of the infrastructure and allowing participants to profit from their contribution to the system. It should be noted that not all protocols are Hyperstructures by default, but that the conditions within Web3 enable and perhaps even encourage the building of Hyperstructures.

While blockchains create an environment that can incentivize cooperation, they are certainly not deterministic. There are plenty of Web3 companies that combine smart contract code with privately-owned databases in such a way that the smart contract cannot function without the database. There is another important element to cooperation in Web3 - the culture that has evolved in the space.

Culture

Cooperation in Web3 is facilitated by an open, global, and distributed infrastructure, but the evolving culture is an equally important driver. There is a noticeable sense of camaraderie, wagmi (we’re all going to make it) mentality, and positive-sum thinking among builders in the Ethereum ecosystem.

One important driver of this culture is without doubt a reaction to the Web2 era, which was marked by a small group of big tech monopolists selling personal data, exploiting content creators, spreading fake news, and generally capitalizing on their market position instead of considering their infrastructure as a public good. The deep distrust towards big tech has led people to look for alternatives that promise greater self-determination, transparency, and bottom-up cooperation.

There is a sense of working towards a collective mission of building the next generation of the Internet without making the same mistakes as predecessors. This mission-over-profit mentality creates a sense of belonging and shared fate. If our goal is to fundamentally re-structure the dynamics of the Internet, then we need to work together to enable the whole space to succeed. By constructing a shared antagonist in the legacy Web2 way of doing things, we see each other as part of the same team.

The culture of being involved in multiple Web3 projects at the same time and frequently moving between them has also facilitated greater cooperation. Relationships are built across a network of DAOs, which builds trust and strengthens the ability to cooperate.

Business Models

While the culture in Web3 certainly challenges traditional ways of looking at business models and profit, there is also a more fundamental shift at play. The nature of blockchains enables the flow of value (in the form of tokens) between network participants, turning Web2 business models on their heads.

The Ethereum blockchain is not just a shared programmable global computer, but it also has a built-in store and exchange of value in the form of tokens. Network participants, including infrastructure providers, are able to exchange small and large sums with each other based on the value they add to the network.

This means that multiple interoperable pieces of technology can participate as value creators in the same network and receive compensation for the value they created. While the business models of Web2 encouraged zero-sum competition to own all the supply and demand in a network, the business models enabled by the blockchain make possible a positive sum ecosystem that invites and thrives with cooperation.

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The increased level of cooperation that we’re seeing in Web3 is no accident but is driven by the combined forces of technology, culture, and business models. The conditions within Web3 create an environment that incentivizes greater cooperation between projects, and perhaps attracts people who are naturally drawn to more open and collaborative environments. But it by no means demands it - there is a world in which Web3 goes down a familiar path, with organizations competing tooth and nail for market share.

Every builder in the space ultimately has a choice in how we want the ecosystem to evolve and what role we want to play in that. The wagmi meme and culture of openness and positive-sum thinking might be the strongest tool we have to perpetuate collaborative behaviors and realize our vision of a Web3 that is different from previous generations of the Internet.