The Founder's Statement: How to build an investment DAO from scratch?

深潮TechFlow

特邀专栏作者

2022-06-02 13:00

This article is about 8106 words, reading the full article takes about 12 minutes

Some cold-start issues, and clarify some of the nuances of getting a DAO up and running.

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Some cold-start issues, and clarify some of the nuances of getting a DAO up and running.

introduce

Compilation of the original text: Deep Tide TechFlow

introduce

Five months ago, I plunged into the world of NFTs.

A month ago, I started Spicy Duck - a DAO I built with 14 other super brainy friends.

Today, we're learning and building—seeking where it's going in the future...

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the beginning

I started trading cryptocurrencies in 2017 and watched my portfolio plummet and come back to life. After letting it go and forgetting about it for a year or two, my interest in cryptocurrencies peaked again during the pandemic. By mid-2020, I was back into trading, digesting new information, but for whatever reason, I kept staying away from NFTs.

That changed quickly. By September 2021, I've convinced my family and friends to form a fantasy team and get into cryptocurrency. In December, I purchased my first NFT and joined a couple of communities that I love and are still active to this day (Floor & Shiny). As of February 2022, I feel like I've been in the field for a year and still have a lot to learn.

But this is still nowhere near it, I still want to continue to build.

Anxiety is the only phrase that can describe our last year.

Fast forward to March 2022, and it's safe to say our fantasy team is doing just fine. The market has been going up and I'm happy to advise my curious and intelligent friends working in the Web2 world on cryptocurrencies and NFTs.

But how? I thought and tried to move forward by building my own NFT community; however, as some of you know, expectations are high, projects are under-delivered, and people are becoming less and less motivated. WGMInterface's farewell letter hit me hard, I didn't want the experience of creating a project to turn from joy to anxiety.

What is a low risk and good learning opportunity and still gain leverage from it?

I've had friends approach me with requests to learn about cryptocurrencies, NFTs, and Web3 together, and they've all found success in their own businesses and lives. What if we formed a group among us to learn together, invest together, and ultimately create together? What if we start a DAO?

It's not a novel idea, but the point is to build on what I'm already doing myself - keep it small and expand our circle (a minimum viable community) only when necessary. I'm already working on NFTs and explaining them to friends and family. I'm looking at my Web2 friends and their businesses and trying to see if there are any Web3 applications worth building.

Starting a DAO seems like a way to get friends more involved with Web3, learn the ins and outs of managing a product in Web3, and make money along the way.I hope to create great things with 14 other super brain type friends. So it started...

How do DAOs work? What kind of rules are there?

deposit

●Everyone has about a month's deposit time

000 DUCK tokens

●1 ETH = 10,000 DUCK tokens

governance

●Token ownership based on DAO, 1 token = 1 vote

●Proposal approval is set to a majority vote system (<50% or =50% means not passed)

●Proposals/polls last 24 hours

● Recommendation can be implemented if >50% achieved (even within 24 hours to ensure we can act quickly if needed)

Meeting

We choose to meet weekly. The aim is to create a medium where we can review what is happening in the NFT space, ask questions, talk about current and future investments, and exchange any important information.

random tidbits

Many newcomers are hesitant to deposit large amounts of ETH, which is to be expected, so I only allow deposits for 7 days after the first investment - really to make sure we can be successful (usually after raising a round Depositing again is a big no-no, but it's all for experimentation).

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practice

Here are our basic requirements:

● Use a single touchpoint (one app) whenever possible

●Need to be suitable for mobile phones

●Independence, does not compete with other communities

●The cost of upgrading/switching apps is low

●Legal compliance

Keeping the above in mind, we set out to explore DAO tools and ways to structure DAOs so that they scale well in the future.

we focus on:

●communication

●DAO creation

●DAO governance

●Documentation

●Fund management

●Contributor payment and reimbursement

●Accounting and Taxation

communicate

Advantages of Discord

●The Web3 community uses Discord extensively, and Web3 friends who join Spicy Duck do not need to change their habits.

