DAOs [6] • Landscape
DAOs are a new way of organizing people. Traditionally, a company structure has been the most effective free-market approach to accruing talent in pursuit of a goal. That labor is usually persuaded and controlled through wages. DAOs seek similar ends — the creation of value — but rely on a decentralized framework in which workers, users, and other stakeholders have true ownership of the entity.
👉 Part 1: 5 Actionable Insights
DAOs have become a core organizational primitive across the web3 world. In tandem, a burgeoning ecosystem has arisen to support the core functions of these organizations.
Below, we’ll highlight influential stakeholders in the DAO landscape. We should note that this is by no means an exhaustive list — the map is not the territory. Web3 is growing rapidly and changing every day, with new entrants changing the space’s complexion constantly.
Nevertheless, we’ll outline players across the following functional areas:
- Formation
- Communication
- Community
- Governance
- Compensation
- Treasury
We’ll also mention other notable organizations and opinion leaders.
Let’s get DAOwn to business.
Formation
In order to participate in a DAO, there first must be a DAO.
Several projects currently vie for supremacy, including Aragon, Syndicate, Orca, Tribute, and Colony. These are not always directly competitive, as each solution offers a unique value proposition and feature set.
What do these projects do? A simple way to think of them is as a crypto-native version of Stripe Atlas — they allow DAOs to get off the ground. That includes things like membership management, treasury tooling, and infrastructure for governance.
Over the coming years, we should expect to see more products come to market to support DAO formation. Just as white-label solutions are used to handle tasks like content management, we will soon reach a point where a multitude of options exist for new DAO-builders.
Aragon
Founded in 2016, Aragon provides a suite of applications to create, manage, and govern DAOs at scale. This includes Aragon Court, Aragon Govern, Aragon Voice, and Aragon Client. As one of the first teams dedicated to DAO infrastructure, the Aragon Association has become an important service provider for DAOs, claiming notable projects like LidoDAO as users.
Syndicate
Contributor Will Papper is co-founder of Syndicate, a decentralized investing protocol and social network focused on Investment DAOs. Its mission is to democratize the world of investing by allowing individuals and communities to launch investment vehicles far faster and more cheaply than traditional funds. Syndicate’s solution includes legal support and social networking protocols that allow investing communities to convene, communicate and deploy capital.
Orca
DAOs often find it difficult to maintain high participation rates at scale. Orca Protocol has a clever solution for this, while also reducing bottlenecks in deployment of funds and resources.
Specifically, Orca leverages a “Pod Model’’ in which a single monolithic treasury is replaced by smaller “pods,” each with its own sub-membership and wallet. In essence, each pod functions as a mini-DAO within a larger DAO construct.
This is a big unlock, bringing composability to DAOs by creating the infrastructure for pods to attach and detach as needed, kind of like DAO-legos. It also keeps groups smaller, making coordination and engagement easier.
Tribute
Part of the MolochDAO ecosystem, Tribute provides a framework of open-source solutions that DAOs leverage to better scale. Its tech stack includes solutions to cancel proposals, create non-voting shares, kick out members, use NFTs for membership, whitelist tokens, and much more. Tribute is fundamentally modular, allowing DAOs to pick and choose the solutions they need.
Colony
Inspired by ant colonies, Colony offers a collection of Ethereum smart contracts to start a DAO without any coding needed. Colony simplifies governance, authority, compensation, and more.
Colony itself is maintained by the Metacolony — a yet-to-be-unveiled DAO. The Metacolony will continually develop and maintain tools to be used by those that tap Colony’s infrastructure.
Communication
Once a DAO is formed, it needs to facilitate communication among its members. Healthy discussion is, of course, the key to information sharing, which unlocks good voting practice, treasury management, and broader coordination. No DAO wants to become the Quiet Place.
A number of tools have emerged to facilitate conversation, with Discord, Telegram, and Twitter chief among them.
Discord
Arguably, the primary means of communication and coordination for DAOs is Discord. For those that have yet to enter the eye-bulging-rapid-fire world of web3 servers, Discord is a free voice, video, and text chat platform that has quickly reached ubiquity in the ecosystem.
Its characteristics make it particularly appealing for DAOs. For one thing, starting a Discord is relatively trivial and thanks to its channel and sub-channel architecture, organizing communication is straightforward and flexible. (Even if it doesn’t quite quell the madness.)
Critically, as Discord has become the default in web3, a number of useful bots and plug-ins have arisen to support it. Chief among them is “token-gating” functionality. As alluded to previously, some DAOs restrict access to those that hold a certain number of native tokens. For example, if we were to start RandomDAO, we might insist that anyone who wanted to join the Discord needed to hold 420 $RANDOM tokens.
