The evolution of Web3 thinking: from minimum viable product to minimum viable DAO

Original Title: “From MVP to MVD: The Evolution of Web3 Thinking”

Written by: NFTGo

From Minimum Viable Product to Minimum Viable DAO

The concept of MVP was first proposed by Eric Ries in "The Lean Startup," meaning to build a usable product prototype in the fastest and simplest way, to test whether the product meets market expectations through this simplest prototype, and to continuously iterate quickly to correct the product, ultimately adapting to market demands.

Quick trial and error, quick iteration. By creating products to meet user needs, needs transform into functions, and functions bring user growth.

Today, the community form initiated by DAOs is causing a paradigm shift in this innovation flywheel. With the rise of the crypto craze in 2021, it is estimated that there are now about 1 million participants in DAOs.

According to data from ConsenSys, the top 20 DAOs collectively hold over $14 billion in digital assets. Previously, we often said that without good ideas and concepts, there would be no users; consumers become new products through data monetization. In the Web3 space, to some extent, without a community foundation, there are no projects; consumers transform from "products" into diverse roles such as community members, investors, and stakeholders.

The hierarchy becomes more flattened, Web3 promotes a creator-driven economy while rewarding consumer participation, thus opening a new era of social networks. Next time, before starting to design an MVP, why not shift from the value hypothesis of the product itself to a community-based consensus exchange mindset?

Value Hypothesis: Do users think the product is useful and valuable to them? Do users find the product "amazing" and "far superior to others"?

Consensus Exchange: The initiator drives more people to gather and influence each other through proposing a valuable consensus, engaging in value exchange and self-propagation. Do users agree with this value?

Imagine how users can become your stakeholders and entrepreneurial partners, rather than just your consumers?

Image Source: NFTGo.io

4M Elements to Unlock MVD

To initiate a minimum DAO, just remember the key 4M elements: Mission, Member, Mechanism, Money.

First, you need to determine the vision or goal you wish to achieve. Second, consider what kind of people you want to gather to accomplish this together, defining the roles of members. The third is to consider how to establish a management mechanism, which includes voting, incentive mechanisms, and decision-making processes. The fourth is to consider funding and a complete token economic system, how to convey and transfer value, which can be NFTs or tokens.

From Hypothetical Functions to Consensus Cohesion

Previously, one or two people would propose and determine product functions; now, a group of people launches products through bottom-up contributions that align with DAO motivations and values. The minimum viable DAO prioritizes the community, where consensus precedes the product. Whether forming proposals, voting, defining roles, or consumption, modular DAOs can be created through smart contracts.

Taking Apecoin DAO as an example, one of its visions is to cultivate a community of creators and innovators. Before everything starts, the initiators and organizations need to plan a complete protocol and rules, focusing on how to increase the value of the tokens held by each DAO member, benefiting the entire DAO.

Similarly, Bankless DAO has accumulated the first wave of consensus through many high-quality, in-depth articles and structures—an aspiration for a bankless society, with DAO members continuously branching out to form new guilds.

From Passive Acceptance to Autonomous Voting

Generally, community members propose initiatives for future operations and then gather to vote on each proposal. The approved proposals consolidate community consensus, allowing users to transition from passively accepting all outcomes to collaborating within this framework. Moreover, each member of the DAO supervises the overall operation to some extent.

During voting, attention must be paid to the consistency of incentive measures, maximizing individual interests alongside organizational benefits. For example, ApeCoin holders can submit ideas and thoughts in the form of posts, confirmed by moderators for alignment with community interests. An AIP idea can be collaboratively developed by multiple people, and it can also receive comments from others.

Subsequently, moderators can publish the AIP to Snapshot. Once it goes live on Snapshot, the Live AIP will open for voting. Voting options are "For" and "Against," where "For" means voters agree to implement the AIP as is.

From User Testing to Token Governance

In the past, MVP placed great emphasis on user testing and feedback, with user feedback being used for the next development iteration. However, when initiating MVD, it is necessary to consider how to convert user contributions into funding and incentive mechanisms, as well as clarify how to obtain funding and empower governance.

This is typically achieved through token issuance or NFT issuance, both of which can raise funds to supplement the DAO's treasury. Token holders possess various rights, such as voting rights and partial governance rights.

