Will DAOs get bigger or smaller? Experts say both.
Our experts had different opinions on the size of the next 10,000 DAOs.
Zakk of Solidity Guild expects bigger DAOs in the sense of mission and scope. To him, bigger DAOs “could mean more people participating in the system you’re building. It could also mean bigger mission, or trying to tackle bigger and bigger problems.”
These bigger problems could be massive issues that the web2 world has shied away from, like solving the climate crisis or banking the unbanked.
He elaborated on the difference between a “swarm” DAO with a mission to bring tons of people together, and a DAO with a mission of infinite length. “DAOs will look something like a swarm, which is how I’d classify Constitution DAO: 20,000 people coming together over a short period of time to tackle a very specific mission.” ConstitutionDAO made headlines for raising nearly 50 million dollars in just a few days in an attempt to buy a copy of the U.S. Constitution.
Constitution DAO has “a mission of infinite length. Cabin is trying to build a city that’s spread out all over the world. In theory, that’s something that’s never going to end.”
In summary: “You either get big groups of people on a very time-bound focused mission, or you get these infinite-length missions that will in theory run forever.”
Cokie of Twali disagreed. She said that service DAOs—which are DAOs that exist primarily to provide a service to other people, DAOs, or companies— would likely decrease in size. “This first iteration of DAOs is really big, and that’s potentially going to hurt them in the long run,” she said. “There’s going to be a struggle for lack of focus and lack of direction.”
She noted that small teams can be incredibly effective at achieving goals and serving customers. “In web2, we saw the power of what small teams can do,” she said. Throwing away everything we learned in web2 organizations could set DAOs backwards.
To add, Katy of IndieDAO spoke on how difficult it is to bring a trusted element into large DAOs. She echoed the sentiments of Cokie, believing that small, specialized teams will emerge. “Where I think DAOs will trend is people working together with high trust,” she said. That trusted element is only truly achievable in small teams.
Missions could widen in scope or length, such as tackling bigger and bigger problems or “infinite length” missions.
Teams could shrink and become highly specialized, moving quickly because of high trust.
“In web2, we saw the power of what small teams can do.” — Cokie
Templates, enterprise solutions, and a dash of centralization get DAO builders in the door
The experts believed a variety of solutions could get the next wave of DAO builders in the door.
According to Oleg of Weezi, templates would allow more DAOs to be built. “In our opinion, it’s very difficult to build customized solutions—it’s just not scalable,” he said.
It’s not only unscalable for the team providing the services—it’s unscalable for DAOs themselves to build something new every single time. Cokie shared that there’s a reason that companies don’t spend so much time focused on operations—it doesn’t make money. Getting DAOs to a place where they can start their organization and get it running smoothly without constant back-and-forth will be essential for new DAO builders.
For RuntheJewlz of Bankless Consulting, enterprise software for DAOs will be the killer DAO success feature, particularly creating “enterprise software and services with DAO infrastructure, DAO technology, and DAO hive mindset.”
Katy highlighted the fact that pieces of centralization can make DAOs much more effective, which could usher in the next wave of building. “There’s a ton of centralized pieces that worked really well in how we did business before. But what we’re trying to figure out now is how can we add more diversity within our communities, where more people have more permission and more governance control than they had in organizations before.” In other words, how can we take the centralized elements that worked, then add diversity of decision-making on top?
Templates lead to fast building and possibly more DAO onboarding;.
True enterprise solutions for DAOs will be necessary.
Pieces of centralization mixed with bringing in diversity of permissions and governance control could be a killer combination.
"What we’re trying to figure out now is how can we add more diversity within our communities, where more people have more permission and more governance control than they had in organizations before.” — Katy
Mixed DAOs: Nesting a DAO within a traditional company could be a killer use case
Dogstoevsky of Otoco spoke on how many DAO builders come to spin up a DAO because they think it’s an easier way to start a corporation. “A lot of people have equated DAOs with a light corporation, and that’s just not the case,” he said. He noted how much more difficult it can be to run basic operations in a DAO compared to a traditional corporation today, and how many DAO builders don’t realize this.
“I think we’ll see DAOs not exist as entire organizations, and instead exist as an arm or subpart of a centralized company….Many of the current successful DAOs are quite centralized, however they’re decentralized in a couple of key areas where the decentralization is the value proposition.”
For example, decentralization is a huge value proposition when it comes to dispersing media, building a social club, or tackling a big problem such as climate change. But when it comes to use cases that excel in small teams with centralized direction? Those might stay “corporate,” then add a DAO arm to vote and work on things with decentralization as the core value proposition.
Cokie from Twali spoke about a similar hybrid structure. She mentioned the importance of benefits and stable pay, and how only a centralized entity can offer that. “At Twali, we run like a normal startup because I can offer benefits. Core to what we believe is that the future of work is paid, and paid well.”
Decentralization needs to be a value proposition in order for the DAO to work.
Payment and benefits are key reasons to have some centralized entity, especially in a bear market when it’s hard to attract talent.
“I think we’ll see DAOs not exist as entire organizations, and instead exist as an arm or subpart of a centralized company.” —Dogstoevsky
DAO iteration is the key to growth in the ecosystem
All the experts agreed on one key fact: DAOs are not stagnant. The DAO structures we see today will not be the structures that we see in five years.
“There’s no reason the future of work has to be piecemeal or ineffective,” said Cokie. The world of work doesn’t have to be slow and bogged down in gathering consensus on every detail.
For Katy of IndieDAO, she would to see more iteration in the ecosystem. “I don’t want there to be a finalized solution of what a DAO should look like right now. It’s too soon for us to do that, and if we do we’ll fall into the same pitfalls that we did in the dot com bubble. I don’t think what it looks like today is what it will look like in the future.”
But while we’re iterating, we’ll likely see many DAOs fail. “A lot will fail, but that’s part of the process of working out the kinks,” said Zakk.
Gordo of Developer DAO added that the new structures we land on might not even be called DAOs —they’ll just be more effective ways to organize that everyone uses without even thinking twice about it. “The killer app is when governance actually starts to align with the legal and social environment, and you can trust that what gets written on the blockchain is recognized legally. Suddenly we’ll have tons of potential human structures. Maybe we don’t even call them DAOs anymore because you just know them as a tool to organize with your friends or a whole country to do something together.”
Many DAOs will fail, but that’s necessary to make progress in the ecosystem.
DAOs shouldn’t have a clear finalized solution yet—if they did, we might see a major crash.
In the future, DAOs could become the default organizing system—so much that they’re not even called DAOs anymore, they’re just how humans organize.
“The killer app is when governance actually starts to align with the legal and social environment, and you can trust that what gets written on the blockchain is recognized legally.” — Gordo
We can’t wait to be part of the growth of the next 10,000 DAOs to come!
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