Tools like Collab.Land make it easy for DAOs to ensure that access to private chats is granted only to those that meet token requirements. Other widely used bots include MEE6 and Statbot.
Additionally, it’s worth noting that Discord integrates well with existing sites; as more communities transition to DAOs, expect this to become an increasingly vital feature.
Telegram
The most common alternative to Discord is Telegram. Though popular among the crypto crowd, the chat app hasn’t had the same adoption from DAOs as Discord. That’s in large part because Telegram doesn’t offer the same level of granularity, specifically with regard to bots and sub-channels.
Perhaps because of its comparative simplicity, however, Telegram is often a breeding ground for DAOs that are just getting started, before they graduate to Discord.
“How is Twitter still free?” is something of a running joke among the platform’s most avid users, for good reason. In many ways, Twitter has become somewhat of a public good, especially in the crypto world. The amount of information and insight that flows through that platform on a given day is remarkable and its supremacy as the industry’s de facto social graph has cemented its importance. (Others are coming for that throne, of course.)
While Twitter doesn’t address DAOs’ need for private, high-volume chat, it remains an important communication tool in the ecosystem — particularly for discovering new projects — and we’d be remiss if we didn’t at least acknowledge it.
Coordination
One of the biggest challenges to any collective, whether it be a local community or multi-national corporation, is coordination, especially at scale. Historically, we’ve used hierarchies to manage this problem, but what is the best solution in a flat, decentralized structure?
DAOs rely on a number of different tools to manage their community and optimize coordination, including Coordinape, Collab.Land, SourceCred, and DAOhaus.
Coordinape
Used by DeFi bluechip protocols like Yearn and Sushi, Coordinape helps DAOs coordinate and distribute resources to contributors.
For example, Coordinape’s “Circle” product allows DAO contributors to “gift” a limited number of GIVE tokens to those they believe are are bringing value to the organization. While this has the benefit of being fun and rewards participation, it also creates a de facto “compensation map,” illustrating who is driving the project forward. Furthermore, the compensation process is functionally decentralized since anyone can choose to reward anyone.
Critics of this mechanism argue that peer-to-peer compensation can lead to a popularity contest in which the the loudest, most extroverted members receive outsized allocations.
Collab.Land
Collab.Land offers a token-gating bot for Discord and Telegram. It’s also useful in assigning roles to DAO members on either platform. Due to its relative ease of use, Collab.Land has become a much-used tool in the industry and should see its usage rise as the number of DAOs increase.
Guild, though yet to be fully launched, is an alternative with a similar feature set.
SourceCred
DAOs use SourceCred to measure and reward the contributions of individuals to a project. Those that bring value to a DAO through their efforts earn “cred,” based on parameters set by the organization. Cred is a powerful way to simply quantify contributors’ reputation and work.
DAOs can also issue “Grain” with cred, which can be used as a wage-equivalent. SourceCred differentiates between the tokens, noting:
If cred answers the question “who provided value?”, Grain answers “how should we reward people given the value they provided?”
DAOhaus
DAOhaus is a “no-code platform” for launching and running DAOs based on a framework built by MolochDAO. The platform allows users to coordinate through a central hub where they can check activity, governance proposals, and treasury health. Membership can also be managed from here.
Since the platform was based on MolochDAO’s structure, DAOhaus users can access all the tooling provided by that parent organization, with the benefits of a user-friendly wrapper.
Compensation
Let’s switch gears and talk about how DAOs compensate contributors. As we’ve mentioned, some offer payment features as part of a larger DAO suite, but specialized offerings exist, too. Superfluid and Sablier are particularly notable.
One way to think of these tools is as “payroll for DAOs.” They help DAOs handle payments on a recurring basis, on the blockchain, with minimal gas fees.
For those new to crypto, a lot of the terminology in this area may sound confusing. The important thing to note about these projects is that they make it easy for DAOs to pay contributors on the blockchain.
Superfluid
Superfluid is a protocol that allows for programmable cash flows. Using its unique ERC-777 standard, you can define “streams of value” so that compensation automatically flows to a DAO’s contributors, constantly. It’s kind of like setting up your company’s payroll so that, instead of getting paid twice a month, your employees are compensated live, for every second they work. All without any further intervention on your end.
Sablier
Like Superfluid, Sablier is a financial streaming platform. Created in 2019, Sablier supports any ERC-20 token and doesn’t charge a fee to use the contract.
One remarkable feature of Sablier is that it is truly autonomous. The team that created the project burned the administrative keys that control the layer 1 contract. What that means is that Sablier’s makers no longer have the ability to stop the creation of new streams. It is, in the words of founder Paul Razvan Berg “a 100% decentralized public good.”
