DAO Misadventures and how to make them better! Sam Harrison; Eric Arsenault Rarible; John Lee SZNS

hello everyone i'm so excited to be on this stage do you guys know that like two nights ago dead mouse was on this stage it was awesome i still can't hear myself um so i'm sam harrison from harmony um i'll be moderating and participating in the panel i'm very excited to see you go all here uh what i want to do actually really quickly do you guys mind introducing yourself and tell you and tell our audience why do you care about dows uh hey i'm john i'm one of the co-founders of seasons uh we're a platform for people to deploy nft dials and collectively own nfts currently on ethereum i care about dals because i think it is one of the ways that people are empowered to actually contribute to organizations in a codified approach with tokens that create unique incentive structures happy to be here and talk about seasons and why government sucks hey everyone my name is eric i've been a long time contributor to the dow space started late 2018 2019 when there was just one dow around and you literally knew everybody in the dow space and um currently helping wearable dao uh decentralize their efforts um and yeah i like daos because you know we need better coordination mechanisms to to make this planet a better place and a more human place so that actually brings up my first question as far as um well let me actually introduce myself with harmony head of ecosystem growth and my job is to kind of run our dao program so i'm very interested in daos i'm very interested in capturing what productive capability the dao has but let me ask this question to our distinguished panel we mentioned coordination can daos actually coordinate do you have an example of both a doubt actually working but more importantly since we're in the misadventures endows one that went wrong um one of the first questions i always ask people when they're talking about thousands like can you define now because like there there's actually so many kinds of dows and we we tend to lump them into one category like oh it's dao but actually like there's a ton of different varieties and structures and and they do need different names so that we know what we're talking about um and so yeah it's it's like a adele like uniswap right i mean they mainly do grants it's working pretty well you know token-based voting they do grants they issue money you know even uniswap had a failure in a way where i think it was something like 20 million dollars went to a team to do some sort of education program and then the team disappeared and you know like that happens um it's very different from a dow that is trying to build a product or trying to build a community and those we call them the same thing but they're like worlds apart in terms of what they do and their goals and like you know all that stuff so um yeah i'd say some dows are working but yeah i mean that's an example of like a pretty bad failure but it's pretty simple just losing money it's only 20 million i mean come on that's like what one i get for quorums it almost happened right it didn't actually happen like the funds got last minute got voted and shut down i think yeah maybe yeah but the threat model exists like and uh i think one of there's always trade-offs like when you want to enable people to actually have meaningful participation naturally you're going to operate slowly and like ultimately what i guess one of the points i wanted to come and make today is i think a lot of crypto people who get really excited about dallas are just like rediscovering corporate governance like when companies were founded and people were thinking about how to make good companies and make organizations run like we've been figuring that out for hundreds of years like maybe if not more right thousands of years but what's now unique is that you can reward people with tokens you can incentivize them and also you can codify how people participate so you can set rules on what it means for one person to actually have one token per vote and if you are going to go and take a plutocratic model then you as a dao can actually say okay mate what is a good measure of what it means to have a majority pass is it 75 85 and let's say you even determine 85 is a sufficient quorum is that good enough like there's already problems about like majority voting uh that we've already experienced in traditional political structures and dials are nothing new but the opportunity that we have is for us to create the best tooling possible at least for seasons what we'd like to take is an opinionated approach on a few set of governance frameworks that i think would be that we think would be most applicable to dials that are collecting nfts and uh i think you know wearable wants to go into the house and there's uh i mean it's [ __ ] hard work but i think the opportunity for us is you know quite open yeah it's pretty big so we have an example of a vote for 20 million dollars that could have possibly gone sideways and we have an example of voting that we don't know if that actually reflects what we are trying to accomplish with a dow one of the things you mentioned which i thought was interesting was that these decentralized autonomous organizations tend to move a little bit slowly can dowse support the pace of crypto um yeah it's interesting i mean like we we think they kind of go slowly but but in a way some of them actually move much faster than centralized organizations like like um within wearable dao we have a grants program and in full transparency we're still centralized so we call it a dao where we're not actually a dow it's very common in companies that are trying to decentralize so currently the granting process gets funneled and it's a very centralized point where like decision has to be made by a small group of people and it's slow like people tend to kick things down the road oh i'm gonna review that next week and proposals just keep moving on and we have a backlog right but dows that are actually decentralized and they have something on chain it moves fast i mean you submit the proposal it's up for vote it has an end period and the decision has to be made so i think there are a lot of benefits and and you know people think dows are slow because there's like this voting period