Social Impact DAO Style Governance is just a way-station. [88]

Every major social impact DAO from the last couple years that hasn't transitioned to full on-chain governance has seen significant existential threat events.

Hello, my friend!

The sheer volume of clashes between the world of crypto and the state is overwhelming for those of us who follow these things. I’ve been harping on this topic quite a bit the last few weeks, so I’m gonna simply give you a link to my news blog and let you peruse that category while we move on to another topic I wanna address: my key learnings in DAO governance.

Zodiacs, Molochs and Nouns as a form of DAO governance. Oh my!

This week has been particularly troublesome for me for reasons I can’t get into the absolute specifics on, but it has to do with failures of DAO governance. For the variety of DAOs I assist and help with, the vast majority of them were founded during or after the era of the Social Impact DAO, the era I wrote about extensively in the NCRI / Rutgers funded report The Diseconomy of Memes just a little over a year ago.

In that time, the majority of DAOs that have been launched follow a very similar stack to the one I’ve described here when introducing the concept over the last year.

I’m here to tell you that this movement of DAOs has forgotten one of the principle lessons I’ve been trying to teach anyone who asks me to learn them on blockchain: blockchain is a decentralized internet protocol for the mitigation or elimination of trust as an exploit vector.

As always, that’s a very lengthy and academic way of saying: remove humans from the equation whenever possible. We should, whenever possible, allow smart contracts to arbitrate and act as escrow agents, not humans. Almost without exception, every major social impact DAO from the last 24 months that hasn’t made the transition to on-chain governance has seen serious repercussions, from rug attempts to accusations of impropriety.

In my experienced opinion, a multisig wallet used to house main treasury in a DAO should not be expected to scale past more than a handful of DAO members for more than a month or two without expectingn serious existential risk to the organization.

That doesn’t mean it can’t be a way-point in a DAO evolution. A multisig wallet with on-chain vote signalling with Snapshot is quick and easy to stand up. The principle flaw in a lot of social impact DAOs, in my view, is that they view multisig wallet management of the treasury (plus nominally on-chain governance) as the destination, not a waypoint.

But what is all this a waypoint to?

MolochDAO: One of the more time-tested sets of DAO tooling.

MolochDAOs are a breed of DAOs built (of course) on Ethereum's blockchain. These nifty smart contracts constellations facilitate community-based governance and resource allocation through a voting mechanism over a reliance on multisig tools.

What sets MolochDAOs apart is the clever "ragequit" feature, enabling token-holders to exit with their share of resources before any undesirable decisions take effect. By minimizing centralization risks, MolochDAOs provide a dynamic, transparent, and accountable platform for collective decision-making, proving themselves as a versatile and ingenious framework in the crypto-governance realm.

Want to code-lessly roll your own? Try DAOhaus.

NounsDAO: The new “fun aunt” DAO archetype.

NounsDAO is a unique spin on decentralized autonomous organizations, with a focus on what they call “Nouns” —generative, public domain art pieces. Nouns are auctioned off daily, replenishing the NounsDAO treasury with ETH proceeds. This self-sufficient mechanism ensures continuous Noun generation and distribution. This was a project initially just for the main DAO, but has since been

Governance? NounsDAO employs a Compound Governance fork, granting each Noun one vote. Votes are transferrable, and votes can be delegated while you retain Noun ownership. No attribute scarcity rules exist, so every Noun boasts equal rarity. This innovative DAO model marries art and governance, creating a fascinating, ever-evolving ecosystem.

Gnosis Zodiac: The nearer way-station on the way to on-chain governance.

Zodiac, an adaptable suite of DAO tools for Gnosis Safe, provides a modular and customizable framework for Ethereum account programming. It comprises four main components: Avatars (programmable accounts representing DAOs), Modules (contracts for decision-making logic), Modifiers (contracts altering Module behavior), and Guards (contracts implementing transaction checks).

Key modules include Bridge (cross-chain control), Exit (asset redemption, similar to MolochDAO's rageQuit), Governor (on-chain governance), and Optimistic Governor (execution based on Snapshot proposal results). Additional modules like Reality, Safe Minion, Tellor, and Usul further expand functionality, such as Moloch DAO integration, flexible voting methods, and oracle-backed decision-making. Zodiac offers a tailored approach to DAO governance, meeting diverse needs and requirements.

Zodiac allows a lot of extensibility for delegating human-performed tasks to smart contracts, and using these modules and modifiers, can make the transition from off-chain to on-chain governance with MolochDAOs, Nouns and others a lot easier without radically re-forming all the cornerstones of the DAO to get there.

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Blockchain Bulletin

• Hardware wallet maker Trezor adds ‘CoinJoin’ feature for Bitcoin transactions. Trezor, the hardware wallet maker, has added the privacy-enhancing feature “CoinJoin” technology to its Trezor Model T, reported Cointelegraph.

• PUBG creator plans NFT metaverse game this year called ‘Migaloo.’ Creator of the ever-popular PUBG: Battlegrounds, Krafton, announced plans to launch its own metaverse game platform that will use NFTs to allow creators to enter into a player economy later this year, reported Decrypt.

Blockchain Behind the Scenes

• MarginFi offering the Omni AI chatbot that can plug into a crypto wallet. Jumping on the generative AI bandwagon, MarginFi has announced its own AI chatbot that is capable of connecting to and acting on its Solana-based crypto wallet named Omni.

• Microsoft partners with Space and Time to make real-time blockchain data available on Azure. Microsoft and Space and Time have joined forces to bring real-time blockchain data into the Azure Marketplace for developers to tap into its hybrid transaction and analytical data.

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Media Appearances this Week

I was the featured guest on Joel Valenzueala’s Digital Cash Network, with one of my first interviews since my transfer from FPC Beaumont to RRC Dallas.