Original source: Old Fashion Research

TL;DR

• first level title

• DAO has more impact on the cryptocurrency field, but its development faces many challenges; more and more DAO tools and solutions have emerged to help DAO overcome the challenges it faces and optimize its operation.

• We believe that in the next bull market cycle of cryptocurrencies, DAO is likely to take over P2E game projects and assume the main responsibility of attracting non-crypto users; because DAO’s core value proposition is more diverse, unlike P2E games For the purpose of profit.We investigate the important characteristics of DAOs designed by these tools, namely

• DAO framework, contributor incentives (payment/streaming management, identity and reputation platform), financial management and DAO governance/voting.

• As a relatively new field, DAO tools are developing rapidly. There are already many tools available for DAOs on the market. However, why are these tool products not fully utilized?

• What we want to see is DAO infrastructure, not just tools. It can integrate all efficient tools and collaborate; it is like a modular center that integrates these tools to help DAO overcome all challenges and thrive.

first level title

What are DAOs?

DAO, or "Decentralized Autonomous Organization", is an entity initiated by the community without centralized authority. DAO is completely decentralized and can accept public supervision at any time: smart contracts establish basic rules and implement the resolutions reached; at any time, proposals, voting, and even the code itself may be subject to public supervision.

The purpose of a DAO is to manage and supervise a company-like entity. However, DAOs thrive best when there is no single authority; the DAO's collective leaders and members are its governance. The members of the DAO are the sole decision makers on all future matters of the organization, including but not limited to issues regarding technological development and funding allocation.

The voting process of the DAO is recorded on the blockchain. The user must choose between different mutually exclusive options. Typically, users' voting power is allocated by the number of tokens they own. For example, someone with 100 DAO tokens has 2x the voting power of someone with 50 tokens.

Most DAOs also have treasuries, which hold tokens that may be traded in fiat currencies. Members of a DAO can vote on the use of funds; for example, certain DAOs wishing to acquire rare NFTs can vote on whether to exchange treasury funds for assets.

first level title

Despite the growing popularity of DAOs, many early entrants are bound to encounter problems and obstacles. DAOs are still in their infancy as those interested in DAOs represent only a small fraction of the Web 3 community. We can foresee that it will be a superior organizational structure than enterprise architecture. This section will illustrate some operational and management difficulties related to DAO in the Web3 ecosystem.

secondary title

1. Search and join

Let's imagine the steps a Web3 actor might take in order to enter a DAO and provide expertise. It starts with doing thorough research to find DAOs that share their goals and need their help. For most people, the first step is very difficult. Because the number of DAOs continues to increase and their purposes vary widely, it can be difficult to find the ideal DAO.

And for contributors who want to try, it is more difficult to find the ideal DAO, especially when they are not sure whether they will succeed, they may give up trying. DAO lists such as Messari's are helpful, but they don't provide enough information for individuals to commit themselves to a DAO, and a vision statement on a website or social media platform is not enough for a DAO.

As stated in Avenueplace.eth's article on DAOs, the formulation and execution of the onboarding process and documentation will play an important role in identifying the ideal member - a matter of context.

secondary title

2. Incentives - Personal Growth

When it comes to incentives in DAOs, it is normal to use tokens as rewards, because the effort put in should be rewarded as it should be. However, money should not and will not be the primary incentive for DAO members. What has not been mentioned before is that working in DAO will not only bring you economic gains, but also growth in ability, knowledge and resource network.

One of the tools built from this perspective is SourceCred, which records DAO participation on-chain. Many SBT-related applications can also demonstrate individual contributions and achievements by distributing non-transferable tokens. DAOs can also learn from observed corporate practices, such as mentoring and member evaluation.

secondary title

3. Development of DAO system

How to make DAO fair, scalable, and adhere to the decentralized governance model is a challenge for DAO and many other Web3 projects. As stated in an article by TheDefiant, many DAOs just copied their predecessors' systems without considering whether such a strategy is suitable for their projects.

Given the digital and decentralized nature of DAOs, they often lack the developed and efficient infrastructure enjoyed by traditional organizations. Many DAOs are required to create their own infrastructure and tools before starting, but most of these tools are very "weird". DAOs lack proper infrastructure for reporting, financial management, governance, compensation, communication, and identity management. Without the proper infrastructure to manage them, many DAOs will suffer from membership loss and lack of cohesion.In terms of scalability, DAOs will grow faster if they are centralized and run through legal entities. Some institutions, despite their flaws, were created to coordinate decision-making among parties with a common economic interest.Inactive token holders will have a negative impact on the operation of the DAO. As mentioned earlier, delegation also raises the issue of centralization, although many may quickly decide to vote in favor. Some DAOs are evaluating the use of incentives to address this—rewarding active token holders and penalizing inactive ones.

first level title

Learn more about DAO tools

The ever-expanding selection of DAO technologies allows us to efficiently organize DAOs, manage funds, align incentives, vote, and reward contributors to foster the growth of these project ecosystems and unlock the true potential of DAOs.

first level title

DAO framework

The key idea and principle behind developing or building a DAO is to build a minimum viable community (MVC) that can grow. When it comes to building a DAO, there are many unexpected work and design considerations. A number of technologies have simplified the process of building DAOs in the past. However, with the development of DAO, the original tools have fallen behind, and product iteration will therefore become slow and cumbersome.

