Getting yourselves organized and working towards collective interests. That’s what DAOs are all about. This stands for a Decentralized Autonomous Organization. However, governance on DAOs isn’t always easy. So, how can a DAO change the world?
In the panel of “How DAOs Will Shape the World” at GeckoCon 2022, we have:
- Harith Kamarul — Moderator. He does Product and Community at Etherscan.
- Eleftherios Diakomichalis — Founder of Radicle.
- Jon ShapeShift — Co-founder of ShapeShift DAO.
- Kevin Owocki — Founder of Gitcoin.
What Is the Story of Your Companies? How Did They Become a DAO?
ShapeShift launched in 2014. It was the first project that allowed swapping assets. In 2018, they had to introduce KYC procedures. However, in early 2021, they started with DEXes and dropped KYC again. They launched the DAO a year ago with a massive airdrop. Everything is open source now, powered and run by FOX token holders.
Radical started in 2017. Code became the new frontier for freedom. Whoever controls the infrastructure will be important. So, they developed this new sovereign code infrastructure. They also bring together Ethereum’s coordination infrastructure. From the beginning, they wanted the users to be the owners. That’s why, in February 2021, they started the DAO.
Gitcoin is a democratic crowdfunding platform. They reward the number of contributors more than the amount they contribute. However, with voting, they have the Sybil attack problem. They need proof that a person didn’t vote multiple times. As a result, they built the infrastructure to solve this. They wanted it decentralized and transparent. This how they govern problems. In May 2021, they launched the DAO.
Why a DAO?
Consent of the governed is the only legitimate basis of a government. He hopes that this leads to more long-term growth. Simply because the community oversees governing the platform. They also introduced delegated governance and seasons. The latter means that delegators only need to pay attention for a two-week period per quarter. Currently, they already spent $65 million on grants. Each quarter, they add another $3 million. People live off Gitcoin grants, and that’s why governance is important.
He looks at this from two sides, the founder and the contributor. For founders, if they believe in community-owned and operated networks. It’s also a non-hierarchical environment. Furthermore, it’s a truly open organization. For the contributor, everything is open and what they see is what they get. Contributors also own what they create. He describes DAOs as open-source projects with money.
DAOs are still nascent, but they evolve quickly. They can get organically involved in the community in a fast way. This allows DAOs to change a lot faster and be innovative. Especially compared to traditional structures. He believes that DAOs are the future, and they will evolve along the way.
Liquidity is the lifeblood of DeFi, and the rapid advancement of DeFi 2.0 is a testament to the ongoing evolution of the #DeFi space 🚀 🦊
#ShapeShift #DAO believes in a future of innovation, revolution, and experimentation – here's our take: https://t.co/k0Lk8afSFS
— ShapeShift 🦊 (@ShapeShift) May 4, 2022
How Has the Dao Landscape Changed Over the Years?
Jon mentions that the original DAO grew fast but collapsed in a spectacular fashion in 2016. Among others, it caused an Ethereum hard fork with ETC as a result. Because of all the drama, nobody wanted to go near a DAO for a few years. During the last three years, DAOs have revitalized themselves again. Tooling came a long way, like smart contracts. This allows you to set up a DAO in a matter of hours or days. The stigma also wore off. As with many early day projects, they can easily blow up. However, today’s DAOs are a lot more robust, and they evolved a lot.
Kevin also sees small steps in how the DAOs got to where they are today. Ele sees two different kinds of DAOs. A corporate DAO with a Discord and a token. On the other hand, there’s the true open-source DAO.
How Do We Stop Whales From Unduly Influencing Decisions?
Kevin sees as one of the problems that people want the governance tokens, but they would rather not govern. Voter turnout beyond whales is around 3%. That’s why they introduced voting delegation. So now, instead of 15,000 people with a 3% turnout, you have 40 people that vote, with an 80% turnout. He also thinks what Optimism did with bicameral voting will find more acceptance. This is with two separate assemblies. Kevin is a fan of quadratic voting. This takes away the runaway game of accumulated capital. In other words, more tokens are not more votes. They want to get away from plutocratic governance. Instead, they wish to move into democratic governance.
Jon states that various DAOs will have different kinds of governance. It depends on what the project tries to do and what the values and missions are of said community. Not every DAO needs an entirely flat governance structure. There needs to be a balance. Currently, tokens with governance is the best solution. It naturally solves the Sybil problem. There will be a lot of new solutions that we are not used to.
How Can We Solve Sybil Attacks?
Kevin sees a few options. For instance, quadratic voting or funding. They created a Gitcoin Passport that helps to ladder up the Sybil resistance on Gitcoin. However, it’s still an unsolved problem, but they are making headway.
9/ Someone submits a proposal to give you an $150K salary for your hard work.
There's no CEO to approve this. Instead, all contributors vote and the proposal passes.
You feel validated that you're getting a salary. Maybe you'll only work for 2 other startups instead of 5.
— Peter Yang (@petergyang) October 11, 2021
How Will DAOs Affect the Real World?
Ele sees that DAOs can realize potential a lot faster. He also thinks that true open source is important. Jon thinks that DAOs are already impacting the real world. Furthermore, he thinks they will become the most powerful things on the planet. DAOs may start to rival nation states for power.
This presentation showed how DAOs start to play a role in governance. Most importantly, they can grow and become a leading part in real life. There are problems to overcome, but they are moving in the right direction.
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