DAO, as an emerging crypto vertical, has gained great progress and development in recent years. As of now (21 Jun 2022), there have been 1085 DAOs with more than 3 million members according to the data of deepdao.io. To enable these organizations to flourish, a vibrant tooling and infrastructure stack has been created, driving a thriving DAO ecosystem. These projects provide communities or projects with different templates, frameworks and tools to pool resources and launch their first DAO. They typically provide smart contracts and interfaces to facilitate on-chain operations for decentralized communities, making it easy for anyone with limited technical skills to launch a DAO.
In this article, we will introduce some important DAO infrastructure and tools from four most fundamental aspects â treasury management, governance and voting, contribution and reputation, compensation.
Treasury Management
A DAO isnât a DAO without a treasury â a shared wallet that can be used to send and receive crypto funds on the blockchain. A DAO treasury serves as the lever for actions within the organization: making purchases, enabling fundraising and interacting with token or NFT sales, rewarding contributions, etc. In addition, a crypto treasury is the most fundamental staking mechanism by which community engagement is incentivized.
Gnosis Safe
Having started developing blockchain-based financial infrastructure products since 2016, Gnosis Safe is a decentralized asset management platform that sets a secure standard for managing funds and can hold a wide range of asset types as well as NFTs.
Gnosis Safe has become the first choice for those looking for a lightweight multi-signature solution for DAOs. It supports offline signatures, hardware ledgers, and allows users to configure the number of signatures required. Currently Gnosis Safe supports multiple public chains such as Ethereum, Polygon, BSC, Avalanche and so on. Besides, non-ether transactions on Ethereum are made possible by Gnosis through transaction relay mechanism.
Juicebox
The Juicebox protocol is a programmable treasury. Projects can use it to configure how its tokens should be minted when it receives funds, and under what conditions those funds can be distributed to preprogrammed addresses or reclaimed by its community. These rules can evolve over funding cycles, allowing people to bootstrap open-ended projects and add structure, constraints, extensions, and incentives over time as needed.
Juicebox also acts as a payment terminal and programmable treasury for projects, allowing DAOs to manage treasury actions such as crowdfunding, employee salaries and automated payouts when a project closes. It is light enough for a group of friends, yet powerful enough for a global network sharing thousands of ETH, ERC20 tokens or other assets.
Governance & Voting
DAOs must maintain transparency and visibility of how their decisions and funds flow in and out of the community, thus many DAOs use voting to make democratic decisions. Members can earn voting privileges in the DAO through contribution and express their opinions by voting on specific actions. Once approved, those votes automatically translate to on-chain action and get recorded on the blockchain, such as transferring funds from the treasury to an external entity.
Snapshot
Snapshot is an off-chain gasless decentralized governance and voting system. It provides flexibility on how voting power is calculated for a vote. Snapshot supports various voting types to cater to the needs of organizations, such as single choice, approval voting, quadratic voting and more. Creating proposals and voting on Snapshot is user-friendly and does not cost gas as the process is performed off-chain. Moreover, proposals and votes are stored as signatures on IPFS and there are no restrictions on projects or blockchain networks.
Over the past year, the high gas fee on Ethereum has caused problems in this ecosystem. With voting gradually decoupling from on-chain execution, Snapshot has become a popular way in DAO governance. To date, Snapshot has supported 13 public chains and over 4,000 projects and the numbers are still growing rapidly.
Tally
Tally is a powerful platform for analyzing and voting on crypto protocols. Anyone can connect a wallet and see all the DAOs he or she is involved with in one place. Itâs effortless to develop and submit proposals. Tally supports Ethereum, Polygon, and Avalanche. Users can use Tally to create and pass proposals, enable delegation, and power voting, if their DAOs involve submission and voting of proposals.
Another feature worth mentioning is that Tallyâs SafeGuard allows a certain number of token holders to revoke a transaction initiated by multi-signature or reclaim funds if they believe the signerâs decision was improper or unfair.
Contribution & Reputation
To become a contributor, one generally goes through the following journey: from being completely unaware of DAO, to lurking on various social platforms like Twitter or Discord, to connecting with other members, and finally making the first contribution to DAO and creating value on a consistent basis.
Ideally, membersâ sense of belonging will be strengthened during this contributor journey, prompting them to grow with the community, contribute more, and move toward a common vision. Achieving this ideal situation involves process design issues, the essence of which lies in choosing the right tools and maximizing the value of the tools as much as possible. Good use of tools can help solve macro problems, such as:
How to provide the right opportunities and information to the right people at the right time
How membersâ contributions are quantified, motivated and appropriately rewarded
How to foster trust through roles and reputation mechanisms
Gitcoin
Gitcoin is a platform where coders and developers can get paid to work on open-source software in a wide variety of programming languages. It mainly involves tracking and verifying off-chain tasks and self-reported tasks.
