DAO is stepping out of the utopian dilemma: The starting gun has fired in Denver

Author: Baiyu, SeeDAO

These days, it feels like I've had a bizarre dream, meeting many DAO friends offline as if we were old acquaintances, and miraculously finding a group of comrades from different countries speaking various languages in the cold of Denver. People gathered in small groups at any time, exchanging information densely, sharing each other's DAO progress and reflections, taking group photos, and then going their separate ways to continue exploring DAOs, looking forward to meeting again in the future.

I exchanged views with several good friends who are interested in DAOs regarding the future development of DAOs. Although there are differences in opinions about the timing of a DAO explosion, there is one consensus: DAOs are evolving all organizational forms and political systems in human history from scratch, but the iteration speed is 1000 times that of traditional history.

DAOs are Emerging from Utopia

DAO-related activities took place in two main venues: one was the side event before the conference - DAO Denver, and the other was the DAO Town area at the main venue. The former lasted for 3 days, while the latter lasted for 4 days, both featuring keynote speeches and roundtable discussions that covered global projects and core contributors related to DAOs. I spent almost all my time in these two venues, listening to speeches and roundtables, interacting with guests about DAOs, and also sharing some unique contributions from SeeDAO. In the evenings, I participated in several small gatherings organized by foreigners focusing on network states.

The topics set for DAOs had a clear bias, almost all reflecting on the governance dilemmas of DAOs and discussing new ideas and tools. Due to the special status of ETHDenver, this can be seen as a barometer for the development of the DAO field this year, triggering the starting gun at the conference. In fact, this was confirmed in private conversations with several DAO OGs. I expressed my excitement about hearing these reflections and new ideas, and one of them mentioned that these concepts were already old news in their core circles, with this year's task being to solve the overly utopian dilemmas. So what topics did everyone reflect on?

01 How to Understand Decentralization

The way decentralization is understood directly determines the governance model and decision-making mechanism of DAOs. Unfortunately, for a long time, due to the overlap of political correctness in the Western real world and Web3, there has been an overuse of decentralization, "overused decentralization." A few core contributors have realized the problem but do not dare to discuss it publicly in the community, often using various roundabout metaphors and hints when talking about DAO dilemmas on Twitter.

Even I, at the beginning of this year, made a significant decision to openly discuss this point in SeeDAO's 2022 summary and 2023 action plan, taking risks to do so. In Denver, when I saw many core DAO contributors and initiators collectively reflecting on this and discussing "how to develop leadership in DAO but not to recentralize," I was naturally very excited.

A term I repeatedly heard regarding governance models was "representative democracy." Different guests coincidentally pointed out that "having everyone decide everything" does not work, and while working at ConsenSys, many core DAO contributors suggested that good governance should involve rare voting. The selected team makes decisions and executes professional tasks, which is a form of delegation but does not revert to the old path of recentralization, as everyone emphasized transparency, proposal systems, and the tools of "code is law." This aligns with SeeDAO's governance principles of "mechanism transparency and power flow." Friends familiar with Fukuyama's model of the origins of political order should understand what stage DAOs have reached: tribe—nation—rule of law—accountable government.

At the same time, everyone began to realize that good governance is a dynamic balance, with no one-size-fits-all solution.

02 Offchain is Important

This year, many DAO tool projects are still talking about on-chain DAOs, such as Tally, Arogon, and Koris. Interestingly, Arogon has finally begun to reflect on itself, proposing to simplify and prioritize UX, and has released a brand new DAO OS, providing SDKs for DAO developers.

However, more DAO initiators and participants began to share that the most important thing is for people to reach a consensus. Many scenarios are currently impossible to go on-chain, and for DAOs to operate effectively, they must combine off-chain tools. More importantly, transparency and immutability are often sufficient with AR and IPFS. After a long period of governance practice, everyone began to realize that complete on-chain governance [100% governed by smart contracts on-chain] is not feasible, and even some projects like Q.org have shouted "Beyond code is law."

03 Human Center

People are finally no longer using the fundamentalist definitions from the Ethereum white paper to examine DAOs, demanding 100% on-chain, with all decision-making behaviors predefined, on-chain voting, and fully automated execution. In fact, none of the star DAOs that promoted DAO prosperity in the last cycle adopted the previous pure on-chain framework to start their DAOs.

