Confronting DAO Assumptions with Jess Sloss, Jon Hillis, Parker Jay-Pachirat, and Yancey Strickler

things to share with us also let's hold them to that so the panel is a confronting Dow assumptions there is no shortage of assumptions and I think lessons that we've all learned so this should be a juicy uh conversation I want to start it off with maybe the the juiciest one which is the idea of the importance of tokens and Dows should Dows have tokens do we need tokens when token Parker I know you have thoughts on this so I would love to start with you yeah um thanks for kicking us off super happy to be here and it's an honor to be on a panel with such amazing and impactful peoples working in this space um yeah tokens loaded loaded topic uh I think while tokens can provide the right incentives and enhance the correct first principles of a Dao with actually more important is really thinking about the infrastructure that underlies that um so for example what is your North Star how are you thinking about attracting a network of intrinsically motivated and aligned participants in your Dao first and foremost and I think most importantly is there even demand for Adele right like does the community that you're trying to cultivate want to Dow and does the Dow make sense as a business model for what you're trying to achieve yeah I mean I think there's this moment where uh you know Kevin launched with a crowdfund it was sort of this opportunity for a community to come together to provide some funds to kick start something a whole new brands emerge from from that moment of the the swell out of a of a crowdfund was sort of a big big thing and so it seems as if like the the idea of launching a token from day one was really embedded in a lot of the assumptions or a lot of the Dows that launched over the last couple years I think there's a number of folks right now who I think quite rightly say hey these tokens actually cause a lot more friction in in the short term than uh maybe maybe benefit but John I know you have a a different opinion there you're very much a fan of launching a token from day one I am I this has become a hot take as you said this was like standard practice in 2021 and then all of a sudden nobody wanted to have tokens in 2022 um I actually believe that having a token from day one is a really good idea as long as you don't over financialize it so I think it's important to start building a community and distributing ownership of your governance or you know whatever your token represents to that Community from the beginning um because it's a lot harder to like do that retroactively down the line but the key here is you don't just want anyone to be able to go to a liquidity pool and you know buy your token and uh or sell it right and like all of a sudden they have this very transactional relationship with your organization so I very much agree with what Parker said about like the the social core of what you're doing being the most important part but I actually believe we should be launching tokens from the beginning what is the what is the well like best benefit like the best case for launching one immediately because I would see like a big danger and it's like well these are used for governance a group that's day one has not figured out who their stakeholders are has not figured out a like coherent governance strategy so like I assume there's other ways to to think about what a token would do off off chain and it feels like it could risk like you said financializing it because I I think that yeah it's it seems like a risk of um of kind of building in governance assumptions that you can't figure out on day one I actually I think I have a point to that which is thinking about thinking about Squad wealth write that thing from other internet where they're saying you need a squad first wealth second is really important you have to figure out who your people are before you financialize them because once you financialize there's really no turning back my feedback I don't know okay sorry I need towards the mic so point this way yeah this way let's try this yeah so Austin I remember back in the day uh pre-metal label Austin was working on a co-op called ampled and um I I like was super interested in in what they were doing and he was this was like you know not on chain but they had like a spreadsheet basically where they were tracking contributions and from you know early on they had a sense of like sort of this self-tracked you know who who was contributing what I think like having those sort of Records early is really important I think having like a very specific sort of like minimum viable governance thing that you want to do as a community is also a really good way to do this so like our original crowdfund was a donation to support a Creator Residency program people got a token and they got to vote on which creators got to come out for the residencies that was the whole point of the token so there's like this very simple governance mechanic that worked from day one like you don't want to I try to write your constitution on day one because like there's to your point you can get locked into these kind of governance traps but you do want to have like these very simple games that your community can start playing together completely agree with that um I think one call out here that's really interesting right is there's in my opinion not one right way to create a doubt and so it's really interesting to hear with what you're saying about um your belief in having a token from day one even if it's not financialized the approach that we've taken at boys club is actually really different um we've started with almost everything off chain and the goal of that is to really design and iterate and test processes and systems within our Dao before we create a token of any kind so this goes from everything from onboarding to off-boarding governance mechanics and weight um proposal system and optimism station for the proposal process we went to empower the members of our Dao with the resources and context and practice that they need to have the muscle memory to understand and participate in a doubt in a meaningful way that drives ownership and participation and ultimately you know shapes the future