and stuff but it actually forces action um and it ensures that things keep moving and i actually am pretty bullish about you know unchained dials because of the speed that they can operate if they're structured properly anything to add yeah i i think like there is in one sense i think you can kind of argue about let's say you have an organization and the leaders kind of make the most important decisions which is kind of like what happens today with a lot of orgs where uh the company or uh the leaders have like r on uh whatever three of or some three or five multisig or something like that right um but some uh you also have like big protocols like compound that actually have and operate on a real uh like protocol based governance they use governance bravo and uh they have uh in order to actually uh make upgrades to the contract it needs to go through a formal kind of governance process that they've set and last time when they got hacked it took them a week to upgrade the the protocol right because it needed to go through a formal proposal so but i think to eric's point yeah because dials aren't necessarily tied to like some of the i would say uh operational bs that maybe traditional companies have to deal with uh we can operate very quickly yeah one of the aspects that is more challenging is consensus building in the community so you know that takes a lot of hard work and and um in a centralized organization like you have the people at the top setting the vision and people tend to just follow it right um and within a dao that's community-based it's a lot more of um you know people trying to rally people towards their visions right and you might have three four five different people with slightly different visions and you know it's more about like lobbying and that does take a lot of energy and a lot of time and it's pretty exhausting to be honest but you know that that is a community-based vision building which is definitely slower than a centralized organization where you can just move and and everybody listens to you and you go in that direction so since we are talking about misadventures in daos some of the things that i've seen in harmony dowsen and many other dows and this is actually true from everything from like a group project in school to very very sophisticated you know work teams at the office that sometimes there are people who just want to ride on your coattails what have you seen in daos where people are just trying to leech off of the productivity of other people and how do we combat that how do we cut the dead wood to make it sleeker slimmer more effective um i guess yeah uh i think it's okay uh like um all we uh okay um like take traditional stocks like you have people investing in projects because they believe in it and they're in here for like the financial upside right they don't necessarily participate as a shareholder into the meetings and that's kind of the structure that we built in the traditional world and uh we and i don't think you know yes you can say that's bad and then we want to change that with dao's and we have the opportunity to right so a dao can create kind of their own rules for participation that kind of uh removes those like uh free free loaders right the free riders but um personally i would say you know that's kind of like a and natural aspect of having like a free market right you can people can decide to participate and just get along for the ride but if adele wants to create those like rules for the other people's and remove free riders we now have the ability to do so and that's kind of what's exciting about dallas it's always about what kind of tooling can we build what kind of infrastructure do you build for dials to operate on that is different from traditional companies um yeah the way we've done it within wearable dao was a pretty structured reporting and accountability process so teams and people would um request funding to operate pretty independently but then everybody regardless of you know if you're a person asking for funding or team or project would be on this reporting cycle and um you know if if they don't report and they're not held accountable then they don't get more money um so there's definitely um you know the opportunity of like free riders trying to get some money but it won't last very long because uh you know if if you bake in strong accountability tools then it ensures that people who are adding value are going to keep getting paid so this is interesting people who are adding value will continue to get paid one of the things that i've experienced in in the various different dows is a problem of burnout where you get a couple of people who are very very enthusiastic about the mission of the dao they work they work they work they build they build they build but then they feel like they're the only ones in the room and so they're just like fine throwing up their hands i rage quit i'm out how systemic is this problem of burnout and how do we combat it i mean yeah dows are very noisy you know trying to like herd cats towards your specific vision is exhausting uh you know i'd i'd much rather be a dictator and just be like yo we're going this direction and people just like agree um they agree or they get headed that's how that works yeah yeah so 100 it's real i think i think people get um pretty exhausted working in the dow space especially i see people working for like three four thousand i i have no idea because i work for like mainly one right and it it takes all my energy um doubt building downs are very hard so yeah i think i think it's a tough problem um i think there are like groups specific springing up specifically focused on how to create a culture around you know mental health and like doing this sustainably because i think it's going to be it's a rampant problem people get super passionate about these things and they just like charge and then they burn out and get tired and then yeah yeah and you burn through what do you think um i'm burnt out i'm just kidding my investors i'm kidding um let's see uh i think there's also kind of one aspect where uh like the burnout is real but um uh for like projects like sushi for example they need to uh continue to make sure to find new talent and at some point they're just going to uh have to deal with like uh the problem of