Large DAOs are developing their own tools based on their unique business processes and governance models, while smaller DAOs are combining on-chain and off-chain tools. The most widely adopted tools among all DAOs are Discord and Notion, followed by on-chain tools like Gnosis Safe and Collab.land. More and more DAOs are beginning to understand that the key to a DAO lies in consensus and goals, in the trust members have in the organization, and in the emotional connections and trust networks established among members during collaboration.

Tools are meant to increase transparency, reduce trust costs, and improve collaboration efficiency; they should serve the goals of the DAO rather than constrain them. I encountered various colorful DAOs, all with visions that resonate deeply. One guy even wrote a thick book explaining his reflections on the relationship between technology and humanity in the tech era, distributing it on-site and discussing the role of the spirit and how to create a SpiritDAO; there were also artists and intellectuals from the Ethiopian civil war using NFTs to raise funds to save their homeland and seeking solutions through DAOs; some wanted to create a Christian DAO; and there were also cool and somewhat mystical projects like Meloch and RaidGuild…

04 Don't Need Token from DAY1

A good community needs to start expanding from a small-scale group that is highly cohesive in consensus. Attracting many people with inconsistent consensus to the community from the beginning using tokens is disastrous for long-term development. Therefore, rather than issuing tokens right away, it is more important to present a clear vision to attract like-minded early core teams, which is the most challenging aspect of launching a DAO. Many people fail to achieve this and instead focus on token economics, which may lead them astray from the start.

I remember when SeeDAO just completed its last round of financing, we did not convene to issue tokens but used points to incentivize and record contributions [based on the financing valuation and total token amount, resulting in 1 point = 0.03U, and calculating points based on market price]. This was mocked by many friends as "free-riding." Later, Blur used points for airdrops, and Safe airdropped non-transferrable safes to users, with more DAOs using points to record contributions.

05 Reputation System Matters

The importance of reputation systems within DAOs was mentioned by several guests, with a representative from Giveth directly stating the non-transferrable token + transferrable token model. This idea is not new; even before SBT was proposed by Vitalik, there were discussions about reputation token models arising from reflections on governance tokens in DeFi DAOs and NFT community governance, which later evolved into non-transferable NFTs and dual-token governance models. However, due to the compliance risks of issuing governance tokens and the difficulty of distributing dividends from DAO treasuries, this model has not been widely adopted in DAOs. I believe that as Utah officially recognizes DAOs as independent legal entities and allows for profit distribution, reputation tokens may be widely applied in DAO governance in the future.

06 DAOs Need a Business Model

Apart from governance, the most discussed topic is the business model of DAOs. Essentially, everyone agrees that DAOs need to be able to produce effectively and have sustainable business models. Koris stated it most directly: "Run your DAO like a business," and provides corresponding tools based on the Metis chain; FWB expressed it more subtly, but they have already operated like a Silicon Valley company, collaborating with top 100 companies for creative design and product sales, recently announcing revenue data. Those who take on leadership must also bear corresponding responsibilities and meet certain data indicators in the business model, which reflects a pragmatic side of DAOs.

Currently, there are several types of DAO models. First, the incubator model, with Seedclub being the most successful, collecting tokens from incubated projects. However, the operation model of incubators like YC requires strong professionalism and funding resources, so Seedclub itself does not provide services in a DAO manner. OrangeDAO is emerging as a strong contender, combining YC alumni funds and public chain resources, already showing results, having incubated a comprehensive solution service provider for DAOs called Origami, which provides a full suite of services for CollabDAO and recently secured a $100,000 consulting contract for a Web2 company transformation.

Second, some DAOs act as a form of outsourced department for Web2 large companies or Web3 major projects, mainly in creative design, exploratory research, and market impact expansion. Many companies realize that maintaining a creative design or market impact department is costly and ineffective, so they start using part of their budget to support a DAO or collaborate with existing DAOs. Communities are rich in creativity, and there are always natural fans, so why not use the DAO framework to accommodate them? Nike, L'Oréal, Collab.land, and Pfizer have all taken steps in this direction. Of course, complex collaborative tasks like physical production management and software development have not yet been opened to DAOs. Depending on the scope and degree of decision-making that DAOs can handle, this form of DAO is very diverse. DeFi DAOs can decide many parameters, while Web2 brand DAOs can decide on some new product designs, but the income of these DAOs comes from the main company's business revenue.