Additionally, some freelancers, industry advocates, and individuals interested in the project can earn additional token rewards by participating in the governance of the DAO. Their roles create unique value propositions, where the commitments and efforts made in the community can be directly linked to financial capital.

This is an important step in transforming members into participants and stakeholders. Members not only need a sense of belonging and connection but can also invest in things they are interested in.

The value of tokens is related to direct community value, such as member benefits and privileges, social capital and status, as well as long-term community influence, community profits, and token supply and demand. If the token issuance is in the form of NFTs, it will also relate to rarity and other factors.

Currently, observing the token or NFT holders of most DAOs or communities, they can often be categorized into several types: HODLers, Supporters, Advocates, Flippers, Innovators. The different proportional combinations of each type of member also represent the quality level of the DAO.

Of course, DAOs also have their own bank accounts or treasuries, akin to an internet community with a shared bank account, autonomously determining how to allocate community resources and economic rewards.

For example, Doodles' community treasury, DoodlesBank, is used to support various community activities. In terms of decentralization, democratization, and economic participation, DAOs are the purest form of web3 communities and are key principles of the new ownership economy.

Moreover, staking can promote the development of token and NFT ecosystems, improving supply and demand while incentivizing early adopters and existing ecosystem participants. The dual staking model of NFTs and tokens within ApeCoin DAO may become one of the common trends in the future.

From Validating Hypotheses to Taking Action

DAOs often call on the community to propose interesting ideas through funded projects, allowing entrepreneurial individuals to freely submit proposals. The level of participation varies among different DAOs; for some, people gather together to achieve a common goal.

For instance, previous initiatives like Constitution DAO and Assange DAO, as well as others aimed at pooling individual funds to find better investment directions, such as SharkDAO. Furthermore, project parties gather a group of people with shared values through PFP to gradually realize their roadmap.

Technology is Just a Means

Over time and with network effects, social media has gathered billions of users. Large companies have profited handsomely from users' attention, time, and wallets. Web 3 aims to break these concepts, not just allowing early investors and teams to benefit from these network effects; in this era, all users who play a role in the success of a project should benefit. Thus, users become partial owners of the product.

The concepts of decentralization and fairness paint a beautiful vision of the future for us, but at the same time, we must also recognize that Web3 and DAOs cannot solve all problems. Many blockchain projects are based on the idea that technological concepts can solve most social issues under the current mechanisms.

However, technology is merely a means to an end; only the transformation of thinking can remain eternal. In the industry, our attention is constantly diverted by new hot topics, overshadowed by new temptations, and the influx of PFP trends, along with novel and even dazzling concepts and decentralized organizational operating systems, will still undergo the test of time.

Free Expression and the Second Personal Revolution

First comes the community, then the product.

Under MVP, we assume consumers have such needs. Under MVD, we do not assume; we create and choose any needs. Under MVP, a few people determine the size of the demand and evaluate the best ideas.

Under MVD, community voting takes the lead in executing the best ideas. Under MVP, the community is your testing ground. Under MVD, the community is your investors. Under MVP, the community is your consumers. Under MVD, the community is your partners.

A well-functioning DAO produces projects or products that can generate a positive-sum outcome compared to MVPs of the Web2 era. The flow of funds in MVPs often moves from the community to the creative team, and this circulation often comes with losses.

In contrast, under the operation of a DAO, the community and creative teams continuously attract people from outside the community to join, with the flow of funds moving from outside the community to within, rather than being concentrated from many to a few within the community.

The shift from a product-centric approach to an individual-based creation also reflects a new characteristic of society—valuing participation and expression, emphasizing individuality and uniqueness, and focusing on entertainment and consumption. In a personalized society, class distinctions become more blurred, and the self-expression brought about by the second personal revolution becomes paramount.

If we truly want to move towards democratization and liberalization, shifting the discourse power of large companies to individuals, perhaps we need to innovate our thinking. What are the motivations behind everyone's actions, and how is the final distribution of benefits determined?

MVD is a practice of democratizing the monetary system and may become a new discourse in the future. From paid usage to shared benefits, regardless of the ultimate purpose and scope of the DAO, its success depends on its genuine recognition of collective power and its ability to drive results through collective energy.