let's say all of the token incentives are gone right then if the people have been burnt out and left how do you find sufficiently incentivized people who can fill the shoes of like such like crazy dubs that made sushi what it is today right and i think that's kind of going to be a pretty big challenge for the owls um yeah no i think you're 100 correct because there's another issue about dao is that we paper over because we're in crypto so regulation doesn't apply to us right there is a default in many states not necessarily all states that if you are engaged in a common purpose with other people you are part of a general partnership and so if that common purpose that organization is sued they can actually sue and get access to and grab your personal property why would we want to do that well that sounds [ __ ] up actually like a lot of dow surprising number of dials have legal structures kind of behind the scenes some of them you don't even know about it's not even public um but the whole general partnership thing actually i feel like my my thinking around this has changed over the last like month even and part of me is just like you know what let's just wait and see until that happens because it hasn't happened yet the whole general partnership oh you can sue anyone for i'm willing to take the risk personally i'm like you know i just want to build a cool dow a world changing now that's good for humanity and you know yeah so that's that's one of the risks is like yeah we brush up against law we're a general partnership but i i'm personally um interested in seeing if we can test those boundaries no i think that's a good point um and then the follow-up point we've talked a lot about fractionalizing nfts we've talked a lot about sushi swapping incentives we've talked about wearable there a lot of the dows that are that actually work are dows that to become involved you have to buy yourself in for lack of a better term you have to put skin in the game but if we consider the promise of daos this idea that anybody can join one this idea that that you can find your passion in a dao and contribute to it how does that work if you have to buy your way in well uh if we take the premise that dials are just another type of organizations that use token-based you know structures then i don't think passion alone entitles you to a position in the dao like if i'm a like you know we want to hire the best qualified people right just because you're a passionate person doesn't mean you get to join the company and i think it's okay for dallas to be like that and again it's just about what does this individual dial enable for its participants one dow can say it's open for everybody right so if i may do a shameless plug just yesterday we launched something called the trash dao on our platform where if you go to trashstyle.xyz if you have shitty nfts you can deposit it into the trash album and you get 69 trash tokens and that's the only way you get the trash token why not 420 trash tokens so the first genesis piece was the 420 but after that but then uh i guess it's kind of like an experiment for us because a lot of projects come out and they're like hey we're a dow but here's uh 20 to the team 50 to the ecosystem right and then it's kind of just like very top-down heavy um we wanted to kind of create an experiment for people to maybe just start engaging by joining trashdale and using our governance framework to uh start participating as a dao and like i guess you know very uh transparently our governance framework that we provide for the dows has like quite a bit of limitations that we're working on but you know right now we support a simple token holder voting um uh where we we're a wrapper around like a gnosis safe and the safe module and reality.ef so that people can create proposals on snapshot gets voted on and it has execution on chain uh and we think that's kind of like a very uh proper way to launch a dao rather than going on a very trusted model um and to be transparent uh right now our trash dial can only accept uh five contracts uh from like the biggest marketplaces uh like wearable and stuff like that but uh soon hopefully we're going to support like 5 000 plus contracts on openc we ran into an issue uh and then yeah gas fees uh no uh so we pulled a list of contracts from openc uh and like a lot of the contracts they say they're 721 compliant but it actually doesn't follow the spec so it messed up with our back end um openc your apis are great uh yeah we would love to be able to pull more yeah we can so we're trying to talk about the misadventures talking about dows that have failed what is your number one cautionary tale about a dow that has failed for reference as you think about it the early.com bubble and burst you had pets.com you had what was the other one web tv or something like massive investments into these projects billions of dollars of valuation nothing what's your example of a cautionary tale that says hey maybe we need to be very careful when we think about doing a dow uh i would say avoid doubts that aren't dao's i mean probably i don't know what the percentages are but vast majority of dallas today are not dao's um and um yeah if you're if you want to be part of the movement be part of a real dow but that's really hard you know like i i i really empathize with new people coming into this space because there's very little information and it's hard to differentiate like what's a dow that they can actually trust um that's one area i was thinking would be really nice to have regulation around to like actually like yes you're certified now even if a dao was to certify you know we need some sort of mechanism to basically different help people differentiate you know what's a dao when what's not a dao like a tinder app or something you just swipe a blue check yeah blue check uh who got rugged by anubis thou ooh anubis dow anybody okay yeah so that dao got a lot of hype and then one person controlled the uh the address to the dao so he you know rugged them and ran away with the money so you know i think maybe that's to eric's point maybe that's not a dow all right but people kept calling it a down right so i think it's uh we need to start generating some educated consensus about what makes a dao yeah no i think that's a really good point