Third, some DAOs provide professional services independently in specific vertical fields and charge fees. These DAOs are more like partnership enterprises, where the initiators have strong expertise and extensive resources in the field, inviting some friends to form an early core team, and then absorbing community members to collaborate under the consensus framework of the DAO, producing services and charging externally. These DAOs usually have a higher entry threshold, are not large in scale, but have a good community atmosphere and strong execution. With the passage of Utah's DAO bill, this type of DAO is likely to explode on a large scale. Within these DAOs, there are clear roles: contributors, consumers, and investors, such as FWB, Water&Music, StoryDAO, IndexCoop, etc.

Fourth, there are global network-type DAOs serving specific cultural backgrounds. People from different cultural backgrounds have different entry barriers to Web3 and require different services. Once they enter cyberspace, they will disperse and gather into different digital tribes based on their civilizational backgrounds—these are DAOs. These DAOs focus on serving their respective native language communities, providing extensive introductory education, helping newcomers integrate into Web3, and connecting them to the global Web3 network. Their business models are usually based on the DAO's network, providing various services such as education, job seeking, social networking, and digital nomad support for the people within the DAO, as well as providing local information links, market promotion, and marketing services for Web3 projects around the world. They are more like a network, providing soil and bridge services, encouraging members within the DAO to create projects and provide services based on this network, and extracting some form of tax to enter the DAO treasury. Koreans have created HanDAO, ETHKipu covers all countries in Latin America, and Pando connects developers and entrepreneurs from 16 African countries, having incubated over 60 projects with a combined valuation of $5 billion, and is now preparing to raise $12 million… SeeDAO also belongs to this category, as we primarily focus on building a global WEB3 network for the Chinese-speaking community.

07 "Liberate Thoughts, Seek Truth from Facts"

Overall, the discussions at this conference about DAOs seemed aimed at guiding Western DAO community participants to "liberate thoughts and seek truth from facts." I originally had a bias, thinking that overseas DAOs would be trapped in the political correctness of decentralization, but this time I heard many reflections and new solutions that were almost consistent with the experiences and conclusions we derived from our own practices. This is quite alarming; the overseas community lacks neither funding nor high-quality contributors, and once their thoughts shift, the construction will be rapid.

An interesting detail is that one of the roundtable guests was 0xjustice, and the SeeDAO translation guild translated his latest article about how DAO governance should be gamified. He was pleased that we translated his article and was surprised that we independently reached the conclusion of gamifying DAOs, which has even been implemented in the actual governance model of the SeeDAO game operating system currently under development. The next day, while having breakfast, I ran into him again, and he shared many early stories of BanklessDAO, candidly admitting that his gamification ideas were difficult to reform and implement there, looking forward to the wisdom of Eastern DAOs.

The DAO Ecosystem Intertwined with DAO Tools Has Taken Shape

01 Unlocking the Imagination of DAOs for True Mass Adoption

A variety of DAOs are emerging, with everyone trying to use this new organizational tool to reform processes and benefit distribution across various industries. Once the evolution of governance models reaches a new stage, these DAOs will involve more people, far exceeding NFTs, and DAOs will become a true entry point for mass adoption. As one guest put it, "People follow people but not the tech." The most accessible projects on-site were various infrastructure and tool projects, as everyone was looking for scenarios and users.

02 DAO Tools Have Deeply Integrated into L2 Chains

Overseas DAO practices have been around for a long time, so many needs have been identified and various tools have been developed. Apart from DAO protocol template tools like Arogon, Tally, and Meloch, chains specifically designed for DAOs have emerged. Q.org is an EVM-compatible L2 chain that provides various template tools to attract various DAOs for deployment and has already received investment from Hashkey; Metis is an older L2 chain that has incubated the DAO framework tool Koris and launched an incubation program, offering $1500 grants for deploying a DAO using their tools…

Other comprehensive DAO tools like DAOlens and Web3CRM have demonstrated strong product capabilities, evolving to a new stage in UI/UX design, product thinking, and understanding of DAO governance concepts.

I was pleasantly surprised to see that there are finally projects considering the permission issues of DAO tools from a protocol perspective based on DAOs, "Ownable Access Control."