We all know that the advantage of small organizations like startups is that they can adapt quickly and move quickly. In the absence of rules and specific standards, one can indeed introduce the MVC concept in the DAO space and try this model - while maintaining the smoothness of operation, and seeing results quickly.

Syndicate recently launched Collectives, a social networking protocol. People can easily build their own communities on the no-code platform. Since it is built on the ERC-721M standard (an extension of ERC-721 established by Syndicate, M stands for modular), it is highly composable and interoperable throughout the space, even allowing people to customize metadata , and customize it to the needs of each collective. Modularity, customization, development, and programmability are one of the core principles of their collective construction, which also coincides with our vision for future DAO tools.

Another project that focuses on the concept of MVC is Metropolis (formerly Orca Protocol), they express each MVC as a pod, and rename the entire project to emphasize how each working pod (muti-sig package) connects and cooperates , thus forming a complex and powerful digital city.

With the concept of developing MVC first, DAO infrastructure and framework tools can bring them construction experience, so as to continuously optimize and adjust the necessary tools they use at this stage, which is very critical. While there will be more DAOs in the not-too-distant future, realize that speed is not necessarily the most important criterion when building a new one. I believe that adaptability and fluidity will be the key factors that differentiate a good startup platform from one that wants to be built.

first level title

Contributor Incentives

Let’s start by looking at some of the treasury management and payment flow tools mentioned above, such as Gnosis Safe, Utopia, Superfluid, and Zebec Protocol.

first level title

financial management

Gnosis Safe is a multi-signature financial management platform for DAOs. Multi-signature treasuries are not uncommon for DAOs, and they provide DAOs with flexibility in managing their organization's digital assets. The treasury is one of the most important aspects of the foundation of a DAO, so it is important to safely manage funds within the treasury. Gnosis Safe prevents unauthorized access to organizational assets by requiring confirmation from multiple team members before executing a transaction.

DAO tools like Gnosis Safe make on-chain transactions within DAOs safer and more efficient. There are many other multi-signature applications, such as Exponent, Domo, and Multis, which are also trying to achieve similar goals; however, after contacting these platforms, they are relatively similar: most are multi-chain compatible, the user interface is clear, There are detailed asset and transaction dashboards and accounting analysis.

first level title

Payment/Streaming Management

UtopiaDue to the decentralized nature of the DAO itself and the large number of contributors constantly providing value to the DAO, rewards, payments, and salary distribution can become haphazard. Both Utopia and SuperFluid are DAO tools that can help DAOs manage, simplify and automate payment processes more efficiently. These tools are compatible with various multi-signature wallets such as Gnosis Safe and are integrated into the DAO's process.

SuperfluidAllow users to generate payees (contributors)/recurring payment/request lists before initiating a payment (processing fee gas is borne by Utopia). DAOs can also use recurring payments, categorize contributors according to their role, keep records of their historical contributions and compensation, and comply with tax regulations (especially in the US).

Similar in essence to Utopia, it introduces the concept of streaming payment. Flow payment is a continuous payment method based on a predetermined time (for example, annual payment, monthly payment, weekly payment, or even instant payment) - continuous circulation of tokens on the blockchain, no capital lock, and unlimited fund transfers , unless the payment is canceled or the sender's account balance is depleted, and the velocity of the cash flow can change at any time.Now that we've discussed multi-sig financial management, payroll automation, and flow payments, and the tools to enable them, let's talk aboutZebec protocol

Compared with other products, Zebec has a great advantage in terms of functionality, but I believe that over time, other platforms will adopt the same concept to expand their functions and services.

first level title

Contribution/Accreditation

DeworkIn addition to the monetary benefits of contributors, we also emphasize the importance of recognizing the contributions of different DAO contributors. This sense of identity within the DAO has been incredible in uniting the community and encouraging other DAO members to strive to do more for the DAO. In this section, we'll look at task management/contributor recognition platforms such as DeWork and CharmVerse.

It is a Web3 native project management platform. It incorporates token payments, certifications, and bounties for work done. On this platform, DAOs can clearly define their project roadmap and the tasks that must be completed. DAOs can also provide context to ongoing initiatives and attract new contributors. At the same time, DAO can screen applicant profiles according to various tasks and select the most suitable individual/team. Bounties can be awarded to contributors in any form of on-chain token upon completion of tasks. In addition to monetary benefits, all tasks completed by contributors will be stored on-chain in profiles, which they can use to write resumes and let others know about the work they have done for The DAO.CharmverseSimilar to Dework,

is a Web3 workflow operation platform, including task lists, bounties, files and polls. Teams can create token-gated groups for token/NFT holders, or utilize the Moloch DAO protocol to invite members. CharmVerse also provides DAOs with governance tools that guide them seamlessly through the various stages of the community proposal process — from the initial stages of developing a proposal through to community discussion and voting."The look and feel of Dework reminds me of a Web2 DAO tool, Discord and Notion combined. It is friendly to both project leaders and contributors. One thing I especially like is that contributors can earn achievement badges based on their contributions. Both CharmVerse and Dework advocate passing"Proof of employment