●The integration is rich. Most of the communities are built here, so we should be able to use many out-of-the-box bots for most of the required functionality and prerequisites for running a community.

Disadvantages of Discord

● Compete for users' attention among many other chat servers.

● At 15 members, Discord feels like overkill - do we really have enough chatter to take advantage of Discord's full capabilities?

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Advantages of Telegram

● There is no competition for user attention. You know it's a Spicy Duck message + you just open Telegram for the DAO chat.

● Localized voting. Lightweight DAO voting method is very important.

● Group chats that feel more alive. It's the right vibe, not overkill.

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Disadvantages of Telegram

● Telegram has fewer Web3 integrations/bots than Discord.

●More than 15 members may become difficult in the future. Channel segmentation is not native to Telegram.

● If we were building many things for Telegram, it might be troublesome to convert cost to scale.

After all,We really value low friction + a tighter community feel.Discord feels a bit overkill for 15 people, although not having as many integrations and scaling might be an issue in the future. We all know the feeling of trying to use Discord for the first time...too much stuff.

Telegram gives us 80%-90% of the functionality and the better small community/group chat feel we wanted.We believe that,

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DAO Enabler

This space is nascent and unsound, so the rules are constantly changing. The need to digest information quickly is crucial. While we care a lot about the DAO platform, it's all relatively mature. We looked at Upstream Collective, Colony, and Syndicate. For the sake of brevity, and where we spend most of our time, I'll chat about all three.

While Upstream and Colony are definitely more powerful and offer more features - we ended up launching a DAO with Syndicate for three main reasons:

1. Customer service/responsiveness

2. Provide some legal support

3. Giving unauthorized investors the ability to participate legally

also,

also,Syndicate can help ordinary people to legally establish DAO.And other services that allow people to have full legal counsel are prohibitive. We need more services like Syndicate that take into account the legal implications for ordinary people to scale up at scale. It's foolish to think that everyone can come up with tons of cash to create a legal structure for a DAO.

Syndicate helps you create legal entities with Doola in just a few clicks. They provide you with a great template to create operating agreements and prepare other documents such as subscription agreements.

Once everyone is part of the legal entity, the beautiful thing is that Syndicate is structured as an "investment club" under the direction of the SEC. This is an important thing to do if you think long term and want to be able to continue operating legally with more regulation.

Four things to keep in mind as an investment club:

1. You cannot invest in securities (as a non-accredited investor), which means only cryptocurrencies and NFTs (with a few exceptions).

2. Your membership limit is 99.

3. Every member must participate in decision-making in some capacity.

4. You cannot publicly offer the opportunity to join your club (private link to join only).

This is great. It gives us legal protection and a way for our unverified investors to participate legally. For DAOs to gain mass adoption, either regulations will need to change, or services will need to be built around clear legal regulations. Also, similar to our DAO, most of the world is made up of non-accredited investors. Syndicate handles it well.

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DAO governance

This is one area of DAOs that can get complicated very quickly. We evaluated some on-chain options, but ultimately narrowed down to two off-chain tools - Snapshot and Telegram voting.

Although I want governance and voting to be on-chain, I want to optimize participation - make it as easy as possible. Many voting options suck on mobile, and it's impossible to connect to a mobile wallet without a lot of complicated steps or multiple clicks. I realize that most members of our DAO will prioritize mobile phones because they are very busy. I want them to discuss quickly and vote easily.

Unfortunately, we feel that the Snapshot operation is too complex. For this reason, we have chosen Telegram Polls. It's native to our messaging app and gives us a quick way to submit proposals for transparent voting.

But, Telegram voting is the least Web3-like thing you can do...

document

We need an application that can access and store all documents for research, proposals, data, meeting minutes and links.

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Treasurys, vaults and hot wallets

This is another straightforward decision we made. We need a multi-signature wallet to ensure the trust and security of our assets/treasury, and a hot wallet capable of minting, buying, and selling assets as needed. This has been implemented many times for other DAOs, and the general solution works for us. Therefore, we implemented the following:

● Gnosis is safe for our treasury/vault

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Contributor Payments and Rewards

Three applications we found to be effective for contributor payments and rewards are:

1、Utopia Labs

2、Parcel

3、Coinshift

We like all three apps for different reasons. All three allow for money/expense management in some sense, and the basic functionality of all three is relatively similar, coming down to customer service/responsiveness as well as product direction.