Users can also submit their own project ideas to the Gitcoin platform in order to crowdsource funding from contributing donors. Aside from direct community crowdfunding, Gitcoin employs a unique system known as quadratic funding to help match community funding efforts to accelerate development of the projects. Overall, Gitcoin is a platform designed to foster the development of meaningful, open-source projects and better align the interests of donors and developers.
Gitcoin uses its token GTC to incentivize contributions from contributors all around the world. Contributions to Gitcoin could come in different forms â code changes, writing docs, answering questions from users and anything helping keep the infrastructure running, etc. All can be recorded and marked as contributions.
RabbitHole
RabbitHole is a path for project treasuries to distribute their tokens to incentivize participation and future contributors. It is the first crypto-native paid acquisition channel for projects and protocols. Through gamified approaches, RabbitHole helps different decentralized networks attract the right users, allowing users to discover and use new Dapps, protocols or crypto platforms in exchange for token rewards.
By distributing tokens, RabbitHole helps projects acquire real users and participants who are knowledgeable and engaged. It also offers crypto tutorials on topics such as NFT and DeFi with proof-of-attendance protocols so users can demonstrate their knowledge of specific topics.
Compensation
Creating a suitable compensation mechanism for members who write, moderate, and work for the DAO is paramount. Recognition and compensation of people who add value to the DAO will be essential for long-term success.
Every contributor should be fairly compensated for the inputs he or she gave and treated with respect and dignity by the members of the DAO. Moreover, a DAO should make its contributors feel like that the rules, policies and procedures of the DAO are clear, fair and transparently communicated.
DAO contributors have significantly greater power of choice than their corporate counterparts exactly because DAOs have permeable organizational boundaries like communities. Thus, it becomes critical for DAOs to attract and retain contributors with a reasonable compensation system.
Coordinape
Coordinape is a Web3 native platform that enables DAOs to easily distribute compensation to contributors through a peer-to-peer fair distribution. Community grants, internal salaries, and special projects can all be incentivized and rewarded by the community itself. Instead of cumbersome voting or black box committees, contributors themselves can quickly and transparently get rewarded for the value they created.
Coordinape moves more decision making to the community. The simple premise is that if you ask everyone in the community who is doing good work, their collective answers will give a better sense of where the value is and who should be most rewarded. Over time, this also provides valuable insights for the DAO about what kinds of work are prioritized, what the community finds most valuable, and who are the key contributors in different areas. The shared visual display also enables everyone in the community to see who is working on what and find opportunities for collaboration or reduce duplication of effort.
Coordinapeâs current implementation is off-chain while it will continue to develop an on-chain version, using an EVM compatible L2 or side chain.
Utopia
Trusted by notable DAOs such as Friends with Benefits, PleasrDAO, and Yield Guild, Utopia is a collaborative payroll and expense management tool. It helps to manage payments, accounting, and reporting for DAOs. Users can automate payroll using fiat or crypto, keep track of DAO expenses, and assign roles to contributors to ease organization. One impressive feature is that Utopia can batch execute all invoices and recurring payroll into one single multi-sig transaction without paying any gas.
Before the introduction of Utopia, the vast majority of DAOs were operating token distribution and payments based on raw dumps of data. Utopia has built invoices and reimbursements workflows so that DAOs can receive, pay out and manage these requests. Additionally, Utopiaâs all-in-one transactions allow DAOs to batch payments across multiple people and coins.
Summary
Ultimately, the DAO communityâs behavior will determine its success. The most important part is that the community keeps caring about what they are doing â the best tooling and infrastructure today is built to promote social cohesion and prioritize long term coordination.
The DAO infrastructure tools mentioned above are only a snapshot of an ever growing landscape of products and services looking to ensure and sustain fast-growing communities as they scale in members and mission. The time is ripe for the next wave of DAO infrastructure and tools that will undoubtedly reshape how DAOs are managed and operated.
Disclaimer: This research is for information purposes only. It does not constitute investment advice or a recommendation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision.
đŠ @chestersigned
đ 1 July 2022
Links:
https://medium.com/1kxnetwork/organization-legos-the-state-of-dao-tooling-866b6879e93e
https://identityreview.com/the-ultimate-guide-to-dao-tooling/
https://www.alchemy.com/overviews/the-definitive-guide-to-starting-a-dao#dao-13
https://mirror.xyz/twhittle.eth/GwRXJ1_D9bK4P_LKfz3U-HvnvZpcx4ttkP6AvVvxh9s