of what we're trying to achieve here to us we want to we took a minimum viable Community MVC approach in building our Dows so that means minimum viable community members in the doubt and minimum viable amount of tools so that we could design and test and iterate these processes before moving anything on chain this has worked pretty well for us so far one example is like for governance we use Emoji react in Discord so we have a whole proposal and voting system with different avoiding weights but we aren't doing this on Snapshot we aren't doing this on another platform we're starting just in Discord to get our members used to the to the process of doing that first I think embedded in the decision to launch a token was one of being able to capture financing for for these organizations and so there's a very clear trade-off by doing these things off chain and maybe not allowing for that speculation to emerge really quickly and and the ability to capture resources and I think it was probably a moment in time where we were coming through I'm not sure if that era exists I mean I don't think it exists today in the same way uh though maybe a bunch of the pfps that I've minted will become a dow and that'll be exciting probably not we'll see maybe I don't know but I think embedded in in Beyond sort of the idea of sort of financing is this idea of ownership and distributing ownership like why launch is a dow with a token from day one is that you have distributed and provided access to folks who maybe wouldn't always have access to you know there's the whole trend of fair launches Etc um and so I think there's you know embedded in that idea is this idea of like do people really want ownership in these things or what should what does that look like I know Ray have you spend a lot of time thinking about this yeah absolutely I think that you know at FWB and I'm sure for all of our communities here we've always thought about the fact that some people do actually want to build the thing but some people just want to enjoy it from the sidelines they want to be a part of you know the club they want to be in the club not necessarily building the bylines the rules the programming all of that and as people who build communities you have to understand the full spectrum of people being uh to use a citizenship example tourists to citizens to you know local Council to you know the upper echelons of governance and not everyone's going to be at the top nor do you want everyone to be at the top because then you have issues where people may over invest their time and energy but like under invest on like let's say the output or something or The Wider directionality of the community I think um like a fungible token is such like a blunt instrument um that like for governance and for ownership if it's just that one thing it's not a very elegant representation for how communities actually work like yes but like the the idea that there are stakeholders that may not have the ability to be involved from day to day and so I think that's like I see that as a like a big missing piece as like thinking about how different stakeholders are classified within groups if it's just token holders then I see that being not a very elegant reflection and and so yeah I think I think like that's like a first step and I think it it means that more Dao should transition to representative governance more than this kind of like one token one vote model I actually want to add to that that's a really good point I I agree with that I think for us one hard lesson was you had people who were community members and held the token you had people who were not community members and just speculators right so as you know number go up number go down whatever we had to still manage expectations and that becomes a really big drain once you tokenize you have to really understand that people are looking at you from the outside and may not want to come inside even they're just like they're like this so number up and you're like yo you're not inside we can't help you right so just because there's a token doesn't mean it has to be financialized and I think we've like gotten ourselves in this trap where we think that this industry is about cryptocurrencies it's not it's about tokens that can be used for all kinds of things and I like I'll even go further out on a limb here I don't think Dow should have one token I think they should have a whole bunch of tokens so like a good example of this is hats protocol okay you can have these nfts that represent roles within your community and those can be used to you know represent this like tree of responsibilities and access within your community uh that are in a way a form of governance that is not just like a you know binary proposal token voting system zooming out a little bit I think one sort of theme that's arising here right is the role of tokens and governance in Adele and maybe also part of like the question here is like what's missing from that right now um I've spent a lot of time researching and thinking um about uh about governance um endowed specifically also in web 2 decentralized organizations and I think we're really at a very critical point in um sort of like Dao history where token and coin based uh voting governance mechanisms have become the norm and have become the default mental model um for basically everyone in crypto outside of the Dao people and I think there's an eminent danger here um I think there's a clear danger right of um of governance and ownership and decision making um being being restrained to the hands of a few with you know more financial privilege I also think there's a huge missed opportunity if we are to just continue defaulting to token-based government in the design space that is not captured so I think Austin you brought up a great point one that I've been or one that I've been thinking about a lot which is how can we create governance systems um that dynamically reflect the needs and wants and desires of an organization I'm going to take the other side of that not to say that Innovation and governance isn't important but I think like democracy token weighted voting is is you know the best of a bunch of really not quite great options and that you know really the the core