Happy New Year! 🌅

My name is Uwaizumi.eth and I am the developer of Unyte, a DAO tool that aims to make the management of decentralized autonomous organizations (DAOs) more efficient. In addition to developing this tool, I also participate in discussions with multiple DAOs and communities to explore ways to improve governance.

In this article, I would like to reflect on some of the challenges faced by DAOs and propose potential solutions based on my observations and experiences. This is my first time writing a blog post, so please be kind.

Define what is a “DAO“ in this article

Before discussing governance in DAOs, it's important to clarify the definition of a "DAO" that I will be using in this article. In my opinion, there are two main interpretations of the term "DAO": the "pragmatic" interpretation, and the "idealistic" interpretation.

In the "idealistic" interpretation, a DAO is defined by the following characteristics:

• Smart contract-based automatic execution (i.e. "Code is Law")

• System changes are automatically reflected according to voting outcomes.

According to this interpretation, cryptocurrencies such as Bitcoin can be considered DAOs.

On the other hand, in the "pragmatic" interpretation, a DAO is defined by:

• Outputs that are generated through smart contract execution or autonomous actions taken by members.

• System changes are made by members working together according to voting outcomes, without the need for automatic reflection.

Most DAOs and communities fall under this interpretation.

In this article, I will adopt the "pragmatic" definition of DAOs. Personal opinion, The "idealistic" DAOs are too systematic and may not be called "organizations" anymore, it's more like "software".

Today’s governance model of DAOs and its problems

Finally, let's dive into the main topic. In my opinion, there are two main challenges with the current governance model of DAOs:

• Decision-making is slower compared to centralized companies or communities.

• There is no mechanism to reward contributions, leading to a lack of member engagement.

Let me explain each of them in detail.

Decision-making is slower

DAOs often rely on voting for decision-making. However, the process from voting to execution includes several steps such as:

• Proposing a vote using Snapshot or similar platforms

• Voting on the proposed changes

• Confirming the voting results after a certain period of time

• Reflecting the changes in the product or management policy.

It can take a month or more for a change to be reflected, making the process slower than in a startup company or centralized community, where decision-making responsibilities are clearly defined.

No mechanism to reward contributions

In many DAOs, the lack of a "mechanism to reward contributions" is another issue that hinders the growth of the organization. This issue is divided into two phases:

①It is not clear how each member is contributing

②The amount of rewards does not correspond to the level of contributions

① is a state where the information of "who is doing what" is unclear and becomes like a black box. In the first place, unlike a normal company, there is no command system, and there is no need to "ultimately" visualize activity history, which may be why it has become like this. There are patterns of DAOs where there is no place or mechanism for reporting daily activities, and even if there is, it becomes an outdated operation such as "recording activity contents on a Google Sheets on a weekly basis."

② "there is no system of reward corresponding to contribution" means that even if the contribution of the members is visible, it is unclear how to provide "compensation" for each contribution. In a typical corporation, member's (= employee) contributions are compensated in fiat currency "salary." On the other hand, in many DAOs, this system is missing and the current state is often dependent on members' "volunteer" work.

As a result, many DAOs have the following situation:

• Members participate in DAO with the enthusiasm of "I'll work hard!"

• Make a self-introduction

• Chat on Discord, enter projects, etc. and gradually participate in activities

• Without any particularly notable results and no progress in activities

• Gradually lose motivation and fade out

How can this situation be resolved? Improving "decision-making speed," "visualizing contributions and organizing reward systems," etc. are some examples that can be considered.

Solution 1: Speeding up decision-making

Can "decentralization" and "decision-making speed" coexist?

The only way to resolve the slowness of decision-making caused by the governance system is to change the method of decision-making in DAOs. However, if we make the decision to "return to centralization," we will return to a typical pyramidal organization from a DAO, which is putting the cart before the horse.

Note: Of course, in the early stages of founding a DAO, it is one option to allow centralized decision-making by core members. Many DAOs have grown under such an organizational model. However, in this article, we will consider ways to resolve organizational issues while maintaining the decentralization that is a feature of DAOs.

Is there a way to speed up decision-making while maintaining decentralization?

Yes!!!

This time, based on the decision-making model of "Teal Organizations," I would like to propose a method that can make quick decisions while maintaining decentralization.

