The Collective DAO Archives
The Collective DAO Archive is a public good to advance the development of DAOs in the Ethereum ecosystem. It was created by Justine Humenansky and open-sourced by the Optimism Foundation.
I found this to be an impressive resource and am starting to tap into it on a regular basis. I wanted to take the opportunity to present it to the community.
Why is it important?
This work condenses the insights of thousands of governance forum posts from more than 42 of the top DAOs. It’s the biggest resource on DAOs in existence, built completely upon publicly accessible information, and delivers valuable key takeaways and thought starters.
The archives are broken up into ten categories:
- Voting
- Strategy
- Treasury
- Accountability
- Organizational
- Contributors
- Path to Decentralization
- Policy
- Tooling
- Concerns
Key Takeaways
To learn the key takeaways you can either watch this presentation on Youtube or read on. If you want to dig in deep I’m linking all resources at the bottom of this post.
Voting: How does the DAO decide things?
Key Takeaway: Match decision-making model to decision type
- Most early DAOs replicated “direct democracies” (all token holders voting on everything)
- DAOs now transitioning to “representative democracy” (delegated decision-making)
- Decision-making models should match the decision type. Sometimes more decentralization is necessary, in other cases, less can be tolerated
- Models for determining decision-making types:
- Convex vs Concave
- Plutocratic vs Non-plutocratic
Strategy: What does the DAO do? How are things prioritized?
Key Takeaway: Create prioritization frameworks. Empower the community to make decisions.
- Strategy is hard to define collectively
- Without strategy = directionless
- attention and spend is increasingly divided
- short-term decisions dominate
- Focussed DAOs usually set strategy via prominent leadership or core-team (high degree of influence)
- Influence is effective at the beginning of a DAO’s life, but the submission problem arrises once initial leaders phase out
- Prioritization frameworks teach the community how to make strategic decisions themselves
- High level: Values, Guiding Principles, Scope
- Granular: OKR, KPIs
Prioritization frameworks are an important tool to empower the community to make decisions on their own. This increases the resilience of the DAO over time.
Treasury: How are we funding what we are doing?
Key Takeaway: Funding structures should be flexible.
Most DAOs are not set up that way:
- Most DAOs implement working groups that resemble business units
- funded indefinitely to work on a specific domain
- 80% of DAOs analyzed implemented some form of WGs
- WGs are often funded outside of the context of the overall DAO budget
- Consolidate into an overall budget that is unsustainable & 3x higher than traditional startup at a comparable stage
- Worse: Budgets tend to overfund non-core initiatives & underfund core or strategic initiatives
- Hypothesis: Funding should be tied to strategy
- More DAOs testing tying funding to goals instead of domain-specific working groups
- Interesting: ENS RFP Program
Accountability: How do we make sure that we do what we’re funding?
Key Takeaway: Incentivize Execution.
“DAOs are built on proposals which are basically promises to do things.”
- In the proposal stage, the focus is typically on ideas rather than execution.
- DAOs express concerns that competitors are outcompeting them in execution
- We need to enable competition, experimentation & speed
- How do we incentivize execution in a DAO?
- CabinDAO’s “Do-ocracy”
- Yearn’s Governance 2.0: “Constrained Delegation”
- MakerDAO’s Endgame & Atom 2.0: “Separation of Power”
- How do we incentivize execution in a DAO?
Organizational: How are we doing what we’re doing?
Key Takeaway: Define Power Structures.
- Power dynamics exist in all DAOs. We need to define them.
- Undefined Power = Unchecked Power
- Power vacuums result in factions (No one wants drama!)
- It’s harder to define for DAOs that push governance to the social layer
- There are two types of power
- Hard Power: Token ownership & positional authority (easy to see)
- Soft Power: Influence & decision making ability (harder to see & define)
DAOs can’t entirely avoid bodies of power. The important part is that they don’t have any more power than they need to accomplish their goals. The power they do have should be well defined so checks and balances can be implemented.
Contributors: Who’s doing all the work?