issue embedded in here is that most Dows don't have a business model and so there isn't this sort of clear thing clear Focus that we're trying to to incentivize to optimize for and that as soon as all of a sudden there's like meaningful Revenue being generated on chain then all of a sudden governance becomes maybe not easier but but more effective I think and so yeah is there innovation in governance 100 I think we had somebody from optimism on before with their bicameral house fascinating stuff but right now I think token weight and governance works when you're thoughtful about distribution when there's something worth governing and I think that's gonna be good enough for the next little while at least it doesn't keep me up at night uh like uh Nathan Schneider wrote that um that essay of the limits of token governance and advocates for like human-centered politics like I totally agree that like we actually need more politics in these spaces that like using just uh the token which like abstracts like all of the messy um like emotional parts of governing something that people care about and just treating it with this like one specific uh like hard-coded tool um has has limits and I think like an extra layer of people is is like pretty necessary completely agree with that and like you just got into one of like just like my favorite topics to nerd out on because I think the I I strongly believe in the importance of a hybrid on and off chain governance model and what I mean by that is first to take a step back um there's a lot of uh there's a lot of soft power that happens in the governance process um group chats clicks popularity um you know we've seen this I think a lot happened in Dallas like maker now will one one influential person that I won't make a decision and then other people feel almost obliged to follow and so I think it's really important to recognize that and acknowledge that and from there recognize the importance of embedding off-chain governance processes in boys club one thing that we realized right after we started doing our now and launching our governance process was that we needed to have more conversations before voting right so rather than going from proposal to vote directly we needed to have a zoom call a phone call there need to be in-person synchronous follow-up and discussion um and I think that's really important there have been some great studies about this there's one really great uh peer-reviewed research paper that that Drew parallels between web 2 decentralized organizations like Occupy Wall Street and black lives matter and studied why did they disseminate and one thing that it found was that often when when contributors would make a proposal and that proposal was rejected and there was no follow-up the the contributor would ultimately leave they didn't feel hurt they didn't feel seen they didn't receive feedback and I think it's really important that we think about every step every human step in the design process of governance and proposals totally I mean there's stuff we can borrow from traditional governance right if you open a voter's guide for any local election federal election you name it there's pros and cons for anything that goes up and I feel that is so important we've kind of started experimenting with that in FWB saying this is the proposal that's going up here's the counter as you hit the snapshot page or the Discord soft though whatever it might be because without that level of uh Counterpoint it you won't have a durable proposal that will stand the test of however long it takes to take effect especially if their funds at play or if there's you know people's time and energy at play but aren't we supposed to be trying to push to more towards smart contracts and autonomous here and what I'm hearing here is the idea of like Reinventing local governments cities where where I don't know about how it is here in Denver but politics in Vancouver is like a mess right now and that doesn't seem like the most optimistic exciting thing for us to be building towards yeah so I I think we're like stuck in this uh sort of political dichotomy between like right and left in a lot of our traditional systems and one of the things that's really exciting about Dows and why we've spent two-thirds of this panel talking about governance is because it's just we get the first time in you know hundreds of years where we can just like try to take lots of shots on goal on new governance systems and run a lot of experiments and you're hearing totally different governance takes from all of us um we're all governance nerds that's probably why we're here and why we care about Dows I do want to acknowledge though that we're like you know at this point three quarters of the way through the panel and all we've talked about is governance which is like the most Dao ever um we're we're like sitting in this big conference space that is just entirely floating on VC money and there's like six Dows out there that sort of kind of work and like true that have actual Revenue models so uh we kind of ignored Jess's prompt a minute ago about about like business models and just kept talking about governance and I'd love to keep doing that all day but maybe we could spend a couple minutes on how we actually make money yeah um so I feel like I I thought about this a lot um I am a VC um that's what I do outside of boys club early stage in crypto liquid and Equity uh fintech collectors D5 fund um so I talked to a lot of startups and at an early stage we're not I was actually just talking to Austin at this we're not so much looking at financials right a lot of the companies we're looking at are pre-revenue pre-product Market fit and I've been drawing a lot of parallels between um really thinking about the road map for boys club right like what is Boys Club when it grows up how do we make this system work and the sort of analysis that I do when I'm looking at startups right so I think um you know there's a lot of similarities I think um just like a startup a dow needs a common unifying goal and Mission just like a startup a dow needs a North star it needs a vision and needs a road map it needs different teams working on different things and it needs intrinsically and intrinsically