Building Onchain Organizations | Spencer Cavanaugh - Clinamenic LLC

welcome back eth Denver as a reminded this is try and stage and we've got a lot of great a couple great talks left today um right now I got a really great talk coming from Spencer Kavanaugh who's going to be chatting about how we can build on train organizations and so let's give a little round of applause for Spencer and let him take from here all right hi everyone testing okay U yeah I'm Spencer kavana also known as Clinic here I'm going to be talking about on train organizations so over the course of this presentation I want to give a brief explanation of what onchain organizations can be understood as how they differ from Dows and and draw from the Dow movement some examples of smart contracts that can be used to build onchain organizations how they can be combined and then ending with one example of a full-on org chart for an onchain organization here we go so I think a simple way of asking of answering what an onchain organization is is any organization that uses smart contracts or has some other kind of onchain presence I think it's parallel sort of term is a virtual organization which has a couple different kind of confusing meanings but it basically just means any organization that uses digital communication technology to work together so it's not so much an entity type term it's kind of a qualitative descriptor or some term that describes how an organization Works um it's also sort of like an evolution of an online organization uh just on chain and you can sort of think of this as a post Dow framework if that's helpful at all and that it's not so um not so much about decentralization as it is about the other redeeming values of smart contracts and operating on chain so how is it different from Dows if you think of dows as onchain organizations that use this technology to enable decentralization in novel ways or enable Collective agency in Noel ways then onchain organizations are sort of just a generalization from that and that they're not as much built around decentralization but can be built around some other redeeming values of smart contracts um because the technology itself isn't like particular to decentralized Applications although a lot of it was built with that intention there are also plenty of smart contracts that you can use in a traditionally centralized way you can have a a safe multisig that that just functions as a board of directors if that works for your organization or you can tie it into a lot more uh decentralized framework if you want to have a more decentralized approach but the idea is that this this term onchain organization and a few other terms that have been used like internet native company um aren't can use this technology but aren't as dedicated necessarily to decentralization as Dows are so this may ring true for some of you um hopefully it's not too pessimistic but it does encapsulate a lot of my experiences and it does make me think of when decentralization is an imperative or when it's an ideal uh sometimes it it involves a lot of friction and added difficulty and bureaucratic complexity because we think it's worth it to embody those ideals um but sometimes we just learn that decentralization isn't necessary for a given activity or a given operation or maybe an organization doesn't need to be totally decentralized to incorporate those values of democracy or equitability um and so the idea is that if you can be a bit more selective about where you use centralized and decentralized components you can still have accountability and hopefully less dudes arguing online and so here are some examples of what I think of as the other redeeming values of smart contracts um for nonprofits the transparency can be important or sometimes required legally um or again if it's an ideal of an organization you're with you may just want to embody the value of transparency um interoperability is another one that's a bit more of a network effect promise if you can if you want to Envision a future wherein a lot of Institutions and organizations operate on chain then it may be in your organization interest to be interoperable with whatever that technological status quo is um whatever that may look like for your industry but that one's still a bit like prospective like right now we we aren't at a status quo where it's the norm for organizations to have an onchain presence so the interoperability like value prop I don't think has quite materialized yet but it could be but I think one of the big ones that as at least as far as I can discern right now is currently valuable is autonomy largely from um siloed or proprietary software platforms that certain organizations may use now for posting content or facilitating payroll or whatever other kind of storage or operations where if you are operationally dependent on some other proprietary company or platform you're sort of also depending on that company to stay in business and if they go out of business that part of your stack or your infrastructure goes out of business to too and kind of takes out a chunk of the Integrity of your organization so the idea with smart contracts at least as I understand them is that you can interact with this stuff through interfaces that are maintained by companies but a lot of the underlying infrastructure is a bit more um capture resistant is the the term that the folks at hats protocol would use and that it's difficult for this stuff to or at least it can be more difficult for this stuff to be captured or to be deprecated in ways that I gather is much more frequent in the existing uh status quo virtual organizations so I think these are some redeeming values of smart contracts Beyond any kind of decentralization they may enable and here are some examples of smart contracts in particular I just mentioned hats for role management um Dow house is a platform for interacting with small M contracts so you can build a membership body on chain and enable that kind of collective agency uh grants stack is for if you want to run a a centralized or decentralized grants program whether that's quadratic funding or direct funding you can do that on chain now and safe just joint accounts they can also function as committees um very easy to start plugging these things together and that's what I uh hope to convey in the next couple slides as well um yeah we we're all kind of familiar with the Lego block kind of organizational building block things so that's what I'm hoping to convey with a few of these diagrams like this now I've got a QR code at the end of this if anyone's interested in checking out the slideshow and