DAO Anatomy: Heart, Mind and Soul

Each act performed by our bodies is a never solitary act.

It is a collaboration across systems. DAOs, on the other hand, are unlinked, misguided, and full of broken pathways making it harder to reach the simplest of decisions.

DAOs, similar to the body, are systems, but fortunately, our body comes with in-built mechanisms for synchronicity and protection. The same can’t be said for DAOs. However, these characteristics should be encouraged and implemented within DAOs to make for more robust and functional organizations.

Building Blocks of a DAO

Over time, communities have constructed various bodies for DAOs. Similar to human evolution, DAOs adapt and evolve as we identify more effective and valuable practices.

What was one a valuable organ for our body, an appendix, no longer has a function as we eat a more varied diet, targeting more meat and other substances than solely plants. DAOs face a similar pathway as contributors adapt to more appealing standards presented within DAOs, leaving what was once an ideal framework unused, gathering dust on the bookshelf.

The current body of a DAO consists of the following; Discord, Discourse, Safe, Off-Chain voting, On-Chain voting, and others. Like amino acids that form protein, these tools form a core part of the DAO. They can make or break a DAO.

CoinYuppie
CoinYuppie

A single change in one nucleotide can form different amino acids and, ultimately, a different protein. Nucleotides, in this case, are synonymous with the building blocks for a DAO. If you focus on onboarding, such as; having weekly onboarding meetings and intentional diversity, among other practices, you will build a functional protein structure that supports your DAO in many ways.

Whereas if you don’t respect the importance of onboarding, you end up with a malformed protein structure. A dysfunctional DAO. These comparisons aren’t exactly fair as we don’t determine our nucleotides, but we have the option to build a foundation for a DAO. Still, they aim to demonstrate the importance of each nucleotide or building block, as even a small change can have a significant impact.

Like Medicine, Web3 is Everchanging

Not so recently, blood leaching was a common practice amongst physicians, believing that leeches would suck toxins out of the body. Today, we know that to be false, but arguments at the time made it a reasonable practice.

A more recent example is how healthcare systems in the UK are starting to implement more holistic practices into their work. Practitioners are starting to focus on the root cause of a disease rather than treating the symptoms. In one case, a doctor could advocate for a change in a pre-diabetics patient's diet and exercise routine rather than prescribing diabetic medication. A prescription will only treat the current symptoms, whereas a lifestyle change can reverse diabetes. But how does this relate to DAOs?

Every new DAO, protocol, or tool is here to solve a problem. Whether that be a financial, social, or another topic. Few succeed, but why do they succeed? What does it mean to tackle a root problem? Let’s look at one example.

DAOs are currently undergoing a contributor crisis.  Most DAOs have people who want to contribute but aren’t sure how to get involved, and DAOs do not know how to manage these contributors. In this case, the root problem of the contributor crisis lies in a lack of clarity.

  1. What is the ultimate problem that the DAO tackles?
  2. What is the membership criteria for the DAO?
  3. What is the onboarding process for the DAO?
  4. Is there a form of compensation? If so, how does it work?

Similar to pre-diabetic or diabetic patients who have an opportunity to reverse diabetes, DAOs have an opportunity to tackle their root problems. A discord invite and self-assigned emojis aren’t onboarding.

Instead of relying on contributors to figure out the Rubix cube, that is Discord, DAOs should employ practices that simplify onboarding in a more approachable manner. It’s not an easy feat, as one has to unlearn old habits and find ways that match their processes, but in the long term, the rewards are endless.

Bodies Are Built To Fight, So Should Your DAO

Our bodies are built to fight, to protect. They are built for enemies.

Should DAOs be built for enemies?

Currently, DAOs are successful because most people share a similar vision and agree on most issues, but once it becomes rowdy, it turns into a showdown. Recent forum posts from MakerDAO and Balancer are clear examples of when arguments took a nasty turn, becoming more personal and less professional. As much as we try to avoid conflict, it is inevitable.