all right so we just have a few minutes left so i do want to allow our audience to ask a question or two so think about your questions and i'll pick a random hand but as the audience is thinking about their questions what if you could give advice for anybody who's joining a dow to avoid the misadventures what would be your number one key piece of advice that's a tough one and if you say don't that's not an answer um get familiar with the dow tools um you know molok daos and you know aragon daos and snap safe and whatever it is there's a handful of tools get familiar with those and try to understand um for the particular community you're working on like how's it structured look at the docs you know the any good dow should have well documented information on how it's structured like who has voting power you know i i'm personally um not a huge fan of taos that just use pure token based voting so you know like that's one thing to consider like if it's just a plutocracy like do you actually want to spend all your energy working for a plutocracy where like the rich people and everyone who has a bunch of money make the rules like i i don't i want to work for a community that represents me and the builders and people adding value and so you know get to understand the doubt like how it actually works and think critically about do you want to spend energy working for the people so it sounds like you're saying do your own research all right definitely very good crypto advice i would uh highly recommend depositing a trash nft into the trash dial uh we right now only have 15 nfts deposited so currently i'm ngmi uh please uh the the the shield floor is a couple houses down oh i'm sorry okay no more yeah all right so we have time for uh one or two questions from the audience do we have any questions from the audience all right here we go so the question is there are daos that are not daos explain yeah so i would say uh who controls the treasury um like dows typically have a pot of cash or tokens or something like that um so really the difference is like who how does treasure funds move out of there so if it's based on a voting process and its own chain then i would consider that a dow if it's uh you know snapshot snapshot is not on chain and then you know a few people into multisig send out the funds then i would be concerned about that that's the main difference so i would challenge that i would say let's say you can imagine a dow that has the traditional vote on uh snapshot and then have like engine execution let's say it's you know for this purpose just you know completely decentralized right let's say the dial votes uh 75 majority vote to say we appoint one person to be our [ __ ] dictator uh i think there would still be a dow they just chose to have a different governance model right i would not trust that though yeah but in terms of defining what a dao is though right um so i think it's but actually no but again it's just kind of like an argument right one person can then come to me and say well the idea of a dao is that it's a decentralized autonomous organization when you when you appoint a complete leader do you maybe you no longer become a dao right but again i think it's just uh something that we as a community need to have a educated kind of consensus around and right now i don't think we have that it's too new for me the things that are not a dow i look at three main pillars that seem to be consistent across all the various different types of daos and that's the dao has a shared interest they have shared assets and they have shared responsibility and one area that that we don't think about often is the fact that information is an asset and so if you have people inside your dow that have information that the rest of the doubt does not and they're asking for people to vote and they have this asymmetric informational load i think that's problematic yeah definitely yeah that was a good question thank you another question over there in the blue shirt so the question is in the consideration of anonymity how would you consider reputation to be important in daos i'd love to see like better tooling and infrastructure for like building like decentralized social identity that you start building reputations so that even anons then will start to care about kind of the reputation they've earned um and yeah yeah great question um i would second that i think i think there's a lot of like there's a long way to go to get there but i think that's the ultimate right um just have a doubt where you don't need to dox yourself you can have a non-obl pseudonymous and and you know have reputation baked in so as you contribute you gain voting power and uh you know that's definitely like in opposition to the token-based voting which which is just based on token weights plutocracy yeah it's actually an excellent question and i think we've had a conversation about this or two i think so yeah it's like it's almost like you fed me this question so this is devin he's a good friend of mine we do work together and it's one of the things that i'm working to build in harmony is this idea of reputation what i want to do is take something like coordinate that allows us to give peer-based bonuses or recognition for their work but instead of a token that has maybe some monetary value what we have is a token that is non-transferable and so it stays in your web 3 wallet so if you're in a developer dow and you make 5 000 developer tokens you can go anywhere with that web 3 wallet carrying with you that reputation of the work that you did before and then you can build in voting mechanisms where maybe it's not a one-to-one maybe there's some sort of quadratic voting but the idea is the decisions that that dao is making are actually going to start being based more and more on the expertise of the members of the dao so thank you devon that was an excellent question all right do you have time for one more i think so no all right we're gonna wrap it up you guys oh wait do we have i think we have to wrap it up yes we have to wrap it up so feel free to grab the panel later ask them for their autographs because they're very very smart ask them for their seed phrases because they're not that smart um thank you guys all for paying attention and have fun in your misadventures endows [Applause]