(POAP) badge to recognize the value of contributors to The DAO. Contributors can also easily create their professional identities on-chain, especially within the DAO space, where they stand out and others can more easily learn about their accomplishments."Social Oracle"DAOU is also a very interesting new project, which converts the activity data in DAO into verifiable data on the chain through Soulbound Tokens (SBT) and Social Oracle. They recently won the ETH Shanghai Hackathon Bronze Award. by using"GM "People who spam Discord and people who contribute quality content on a regular basis.

first level title

DAO governance/voting

SnapshotThe governance and voting process of a DAO is another key point when a DAO involves decision-making. Initially, tokens and shares were the primary forms of voting rights. Later, more DAO voting technologies emerged to ensure that voting and governance remained decentralized and encouraged more community members to participate in decision-making. Snapshot, Commonwealth, and Tally are representatives of DAO governance and voting tools, which are widely used in active DAOs.

It is an off-chain multi-governance client with no handling fee, and its characteristic is that the results are easy to verify and difficult to dispute. It allows for some flexibility in calculating voting power for votes. Snapshot supports various voting methods to meet the needs of various organizations. Creating proposals and voting on Snapshot is very simple, as the process is performed off-chain and therefore does not require any transaction fees.

image description

Snapshot's Space Creation Overview

image description

Tally.xyzSnapshot's Spaces Kanban"It is also a DAO governance platform. Its working method is similar to Snapshot, and it has an off-chain voting mechanism. The interesting thing about Tally is that their"Governance contract

image description

Tally's Governance Contract Process

I believe this concept of a governor already exists; if not, it would be the next logical step as well. This decentralized and autonomous approach can avoid black-box manipulation within the DAO and achieve 100% transparency throughout the process, although it may be affected by smart contract risks at the beginning.

first level title

Emergence of DAO infrastructure

Compared with other aspects of Web3, the field of DAO tooling is still relatively under-explored and backward. In order to operate most of the business, currently operating DAOs mostly rely on traditional platforms, such as Discord, Twitter, and a few Web3 tools, such as Gnosis (for multi-signature) and Snapshot (for voting). Web3 DAO tools do not provide enough convincing value for existing large DAOs to change the original process.

The DAO tooling landscape is fragmented, with various proposals focused on specific problems and use cases. In my opinion, the lack of obvious cohesion and composability between these projects is one of the main reasons why the DAO tools program is underutilized. Of course, even if all these efforts are good for the DAO, could its actual execution be improved?

Although we believe that the DAO tooling project will be successful in the long run, we advocate a change in direction from building the next great DAO tool to building an infrastructure for all DAOs. What follows is a discussion of some of the key takeaways that will help expand the DAO tool space and make it a model for future enterprises; and why we say build infrastructure, not tools.

first level title

What types of tools do we still need?

In general, there are better tools and more comprehensive capabilities in some problem domains than others. For example, in terms of financial management, projects such as Gnosis Safe, Multis, and other multi-signature financial management platforms and payment flow platforms can effectively manage DAO assets. Likewise, applications like Snapshot, Tally, and Commonwealth effectively address DAO voting and governance, though not entirely.

We were looking for an on-chain agnostic DAO hub that would enable the DAO to perform everything from on-chain voting analysis to off-chain community communication. It’s not that we need a “one size fits all” solution, but a solution that can integrate and collaborate between different DAO tools. Imagine: a more modular Aragon DAO onboarding process, a solution that suits Web3 veterans as well as novice and domain exploring creators. It would be great if there was a way to unify all these resources and allow DAOs to build their own platforms like Lego.

first level title

From DAO tools to DAO infrastructure

Based on the research and experimental results of all these different projects, we have compiled some insights and ideas for future DAO infrastructure.

DAOs should prioritize modular design, be as flexible, adaptable, and open-source as possible to integrate Lego-like into existing DAO tool stacks. We expect DAOs to be modularly upgradeable, similar to computers, without replacing the entire system. What we want to see is DAO infrastructure construction, not just tools.

There need not be an all-encompassing or universal solution: DAOs must explore procedures and frameworks with their members, while learning from the experiences of other DAOs and organizations. We believe that every community has unique infrastructure needs and thus requires flexible and customizable solutions.

Communities should be infinite and collectively movable. Guilds, for example, are the complete opposite of integrated platforms. Our goal is to provide interoperability between all platforms in the community to share, collaborate and interact.

Through the tool development and usage cycle, DAO tools will always evolve along with DAO and DAO framework; when there is a gap between tools, people will develop more tools. With this in mind, OFR is looking for individuals working in this direction. If you know of a project that matches this, please drop a comment on Twitter or email us.