Governance
Solving for governance and coordinated decision making at scale is one of the hardest problems DAOs face today.
Why is it so hard?
One of the great unlocks of web3 is its censorship resistance and “permissionless accessibility”. In other words, anyone, anywhere can transact with each other or engage in decentralized protocols and applications without third-party interference. No government should be able to stop you joining a DAO, for example. (At least, in theory.)
This permissionless access can be a double-edged sword at times, particularly as DAOs grow and scale. Without hard caps on membership, DAOs often become larger and more diverse over time. Eventually, popular DAOs may have membership numbering in the tens of thousands, with each individual bringing differing skills, experiences, values, opinions, and backgrounds to the table.
To be clear, this is a good problem to have. That web3 enables individuals to transition from laborer to owner is one of its most fundamental, and compelling attributes. But as communities grow ever more decentralized, the need for robust governance increases — otherwise you may end up with a splintered organization in which every participant is merely screaming into the wind.
Several teams are working frantically to address this issue, building tools that help organize and motivate members. Snapshot and Discourse are two deceptively powerful products that are widely used in the space.
Snapshot
Snapshot is an off-chain, gasless voting platform mostly used by DAOs that issue ERC-20 and ERC-721 governance tokens. Expensive gas fees on Ethereum preclude on-chain governance for all but the largest token holders.
Snapshot has exploded in popularity by providing an easy to use and cheap governance participation method. Essentially, DAO contributors can head over to their organization’s Snapshot page, see the topics up for vote, and weigh in. For example, here are the proposals Sushi’s community has recently voted on.
With a few notable examples, like MakerDAO, most token-DAOs now integrate Snapshot voting into their governance process. It’s important to note that “SafeSnap”, a product produced by Gnosis (discussed below), allows for on-chain execution of off-chain voting. It does so by harnessing the combined power of Snapshot and Gnosis Safe.
What does this mean?
Basically, DAO participants can still vote off-chain — saving on gas fees — with the results subsequently, and seamlessly enacted on-chain later, without the potential for interference.
Discourse
Discourse forums are like the “Senate floor” of DAOs and represent a place for formal discussion and feedback on proposals. Discussion and debates surrounding governance proposals may occur in back channels like Discord, Telegram, or even Twitter, but oftentimes submissions end up on a Discourse for a more focused, long-form discussion. As their function is more formal, Discourse forums also act as an archive for the discussions and proposals related to the DAO.
Treasury
Many community DAOs require members to commit upfront capital to participate. This capital is then pooled into the DAO’s “treasury.” Like traditional companies, DAOs want to manage their assets effectively and hopefully increase their holdings. To that end, many invest their treasury into assets across the digital ecosystem including into NFTs, social tokens, crypto projects, and so on. In effect, they act as decentralized investment funds.
Lest you think such experiments are insignificant in scale, it’s worth noting that DAOs collectively manage tens of billions of dollars today. These are meaningful entities with complex needs.
Most DAOs have ambitious plans, but shrewd management can be difficult. For starters, the crypto sector is extremely volatile. As asset prices rise and fall, a DAOs assets may plausibly move 20% or more on a given day. To protect against these swings, DAOs have to diversify.
Llama, Parcel, Coinshift, and Gnosis are designed to give treasury managers the tools and insights they need to handle such turbulence.
Llama
Llama is a DAO that focuses exclusively on assisting other DAOs (meta!) with treasury management. LlamaDAO has had some large clients coordinated through Gitcoin grants. It has created dashboards, reports, treasury management guidelines, coordinated sales and financial statements for protocols like Aave, PoolTogether, Uniswap, Gitcoin and FWB.
Parcel
Parcel is a treasury suite used by some of the largest DAOs in DeFi, including Aave Grants, Compound Grants and Synthetix. Currently in a closed beta, Parcel is serving 8 DAOs and has been used to issue $3 million in bulk payouts for various programs. As DAOs scale, they will need the solutions Parcel provides to manage the flow of funds to grant recipients, pay contributors, and deploy treasury efficiently.
Coinshift
Coinshift looks to solve a similar problem. So far, the project has secured the support of heavyweights like Consensys, Messari, Uniswap Grants, and Balancer Grants. The company has raised money from Sequoia, Ethereal Ventures, Weekend Fund, and others. As of January 2022, Coinshift supported 247 “safes” holding $1.6 billion in assets.
Gnosis
Gnosis Safe is a service developed by GnosisDAO that provides a better user-experience for DAO multisig wallets.
What is a “multisig”?
It’s simply a wallet that requires multiple signatures for a transaction to be approved. Instead of a single person being able to ratify a payment, several parties are needed. DAOs traditionally use this framework to manage funds, protect against misuse, and decentralize power.