03 Academic Research and Industry Practice Advancing Together

True strength lies not only in industry practice but also in academia continuously providing intellectual fuel and constructive criticism. At the conference, a guest even quoted the Federalist Papers, and Nathan, a guru in platform cooperative research, shared insights on policymakers letting DAOs play. Researchers compared DAOs to organic ecological organizations, emphasizing "balance and organic," while MetaGov discussed the importance and amendability of DAO constitutions. CommonStack has been referred to as the "Huangpu Military Academy" of DAOs, having produced numerous projects like Giveth… These scholars and organizations are not just sitting in ivory towers doing research; they are deeply involved in DAOs and Web3, raising cutting-edge practical questions and providing their solutions in conjunction with academic resources.

04 The DAO Ecosystem Has Taken Shape; Its Explosion is Just a Matter of Time

Good DAOs attract high-quality contributors, many of whom work full-time in top projects like Polygon, ConsenSys, and Paradigm while contributing part-time to DAOs they are interested in. Many of them provided very reflective and constructive opinions at this conference. After gaining practical experience within DAOs, they either stay to continue building, refine DAO tools, invest in their favorite DAOs, publish academic articles, or even explain DAOs to regulators and promote their development. They are closely connected, resonating with each other, complementing and promoting one another. I see a thriving ecosystem of overseas DAOs and believe they will certainly change the world.

The Chinese-speaking DAO Ecosystem Needs Confidence in Its Path

What about the Chinese-speaking DAO ecosystem? I can only share what I know, and there may be omissions.

At the DAO Denver event, I unexpectedly discovered the sponsorship of the .bit team, alongside DAO tool projects like DAOLens, Koris, and MinDAO, which surprised me. After chatting with them, I found out that they have been focusing on DAO research for a long time and are now transitioning to develop DAO tools around .bit, even launching a DID-based voting tool called Voty.

I was moved to see that the Chinese community finally has a legitimate team that has secured funding and is seriously working on DAO tools. We were like old friends meeting again, with tears in our eyes; we have DAOs, and they have tools, so we need to join forces to make things happen. At the same time, I learned that the Nervos public chain has launched APPChain and is actively seeking partnerships with application parties, while JoyID and Unipass have made many attempts to lower user barriers for DAO scenarios. At the venue, I also saw the treasury products from Tsinghua's THUBA DAO, and a member of the Metaopia product team, like me, had almost listened to all the DAO presentations…

When talking with OGs from Bankless DAO, GitcoinDAO, and others, they mentioned knowing Bob, Shawn, and CHAOS, so we have many predecessors leading the way. Many people in the Chinese-speaking community started paying attention to DAOs through articles introduced by Chao Ge about BanklessDAO and learned about Seedclub; Teacher Shawn is an early graduate of CommonStack, contributing to many DAOs and even investing in DAO tools like Origami; Teacher Bob shared various experiences from Gitcoin DAO; Teacher Pingfeng tirelessly outputs content about the NounsDAO ecosystem; and Teacher Windy, who came from DAO One, is still diligently working on DAOrayaki…

However, on the flip side, the Chinese-speaking DAO community is almost entirely focused on product incubation, translating content, while governance models are pieced together. I have seen quite a few DAO tool teams, but most founders have not worked in a DAO or contributed deeply to one. In contrast, ConsenSys has required its employees to contribute to BanklessDAO during work hours, and after talking with employees from Paradigm, I found that they have a very good understanding of DAO models and the issues at hand. The gap is objectively present, with both environmental issues and practitioner mindset problems, but as long as we face the gap directly, maintain our characteristics, and learn from the advanced experiences of overseas DAOs, we will surely find our own path.

I have always believed that Eastern DAOs are relatively easier to do from the top down, while Western DAOs are relatively easier to do from the bottom up, and good governance requires a combination of both approaches. Vitalik's SBT article begins with a quote from Laozi, and the last introduction in the inaugural issue of Global Overview is about the I Ching. The era of DAOs is a time when human civilization is re-integrating and colliding, and I believe we can break free from the cycle of internal competition, stand on the world stage, and look towards the East.

Due to the length of this article, I will share for now. I will continue to share "Dissecting the SeeDAO Governance Model," "How to Create a DAO Suitable for Chinese Culture," and "The Entrepreneurial Path of DAO Tools." Please feel free to follow seedao.xyz and contact us.

Here are a few photos from the event:

（Comparison of DAOs and Natural Ecological Organizations）

（Investor, Builder, Consumer Role Model within DAOs）

（Giveth Team Member: Practical yet Idealistic）

（Droo Quoting the Federalist Papers）

（DAOs Conquering the World!）