seeing some of these details that are probably too small to read right here uh and I've also got a link to this article that explains some of this but this is one example of tying together hats protocol a moic framework and safe to essentially allow a a group of people to Red delegate someone who's on their board of directors or some other kind of Representative committee using a few steps granted it's still pretty complicated but the fact that something like this is like feasible is uh is still pretty amazing to me and I think a lot of work is being done to make using this technology a lot easier uh and to make the prospects of actually letting more people than just nerds and developers interact with this stuff a bit more likely I find that uh very reassuring and again I've got this this article explaining this particular uh Dynamic right here and this this article right here again for anyone who wants to look at it is intended to try to bring the reader from zero to understanding onchain organization design again Beyond just Dows in in particular and this is another really big one that again details are far far too small to see but the idea is you can start composing these things to build fullon organizational charts and kind of or black prints or or architectures combining all these things so you can have uh is my cursor up there yeah you can have a committee essentially or a community of token holders in this case represented by a m contract effectively operating as a large board of directors functionally again from a legal capacity you may want to uh you know look at particular circumstances this may not be advisable for what you're trying to do but from a technical perspective this is possible you can have an arbitrary number of members in a Mala contract essentially overseeing who is on their executive committee or something like a SE Suite using safe every one of these committees these little big orange dots is a safe contract and all of the signers for those contracts are wearing hats uh that are bound to those safes in what the hats team calls a signer gate multisig where instead of having individual users or accounts be signers on a multisig in a more fixed way they're dynamically bound to hats and thus whoever is wearing those designated hats has sinor access to a multisig and that's what can when you contextualize that within this whole kind of onchain hierarchy you can have a lot more accountability than just um what was the status quo for a lot of early Dows which is just bunch of people voting on a mult M Sig I mean a bunch of people voting voting on a snapshot and then a multisig of three to five people choosing whether or not to go with the verdict um so this kind of ties it all together and lets you have hierarchy and certain degrees of decentralization in a way where it's still there's still accountability a community of people can still track what's going on and can still um exert some kind of agency but me whether it's just switching the Hat of someone that has proven to be a bad actor and has violated some kind of internal uh policy or or code of conduct they can switch the hat to someone else that went through some other kind of designated election process or they can add someone else or they can switch the you know they can switch it so that there is a more centralized board of directors away from the Dow as well um and this top three right here is one example of uh I've got enough time one example of this risk of cod is law uh or Cod law uh where if you depend on this stuff for an organization to run and run in a compliant fashion you may run into certain edge cases where there isn't any human who's able to step in in a some sort of state of emergency or failure case and then that may have nasty implications in terms of people's liability and so one one potential way to address this and this hasn't been implemented to my knowledge but I'm sure there's analoges in traditional organization design is these three top ones right here or what I'm calling the fail safe committee is you can have a a DA essentially or other whatever you want to call a wide body of token holders or members of a m contract this may work with Governor contracts as well but I haven't tried that you can have this community or this Dow essentially be um the board of directors or the the main supervisors of an organization and they manage this SE Suite down here and the SE Suite is the one that's operationally in charge they handle a lot of the budget but they're still accountable to this to this Dow essentially up here and this a lot of this is kind of needs to be glued together by operating agreements and other kind of internal policies they get more into social consensus and legal but that plus this kind of infrastructure I think can reconcile a lot of the tradeoffs between operational efficiency and accountability and prevention of corruption and accessibility and democracy and a lot of the stuff that I think has been driving the down movement so the idea is that the Dow of the community of token holders or members uh can oversee this sea suite and essentially being in control of the SE Suite but if something is compromised technologically or if there's some other kind of Edge case or takeover a whale attack or something that people de facto realize as a failure case then there can be Provisions in some operating agreement that designates this fail safe committee to override the Dow or switch it to an updated Dow contract but this signate committee which could be the same people in the executive or it could be some other kind of auxiliary board that doesn't do anything unless a state of emergency is entered into um that could be one way of preserving that kind of emergency human agency in some kind of technological failure case but just confined to well- defined failure cases within some operating agreement or some other internal policy um so that's that's just one example of how you can use all these building blocks to build a whole onchain architecture for an organization and start trying to address some of these operational difficulties with trying to enable decentralization to be a bit more effective and to enable more accountability but not at the cost of hindering like the operational efficiency or the dexterity or the ability to execute of an organization um but again this is theoretical I I haven't seen this implemented maybe again there's something analogous in a DA or or in some traditional organization um but yeah that's the the presentation I'm glad we did manage to get through it and hopefully there's time for questions yeah yeah time for oh good cool thank you