We wanted something that would bill across multiple wallets, handle contributor payments, and provide decent customer service, because dealing with finances can get messy, and it was important for us to have someone to contact directly when things messed up.

While we like the UX of Parcel and Coinshift, they don't support multiple wallets for bookkeeping purposes. This isn't very friendly to us - I don't want to manually monitor and add these transactions.

It started with a tweet and ended up scheduling a demo with Pryce.

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Bookkeeping, Accounting and Taxation

While there are plenty of personal accounting and bookkeeping tools for Web3, there aren't any really good ones for business/DAOs yet. Most are in early development and cost more than the functionality they can provide.

Having said that, we don't yet have a super complex system, or too many transactions, so we opted to use Koinly (taking notes on transactions where necessary) while waiting for Utopia Lab's bookkeeping solution to be available in June.

We evaluated Coinbooks and liked what they were doing, but in the end, we wanted to keep all fees, payments, and bookkeeping on one service for less hassle. The cost of Coinbooks also doesn't make sense to us (at this time). The short-term pain of using Koinly and later migrating to Utopia Labs seems like a good tradeoff.

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What are we doing today?

Spicy Duck has only been around for a little over a month now. We've made some investments and formed theories that make sense for the future (more on this at a different time).

Some notable investments include:

●Moonbirds

●Moonbirds Oddities

●Chromie Squiggles

●Floor NFTs

●Tokenproof

What else did we encounter?

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quit

The question at hand: How can we exit liquidity without violating security regulations against unauthorized investors?

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Increase DAO treasury

The question at hand: How do we increase the DAO's funding without diluting existing shareholders?

We have 15 members with a starting value of 42.2 ETH. It's great, and it's worth laughing at, it's nothing compared to a large DAO, and while we'd love to be that, we don't think inviting more people is the best way to go.

So some thoughts that came to my mind:

● create art/generate mint, we share profits with artists (or ourselves)

● Consulting in our area of expertise (similar to CPG)

● Building our tools for DAO monetization

increase/motivate participation

The question at hand: How do we increase and incentivize participation?

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Learn together as a DAO

The question at hand: how do we get everyone to actually use the same tools/learn together?

We set out to start this DAO to learn together. It allows us to invest in assets, access different communities, and apply that to future investments and the things we build. In theory, this makes sense. Actually, we still had a problem.

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dilution of early believers

The question at hand: how do we ensure we don't dilute early believers/investors? Or let the dilution happen?

Business Wallet and Spend Management

The problem at hand: how can we get everyone to make purchases on behalf of the DAO, and run our accounting system and pay taxes properly?

Currently, the Web3 wallet architecture is not friendly to the real world. We must each have separate hot wallets or make sure we mark business transactions on our personal wallets separately. Otherwise, we run into accounting and tax issues.

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FAQ

This section addresses some common doubts and questions you may have while reading this article.

●This is not a DAO, this is an investment club.

you are right. The purpose of this DAO is to learn about Web3, NFTs, Crypto and DAOs. Implementing everything at once is not realistic nor the right solution for a group of newbies. The aim is to become more familiar over time, gradually decentralizing and on-chaining transactions.

●There are so many DAO tools you haven't considered that this list is incomplete.

I know. I wish I had time to understand everything, but sometimes it's better to build and tweak the big picture than to spend a lot of time digesting the minutiae. We will gradually decentralize, and time and effort will tell if this is the right decision.

●Why DAOs? If you just invest, collect and learn, the efficiency is too low.

While we're trying to be more efficient, that's not what we're optimizing for. We want to learn and really believe that DAOs are going to be something worth doing in the future. I rarely take advice from people who haven't experienced it firsthand - learn by doing > learn by reading, watching, listening, etc.

You didn't mention using tokens to restrict access, does your community/DAO have tokenized permissions?

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