motivated team right with skin in the game like we just talked about like maybe um parts of the pure token approach to governance which may have drawbacks and then now also seeing the pure Vibes approach to like what the purpose is and then seeing well that's not sufficient like uh I wonder what the like Google tracker for the word Vibes would say like how it corresponds with each prizes but I tweet Vibes on a daily basis so I'm trying to keep that high I think we had this era where we could turn Vibes into money and that was phenomenal it's not where we're at right now I think North Star Etc yeah really great business model you said there's two two to houses you think have business models right now and put you on the spot what are what are those well the problem is uh the only dowels that actually make money are the D5 ones um and like the social ones which is largely I think what we represent haven't figured that out at all um I I think the most compelling you know option out there is probably subscriptions and like membership and and this is how like most social organizations you know have always worked is like you're a member of a thing and you pay dues or you you know get together IRL and like pay for you know getting together at events and you you actually like generate Revenue that pays for the organization and it doesn't take a ton of Revenue to support a small team to like keep a community operating I know actually really against that cool um tell me about it yeah like I don't think that we that membership should be like constituted of financial means I think membership for a sustainable doubt should be constituted of members who are value aligned intrinsically motivated and have an idea of what they might want to build or create or what they might want to change within the Dow that they're joining and I think ultimately um for a doubt that is going to generate Revenue in the future that set of members is going to be like the core nucleus and mitochondria powering that right and we talked about earlier different levels of ownership I completely agree with that I think you know there should be varying levels of commitment and ownership across the down I totally agree to their point that you don't want every single member of it now like being a complete owner or having complete ownership but I think if you're if your means of access into an organization is financial privilege you're going to end up with a situation where your members are not unified by the values and motivations and desires and excitement right that that is going to ultimately sustain that out in the future yeah I totally agree with that by the way I think like membership should not be something anyone can buy and it should also be something that like is not easily you know liquid or tradable on exchanges I think there's a copy out there not anyone can buy but something that not everyone can buy I think is the the thing Austin and I always talk about the fact that like if you go to a punk rock Co-op venue you can sweep the floors and get into a show right like you can show up and do the work just as like you know a lot of web 3 folks like hey I'm good at doing analytics I made a dashboard for you guys would you get me in absolutely right and we're giving people these kind of effort-based non-financialized entry points into a dowel and oftentimes those folks who are the most excited to do the work off the bat are the ones who get in I'm not saying I'm fully in favor of like apprenticeships in Dallas but that is always kind of a possibility and you're always surprised at who is maybe too too Meek to speak in a Discord or a public forum but not so Meek to be like sliding in your DMs with like hey I did this for you and I think that's so important and those folks are the people that are kind of your lifeblood as well I mean something you'd see in like a on a flyer for a show is not fluff no one turned away for lack of funds like these are like existing vibrant communities and that is like an existing value that reinforces a positive community that like can still generate funds for artists Creator maybe there's like a further distinction between like Which models lend themselves to cultural uh applications more than social like uh other kinds of Dow applications but yeah I think like ways to become a member owner any kind of Distinction Beyond buying in is important if buying in is the only thing then I I think there's a feedback loop of like you you bring in people with um a specific like specific kind of people it's filtered for that creates a culture that invites more of those people and then people look around and then wonder why anyone's here yeah to that you know you have a good example with the nouns right where it's just like they are basically accumulating funds without kind of uh an exit path or a way for people to actively contribute before the proposal process and I think we see very actively that there's kind of a calcification of thought or a calcification of ability which most owls I think all of us on stage agree like we want to avoid kind of stagnation and so how do you keep a token based whether financialized or not as like a social lubricant if you will for people to keep moving forward towards a shared goal give you the last word right because I think ultimately with the Dow right you're building a team and you don't want you don't want to build a team just because the team has enough money to be in the team right you want to build a team with experience and different experiences and different opinions and diversity of thought um and yeah that's pretty much it I love that this is the panel where we talked about nouns and I didn't say anything about nouns so stuff I'd like you to recognize that appreciate it we're coming up in our time here folks really appreciate you hanging out with us today I know the panelists here would be happy to chat with you afterwards if you have questions or you want to jump in oh I'm supposed to say that I'm from C Club because I didn't say that before Steph's in charge of our brand so she would kill me otherwise so C club.xyz come hang out these are some wonderful members of our community thank you all for joining us today thank you thank you thanks y'all [Music]