WTF is “Teal Organization?“

A "teal organization" is a new organizational model proposed in 2014 that incorporates a new management technique different from previous decision-making models. In the book, "the governance model of the organization depends on the consciousness level of the founders," the transition of human minds and the form of organizations from primitive organizations (red) to modern new forms (teal) is introduced based on this principle.

It seems that many of the various ways in which organizations try to resolve internal problems tend to worsen rather than improve the situation. Most organizations have experienced numerous changes in business, mergers, centralization, decentralization, introduction of IT systems, remodeling of mission statements, and reconstruction of evaluation and reward systems. There are also times when current operations feel limited, and traditional prescriptions are seen as part of the problem rather than a solution. A more bold and innovative approach is required. But is that really possible? Or is it just a hopeful observation? What kind of organization brings out the possibilities of people? What does it take to realize such an organization? These are the core questions of this book.

-From the book, "Reinventing organizations"

The most significant feature of teal organizations is that "members on the ground can make decisions autonomously."

It's important, so I'll say it again,"members on the ground""autonomously" "can make decisions."

Hmm. It seems like it can be so useful for solving DAO issues.

From examples of existing teal organizations in the book, let's consider how to adopt a similar model in DAOs.

The relationship between teal organizations and DAOs

Before I go on, let me also summarize the position of DAOs "at this point in time". It is believed that the organization undergoes the following transition leading up to Thiel.

Among these, it is the "multidimensional type (green)" that has characteristics similar to those of a typical DAO. The "Green" type was designed to solve the problems of the previous "Achievement Type (Orange = meritocratic organization)," such as environmental destruction and organizational corruption while maintaining equal rights for each member.

• Each member retains equal rights.

• Community-driven decision making

The idea is similar to that of today's DAOs. This is a similar concept to that of today's DAOs.

A pluralistic perspective does not fit in with power and hierarchy. Ideally, one would want to eliminate both. Some people have tried to start this too radical phase with a clean slate, abandoning the adaptive and achievement models. They say, "If inequality of power always results in those at the top governing those at the bottom, then let's abolish class and give everyone equal power. Let's decide everything by consensus (or, if necessary, by taking turns in leadership), with all employees having equal ownership of the company and no one holding a leadership position.

From the book "The Teal Organization(Japanese Edition)

However, as mentioned in the book, Green's organizational model has the challenge that things are not decided.

Consensus is an idea that sounds appealing. After all, all participants are given equal say (a value emphasized in pluralistic organizations, among others). In reality, however, it often degenerates into a collective ego storm, with each participant having his or her own agenda. Everyone has the right to stop the group from making decisions if their ideas and wishes are not incorporated. This means that everyone, not just management, has the power to exert over others (albeit a power that can paralyze an organization). Attempting to satisfy everyone's wishes (no matter how trivial they may be) is often a painful process with no way out. And in the end, it is not uncommon for most people to not care, and to say, "Whatever, I just want someone to decide as soon as possible.

From the book "The Teal Organization(Japanese Edition)

The challenges facing DAOs today are verbalized. It is painful to hear. The Teal model was created to address these green challenges. The image in this article is helpful.

We will now organize examples of actual teal organization operations and how they are implemented in DAOs.

DAO Governance Reflecting a Teal Organization

In companies introduced as teal organizations, members can make decisions at their own discretion. However, this does not mean that they can "do whatever they want," and there are several "covenants and constraints" in place. This decision-making model is called the "advisory process. The book's explanation of this is concise and is included in the citation.

In principle, any decision can be made by anyone in the organization. Before doing so, however, they must seek advice from all parties involved and experts in the matter. The person who wants to make a decision is not obligated to take in every single piece of advice. The goal is not to reach a compromise that is thinly veiled to accommodate everyone's wishes. But one must always seek the advice of all concerned and consider them seriously. The greater the content of the decision, the wider the audience for advice, and in some cases, the opinions of the CEO and board members must also be sought. Usually, the decision makers are those who are aware of the problem or opportunity, or those who will be most affected by it.

From the book "The Teal Organization(Japanese Edition)

In this way, all members are given appropriate discretion. We believe that by doing this in a DAO, the speed of decision-making can be increased while maintaining the decentralized nature of the ideological foundation.

The following is how we would actually implement this in a DAO.

• Members draft what they want to work on for the DAO.