Especially in a digital world, it is expected to see people clash. We’ve seen it across Twitter, Facebook, and Instagram for years, and we should not expect anything less within DAOs. Still, currently, no solution is actively used to facilitate controversial discussions among members of DAOs without it ending with someone badmouthing someone’s cousin or cat.

One way could be to implement the use of Pol.is, which focuses on finding common ground to find similarities. It may not be completely trustless, but implementing a mechanism that automatically takes controversial discussions and employs the Pol.is mechanism could help filter through a lot of noise.

A tool like Pol.is could help DAOs debate topics in a much more formal manner, avoiding tension and reaching a fair ending. Not every fight is avoidable, but a controlled fight is the best option.

Cleaning a DAO: Marie Kondo Style

Unlike DAOs, our bodies are built to fight. After you get a bit tipsy-tipsy, your liver works to expel the toxins, aka vomiting. Even though you may hate hanging over the toilet seat at 4 am with your man-bun tied behind your head, hey, you can’t complain. Your body is in the boxing ring, going rounds with those six vodka shots you knocked back 30 minutes ago. If you do not respect the limits, consequences follow.

DAOs are no different. A lack of meaning, clarity, or organization will be the greatest reason for the downfall of a DAO. Very few processes within DAOs function encourage removal. Not everyone or everything needs to stay in a DAO, and this hoarding mentality can be detrimental to the efficiency of a DAO.

One new way to explore “removal” is to see some individuals as temporary contributors. Using a Prop House or grants committee, one can employ contributors for a goal or x amount of time like a paid volunteer rather than explicitly being classified as a part-time or full-time contributor to the protocol. Prop house presents a compelling model since it is less hands-on for a committee but more hands-on for the community, as token holders will vote on whose project is funded.

Not only does this remove the process of going through a governance proposal, but it increases the capabilities for service providers to jump between protocols and offer their services to prop houses. If deemed fit by the community, they can provide.

Have you had your check-up yet?

We all don’t do it, but we ought to. See your doctor, see your dentist. Those check-ups are invaluable as we age to ensure that our systems are checked, but why don’t we do this for DAOs?

So many screamed about the health of a DAOs treasury, only for the screams to be deafened by the hype of “soon $10k ETH” or “wen lambo”. Now many DAOs are paying the price like Index Coop, which laid off many contributors in the past month. One of my recent articles expands further on treasury diversification, but in summary, many DAOs have lost over 50% of their treasury since Dec 2021.

Aave lost $1.08B in August 2021 to $101M in July 2022
Aave lost $1.08B in August 2021 to $101M in July 2022

As DAOs expand, they fall victim to the fallacy that their treasury is impenetrable. Recent times show different. Popular DAOs that we know now could evaporate over the next couple of years. Bringing in external support, such as organizations like Llama, which can focus on diversifying your treasury safely and sustainably, would be money well-spent.

In addition to the DAO treasury, many of the following should be involved in your DAO check-up:

  • Decentralization of the protocol
  • Voter participation
  • Decentralized workforce
  • Contributor on-boarding
  • Amongst many others

Without continuous check-ups, DAOs lay vulnerable to being deficient in certain aspects like those outlined above. Recently, MakerDAO detailed the decentralization of their MKR token, including delegate decentralization, voter turnout, and other details, setting a standard for themselves. In 6-12 months, it will be interesting to see whether they have progressed or regressed in decentralization, allowing them to pinpoint reasons for their result.

Monthly treasury management reviews, Quarterly working group reviews, and annual decentralization reviews are examples of certain reviews necessary to the longevity of a DAO.

Unchecked, these could lead to the fall of a DAO.

Closing thoughts

Medicine, in some ways, is analogous to Web3, but in other ways, lives on polarizing ends. One reason I resonate with healthcare as a way to identify similarities with web3 is its core nature. Medicine cares for someone's physical and mental well-being.

Web3 opens up opportunities to improve one's financial well-being, whether banking the unbanked or allowing permissionless transfers. In some ways, they both have many privileged roles as service users hope to see a change in their lives.

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