Key Takeaway: Don’t treat all contributors like representatives.
- It’s hard to be a DAO contributor
- Faced with defending roles & salaries publicly every 3 months
- In a completely transparent, direct-to-DAO hiring model, the main accountability mechanism is public firing by token holders
- Most DAOs still need to incorporate basic HR practices
- Only 20% of analyzed DAOs have codified hiring practices
- Only 40% have formalized compensation policies
- Contributor burnout is a prevalent problem:
- Retention suffered after 7 months in the analyzed DAOs
- We need to make a distinction between representatives and contributors
- Community representatives manage DAO resources directly or make decisions on behalf of token holders -
- Contributors do work for the DAO
- Representatives should be elected and held accountable
- Contributors don’t need the same level of public scrutiny
Path to Decentralization:
Key Takeaway: Find the balance between the core and the community.
- All DAOs struggle with it.
- A delicate balance of power between the core team and the community
- Community-side: Struggle for gradually more autonomy
- Core-side: Struggle with mindset shift of going from employee to contributor
- Moving from a position of authority to a position of service (hard and not intuitive)
- The tension that arises is usually not the existence of control but that there is ambiguity around it
- The best way to prepare a community for this transition is to provide as much transparency into where the core team has control and the path forward for transitioning that to the community
- DAOs may include the community in defining that path
- The best way to prepare the core team is to start hosting educational workshops that set the mindset of the contributor (how does it feel like?)
Policy: What is the operating system? What are the rules governing this whole thing?
Key Takeaway: Maintain transformability.
“Systems need to be both capable of change and capture-resistant. A much harder problem to solve than a static capture-resistance system.” - Jinglan Wang
- DAOs tend to implement structure and create policy reactively
- overspecifying and overcorrecting to prevent recurrence in the future
- “We don’t know what’s going to happen before it happens”
- DAOs that lack a defined structure or policy entirely tend to collapse
- When important parameters are left undefined, norms will be defined by precedent, creating a common law system that is increasingly path dependent
- Really hard to change again!
- DAOs need a minimized governance system that is as flexible as the DAO itself
- Ask yourself: “What is the process to change the process?”
- Create frameworks instead of rules
- Prescriptive rules fall short in edge cases
- Frameworks allow making decisions when faced with unknowns
The healthiest DAOs exhibit minimal policy and are instead (re-)designed to prevent exploration of the system in the first place.
Tooling: What are the tools everybody is using to do all these things?
Key Takeaway: Facilitate two-way communications.
“Organizations are communication structures.”
- The majority of initiatives in the tooling category focus on communications
- Usually plenty of top-own communication (core team → community)
- But limited bottom-up communication (community → core team)
- User research remains rare, some DAOs struggle to understand the profile of their community members
- Data-driven analysis shouldn’t be constrained to risk and financial analysis
DAOs need to prioritize mechanisms to collect and incorporate contributor feedback. We should use data to analyze DAO-driven decisions
Concerns: How do we survive DAO drama?
Key Takeaway: The difference between crisis and collapse is legitimacy.
- The presence of conflict does not appear to be a distinguishing factor in a DAOs success (neither external nor internal)
- Hypothesis: Legitimacy was the difference
- Legitimacy can be established by brute force, continuity, fairness, process, performance, or participation
- Since DAOs are closer to sovereigns than corporations, their legitimacy is created endogenously (within the DAO).
- Loss of legitimacy can result in a complete collapse of the DAO since there are no external mechanisms to reinforce it
DAOs should do everything possible to avoid negating any of the sources of their legitimacy. Avoid neglecting any of the six sources of legitimacy.
What can we learn at PoolTogether from this?
There is so much in these archives - we should use them to point out the areas in which we are behind and find best practices on how to improve.
I want to invite everybody to dive into these resources with me, learn from them, and hopefully contribute to improving our own processes and frameworks.
Resources:
- Announcement Tweet
- Governance Library
- Governance Timelines
- The Collective DAO Archives by Justine Humenansky (Youtube)
- Presentation Slides