• The member who provided advice in the advisory process electronically signs the relevant draft as evidence

• As soon as the required number of electronic signatures are collected, the draft is finalized. The draft is moved to the execution phase.

This allows the project to move forward at an overwhelmingly faster speed than if the necessary number of votes were collected by Snapshot.

Solution 2: Visualization of Contributions and Organization of Reward System

Now, let us try to organize solutions to the second issue, "absence of a system to reward contributions," as well as slow decision-making speed.

How to visualize contributions

First of all, let's start with the question of how to visualize the activities of members. In the current DAO, I mentioned that what members are doing on a daily basis has become a black box. To solve this problem, we are developing a DAO tool called "Unyte.

Unyte is a bot that runs on Discord and allows teams to make

• Suggestions to the team

• Record daily activities

• Thanking other team members

and other activities can be recorded at the touch of a button called a "slash command".

For example, the "/proposal" command can be used to easily make a proposal to the team. Proposals are collected in a place called the "forum channel" on Discord, so you don't have to worry about them getting lost in the rest of the chat.

Proposals and other activities are recorded on a dashboard that is issued for each DAO.

Information about which types of activities and how much each member has done will also be recorded on a monthly dashboard.

In this way, the activities of DAO members can be easily visualized, eliminating the problem of "it is difficult to know who is doing what.

Clarification of Reward Structure

Once the activities of the members have been visualized, it is time to discuss "how to reward them according to their contributions. This is a part that is difficult to generalize, as policies vary considerably from DAO to DAO. This time, I would like to introduce an example of a DAO (community) that has a "reward system that works".

The one I'd like to introduce this time is the VeryLongAnimals community!

As you know, the VeryLongAnimals community is the most active NFT community in Japan. Many people, both holders of very long animals and derivative works as well as those who are not, join the community via Twitter and Discord and are active on a daily basis.

The community has its own reward system called "Potatoes".

Potatoes can be received by contributing to the Verrillon community and have utilities to help you enjoy Verrillon more. You can read more about the utility of potatoes here.

https://twitter.com/VLA_JAPAN/status/1588726745016201216?s=20&t=5eYX6zWbyIGs9yhP_QY3SA

To briefly summarize, by collecting potatoes in your daily activities, you can

• Get great deals on Verrillon-related NFT collections

• Redeemable for great prizes such as Disneyland tickets and iPads (current items can be found in the Potato Catalog)

and other benefits. This is one of the motivating factors for the members of the Verrillon community, which has sustained the community activities that many enjoy to this day.

The conditions for receiving these potatoes are clearly stated in a document called "Potato Distribution Criteria".

https://verylonganimals.com/potatostandard/

The distribution criteria range from those with a high level of difficulty, such as

• **"creating a derivative work"**and

• "communicating about Beliron on social media,"

to those that allow you to win fries just like playing a game, such as

• **"tweeting 'vgm #ベリロン' in the morning"**and

• "tweeting 'ベリロン' on Twitter at 11:11 PM and being the closest wins fries.

A wide range of options is available.

This "easy to contribute and get real rewards for your contribution" is a strong foundation that supports the growth of the community. The utility of the right to obtain NFT collections they sell at a discount or in exchange for goods that enrich users' lives seems to be something that other DAOs can imitate in many areas.

The aforementioned Unyte also implements a feature that sends specific rewards to users based on their activities. Like the Verilon community, contributions with a fixed amount of reward (e.g., creation of secondary works, etc.) The new command will also be able to be used for other purposes, such as registering a new command for a certain amount of contribution (e.g., creation of a second work).

Conclusion

I have discussed some of the challenges related to the governance of DAOs and their solutions.

As an individual, I have my doubts about the situation in which many people are forced to base their lives solely on the option of "working for a company.

I believe that if "contributing to DAOs and communities" could be expanded as a new basis for living, replacing the alternative of working at a company, many of the issues (overwork, mental illness, etc.) that are prevalent in today's society could be resolved.

It is with this hope that I spend my life developing tools while supporting the activities of DAOs and communities. I would be more than happy if this article helps to "develop a system that allows more DAOs to continue their activities in a sustainable manner.

Unyte, which is still under development, is still in the verification stage, so we are looking for users who are willing to participate in a test run! If you are interested, please contact me or Unyte's official Twitter account!

Thank you for reading this far!

Have a good DAO life! 👋