On The Other Side ep 29 - DAO Mini-Series: Getting into governance
Primer: How should we think about governance? In this DAO Mini-Series, host Chase Chapman invites Aaron Dignan and Rodney Evans from the Brave New Work Podcast to share their insights on governance and organizational structure and the considerations involved in each type of structure.
DAO Governance Today
Typically, DAO governance power is weighted based on how many tokens are held
Often, decisions are made by reaching a majority or by reaching quorum, so a minimum amount of tokens need to be involved in the vote
In almost any system, it starts with a power holder/holders
Aaron’s take is that the very first vote should be about choosing a governance model to run the organization, distributing authority to certain subgroups:
People who are acting as source
People who are close to the action
People who will be impacted
“Most voting is ultimately a form of tyranny. Because if you have 51% of the people vote or 51% of the power, in a lot of cases with token holders vote for something, everybody else is along for the ride, and you tend not to get super interesting or super acceptable to everyone outcomes in a system like that.”
- Aaron Dignan
Thoughts On DAOs That Are Focused On Figuring Out Their Governance Structure Straight Away
Thinks it is a red flag
It’s like spending a lot of time building a house before even deciding what city to live in
Minimum viable governance is an option
At minimum, DAOs should consent to their principles of decentralization:
What are we designing for?
When we say “distributed”, what do we really mean by that? Are we pushing to the edge or pushing based on contribution?
Is authority based on token holdings or the intent to have the most voices, the least voices, or the specialist voices?
Have to balance between doing too much too early and doing too little and expecting people to trust that they will have the authority that they need
The Ready Foundational Agreements
Aaron’s company, The Ready, has a set of foundational agreements:
Transparency: How the system defaults to open
Marketplaces: How they use market forces inside the organization so that there are buyers and sellers, and that everyone has agency in the marketplace of The Ready
Autonomy: How we give people the right to do more
Teaming: How we build squads/pods/teams/circles, etc.
Roles: How we think about the individual roles that people fill
Consent: How to make decisions that are safe to try
Agreements: Writing down a proposal and an agreement and what does it mean to us
Agreements do not have to be long. They could just be a single paragraph
Figuring Out Where Cross-Functional Groups Go
Some cross-functional stuff are not persistent. Hence, we do not need a circle for them
A cross-functional project could be done by taking the best guess of the contributors required to do it, figuring out what that stack of work is, and getting them together to do it
Sometimes, there are cross-functional needs that are more persistent. They end up as a representative body that sits on top of their basic functional groups
Structure In Organizations
There’s a difference between a project and a working group
Have to decide whether a formal structure needs to be spun up or the project can be nested inside a working group forever
At The Ready, they have teams that do strategic initiatives. These teams are projects and live inside what they call a source circle
The budget comes from the source circle
Another point to consider is on functional integration vs functional division
If you're doing a lot of cross-functional work at a small scale, it means that you are not structured correctly
Functional integration entails creating groups of individuals with one objective/product/service that they are focused on. Within that group, they have all the skills that’s needed to get the job done (e.g. design, finance, engineering, etc.)
Instead of large monolithic departments, we could have many fractal cells of 20-150 people that is needed to do the work and are functionally integrated with one another
Example Of Where Centralization Is Helpful
There was a time at The Ready where each project team did its own hiring
This was not a great experience for people that were hired
Now, they have a hiring circle that will hire for every project need
All information presented above is for educational purposes only and should not be taken as investment advice. Summaries are prepared by The Reading Ape. While reasonable efforts are made to provide accurate content, any errors in interpreting and summarizing the source material are ours alone. We disclaim any liability associated with the use of our content.