Unlike some alternative solutions, Gnosis Safe supports ERC-20s and ERC-721s assets, allowing DAOs to hold NFTs in a multisig wallet. Since many NFTs have seen huge price appreciation, strong treasury tooling here has become increasingly important.
Other notable organizations
DAOs have the opportunity to bring the next 100 million users, or more, into web3. As the foundational structure for organizational development and deployment, DAOs will reveal new ways to coordinate across personal and professional engagements, rethinking how we operate and make decisions as a collective, together.
As the tools and tactics mentioned above come together, it’s worth highlighting some popular projects that have brought them to life.
PartyDAO
PartyDAO is a decentralized collection of developers, writers, engineers and designers who design and build DAO tooling. Their first product, “PartyBid,” allows users to pool funds to bid on NFTs. Users have used PartyBid to pool funds to bid on Cryptopunks, Andrew Yang’s NFT, and CrypToadz. With the release of “Party Splits” at the end of September, PartyDAO now enables the fractionalization of NFTs, distributing ownership.
Mirror
Mirror, founded by Denis Navaroz, is a decentralized publishing network. Mediated through the WRITE token, users can pay WRITE to mint their own Mirror domain, to which they can publish articles and influence the approval of new members via their voting power.
In quick order, Mirror has become the de-facto place to publish thoughts on web3 and kick-off community efforts. For example, “Crypto, Culture, & Society,” initiated by Mirror’s CTO, used the platform to outline a crypto learning DAO, raising 25 ETH in the process.
Seed Club
Seed Club is a DAO that builds, supports, and invests in tokenized communities. The community includes many top influencers and founders in the social token space. Already, Seed Club has worked with prominent DAOs and communities including PartyDAO, Forefront, The Generalist and SquiggleDAO.
FWB
We’ve spoken of FWB already, but the DAO’s influence is worth a slightly longer discussion. Just this week, the large social DAO announced it had raised $10 million funding from a16z, Pace, and others.
FWB is the home to one of the largest collections of crypto-thinkers and hosts wide-ranging discussions. One channel of the Discord might talk about music, another about NFTs, while a third riffs on investments. In addition to acting as a kind of web3 social club, FWB members are actively building products for the community, as discussed. It is, in short, emerging as a true cultural, generative home for crypto.
The LAO
By definition, The LAO is not quite a DAO. Rather, founder Aaron Wright’s entity is a “Limited Liability Autonomous Organization.” Though maintaining many of the traits of a DAO, The LAO is an actual Delaware incorporated entity. By grounding the product in the traditional legal world, The LAO seeks to streamline and simplify thorny legal and tax issues for its members.
Beyond its differentiated structure, The LAO is remarkable for the influence it has in the Investment DAO space. Not only has it received more than $65 million in contributions, it has spawned a wave of subsidiaries. That includes Flamingo (an NFT collective), Red DAO (a digital fashion DAO), Neon (a metaverse DAO), Neptune (a DeFi liquidity DAO) and more. As noted in the diversity of the DAOs aforementioned, limited liability structures can be helpful across the entire spectrum of crypto-related projects.
Given these entities have been extremely active in crypto over the past couple of years, paper returns are almost certainly insane. Wright himself tweeted that Flamingo was on track to have $1 billion in AUM:
MetaCartel
MetaCartel is a decentralized group of builders who originally worked to support Dapp development but have since pivoted to incubating DAOs. MetaCartel educates people on DAOs, conducts case studies on real-world DAOs, and assists in everything related to the development and bootstrapping of a new DAO.
MetaCartel has also spun out an investment arm, called MetaCartel Ventures. It has, in turn, invested in several other DAOs.
Moloch
Moloch DAO was originally founded to fund the development of Ethereum public infrastructure related to ETH 2.0. Since then, Moloch has expanded into a Grants DAO, supporting projects like Tornado Cash, Lodestar and Dapp node through its grants. Numerous sub-guilds have been created to assess projects that apply for funding.
Additionally, MolochDAO offers an open-source DAO framework with their v2 smart contracts. We noted earlier that both Tribute and DAOhaus have benefited from Moloch’s work here.
Rabbithole
Rabbithole is a learn-to-earn DAO, giving consumers a pathway to learn about crypto, while receiving rewards.
In the process, Rabbithole provides crypto-protocols with user-acquisition. The number of protocols and products in crypto have exploded over the past year, making it hard for some projects to find and retain active, skilled participants.
Through “quests,” Rabbithole helps protocols acquire trained community members, who have demonstrated their ability in the process. Aave, Opensea, Matcha, Perpetual Protocol and PoolTogether have already worked with Rabbithole.
With new DAOs gaining traction every day, expect this list of influential organizations to grow rapidly in the months and years ahead.
