Imagine you want to work at a company that you believe has the mission and culture that would make your work life exciting and rewarding. You go online, join their internal discussions, and learn about their various projects. Eventually, you see something that you think would be valuable for them, and you just do it — you work on a piece of code, write a how-to document, make an explainer video, create a new logo — anything you think is needed. You just do it. Invest your time and energy and give it to the company, hoping it adds value. If it does, you may get recognition through emojis or tips (a tip is a spontaneous cryptocurrency transfer to your account by individuals or the organization). But perhaps even more valuable is that you build your reputation within the organization.
Then you could propose to the company that you work on a project for which you are paid. You create a written proposal and submit it to the company, and everyone with a share votes on whether or not to approve this proposal. Or you could review the list of existing proposals and perhaps evolve them. You can continue doing projects for the company this way or join them as a full-time resource.
Naturally, it’s hard to imagine any current company operating this way. What about interviewing and hiring? What about performance reviews? How would it approach compensation and promotions? How does it all work? How could someone simply pick a random project for a company to try out before joining full-time?
So it’s not a reality now, but wouldn’t such a thing be great?
And if you want to change roles, you don’t have to go off on a job hunt and interview; you start doing projects for another company.
Anyone not currently active in blockchain might be surprised to learn that thousands of organizations are operating on blockchain technology as some version of a decentralized autonomous organization. Many blockchains are, in fact, developed in this way already.
A corporation’s ownership today has a combination of substantial shareholders (“whales” in crypto-speak) and retail (“guppies”). No matter their size, all shareholders vote once a year on critical issues: Who will be on the board of directors, and which firm will audit the company’s books? Ideally, people vote for board members sharing their philosophy and approach — someone they trust. But in reality, most small shareholders know very little about the proposed people. Ultimately acting as the CEO’s boss, the whales decide who joins the board that creates the company’s governance.
In stark contrast, the framework of a Decentralized Autononmous Organization (DAO) can be designed in whatever way best suits the DAO. The DAO votes on all sorts of proposals, from how to spend money and structure the organization to which logo they want. Voting is open to anyone with DAO tokens, whether bought on the market or received in exchange for work. For example, Gitcoin has a quarterly ballot to establish the budget allocation across different projects, and voting takes place to confirm the development budget.
The DAO voting process varies, and many models are being used and tested. Gitcoin uses delegation. Voting requires you to follow the process, educate yourself on the proposals and discussions around the issue, and then take the time to vote. Such preparation requires effort and time that few people are prepared to invest. Hence, they can delegate their voting rights to someone they feel aligns with their values (and how they would vote). These people are called “stewards.” A steward’s voting record is public information. You can see how often and how they vote on different proposals. You can also change your delegation as needed. It would be a little like working in a company, but you could vote for your leadership team based on their performance.
All DAOs are figuring out how best to handle governance and voting. It’s a constant and evolutionary process, and it will be fun to see what comes next as they mature. Different models will likely work better in different environments.
The idea of a significant break from the traditional, hierarchical company will sound like fluff or an impossibility to many. But it is happening today, and it’s building some of the most innovative software in the world. All companies struggle to create engagement and retention. They yearn for the kind of engagement and energy rampant in blockchain right now — highly enviable levels of community engagement.
DAOs still face many challenges as they’re not legal entities and have no limited liability options. But as regulation catches up, these issues will be ironed out, making Decentralized Autonomous Organizations a more common choice. At that point, companies must consider if they wish to adopt this new and exciting organizational reality.
DAOs are so new, and they’re thus in a constant state of evolution as people learn what does and doesn’t work. One thing’s for sure, it’s an exciting time, where antiquated and self-serving top-down structures will eventually topple, and genuine community-led organizations will thrive.
