ChainLinkGod Podcast - The Trade-Off Spectrum of DAOs with FactoryDAO Founder Nick Almond
Primer: How do DAOs differ from traditional organizations? What is the current sentiment on DAOs? What is the future of DAOs? All these and more in this episode of the ChainLinkGod podcast with guest Dr Nick Almond of FactoryDAO.
Background
Background in physics
Spent 10 years as an experimental physicist
Taught maths and cryptography at universities
Got interested in governance and decentralized organizations
Left his job as an associate dean to set up a startup called Finance.vote, a prediction market that uses quadratic voting
Building DAO infrastructure to turn into a DAO
Launched a protocol called FactoryDAO that provides a modular way to build DAOs
Is Crypto Governance Vastly Different From Other Fields?
Big institutions have a similar dynamic as decentralized organizations
Crypto governance touches on lots of different types of governance (e.g. coops, communes, clubs, etc.)
What Is A DAO?
There’s 50-60 definitions of what a DAO is
At a high level, we are trying to reconceptualize organizations for the digital world
His definition: DAO is a socio-technical system that uses decentralized tech to achieve autonomy and social coordination around digital assets
“Code Is Law” vs “Social Consensus”
They are two ends of the spectrum
Governance minimization is the Bitcoin way
The opposite end is governance maximization, where there’s meetings, decisions, and changes all the time
There’s a sweet spot in the middle that gives the best of both worlds
Current State Of DAOs
DAOs are emerging technologies
Emerging technologies are typically not as good as the thing it’s trying to disrupt
It will take time for emerging technology to reach its disruptive moment
Some people are suggesting that we should import corporate governance into DAOs. Found this troubling
Larger Issues Affecting DAOs Today
DAOs have quite rigid structures
Lack of follow-up on where money is sent to
Multisig is centralized
Makes DAOs vulnerable to governance attacks
Getting Things Done With A Flat Structure
Perfectly flat organizations are a myth
There’s always asymmetry in power in any organization:
Some people are more committed
Some people have better ability to achieve organizational goals
Goal is to create clear paths to becoming a core member
People will step up if it makes financial sense for them to do so
Currently, it’s a popularity contest where a handful of influencers are running all the DAOs because they have big Twitter accounts
DAOs VS More Agile Structures
Paradigm becomes more about curation
Need social consensus tool to collect these ideas
Use voting technology to curate the best ideas to the top
Once they gain traction, they get funding and operationalized
A “Labs” Company And A DAO
💡 Some projects have a “Labs” company that does the development and a DAO with its own token. Will there be a conflict between the two?
There’s tension between these different entities
Does the value generated by the product go to the company or to the token?
Have 2 different paradigms of governance that we can play off synergistically
In some cases, it’s to raise money on both equity and tokens. In other cases, it’s for regulatory reasons
Token-Weighted Voting
There’s backlash against it
Token-weighted voting trends towards plutocracy
More people would turn up to vote if the vote meant something to them
Quadratic voting smoothens out the impact of these high-weighted token holders
Makes sense for people who has the most skin in the game to have a large impact in the DAO. This makes more sense for DeFi protocols
Have developed a kind of quadratic voting process for NFTs (e.g. NFT ID number 85 has 3 times the voting power of NFT ID 150)
Extent Of Contributions
There’s a continuum of contributions:
Micro tasks that are easily trackable, farmable
A DAO basic income — 3 months of stipend/stablecoins given for work done
Giving 2 years salary upfront as a high value contributor
There’s a lot of different iterations in between
Reputation In DAOs
Soulboul tokens is attempting to codify emergent reputation
The DAO itself will have a reputation for consistently paying people efficiently and fairly
Will Traditional Companies Turn Into DAOs?
Can imagine large companies having DAOs as part of their org structure
These DAO components will help mediate overseas workers/transient work
“You can imagine digital nomads all over the world plugging into a DAO to deliver the work that they want.”
- Nick Almond
DAOs Forking And Mergers
The MolochDAO pattern has the rage quit function
If there’s a very contentious decision in the DAO, it’s plausible that the DAO could fork into a different organization and generate their own tokens
FactoryDAO has a number of subDAOs with different departmental-like structures
Some subDAOs could operate within a larger, stable organization
Might see a large structure absorbing subDAOs within itself too
Thoughts On Large DAOs
Thinks that DAOs can eventually hyperscale
It needs processes that capture huge amounts of people’s insights, desires, and dialogues
Good DAOs will operationalize, capture, and respond to those opinions and desires as much as possible
Need a shared cultural framework for everyone to get behind and identify with
Conflicts In Vision
Some conflicts are just not resolvable and people go their own way
Instead of having a yes/no voting paradigm, we can move into a more decentralized decision making where there’s more nuance
Not everyone has the right technical knowledge to be able to give inputs on all the important decisions
Future Of DAOs
DAOs could take us towards mass adoption because people will join communities they care about
Crypto is just the backbone that facilitates mass collaboration
Will see social, artists, and music movements as these cultural things have the tools to fund themselves into existence
Recommended Resources For Learning About DAOs
Has a Substack called The Crypto Space that dives into the DAO space
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