Bridging Gaps in DAO Interactions and Building Blocks - Kevin Nielsen

whoo all right i know what you're gonna think another talk about daos it's been the theme but obviously i mean they're the underlying structure i think that enables a lot of the crypto use cases and web3 things that we want to see happen so it's really important i think that we you know really start to experiment but also talk about you know the best systems uh that are available for us to actually make these things happen so my talk specifically is about a topic that's a little bit under discussed and actually something that we're just now kind of like really seeing starting to spin up it's meta governance so you know essentially the concept of entities or communities voting on external governance processes to theirs which is really interesting because it kind of like shifts the governance paradigm on its head a little bit and we'll dive into it um but the this presentation specifically talks about how that framework can actually usher in true stakeholder stakeholder capitalism and it's something that you know traditional corporations have talked about for ages how can we properly represent the wants and needs of our stakeholders set of our community not just their shareholders but we've seen very very little action so we'll dive into that um at the end of the day i think the dows through meta governance can make other dows accountable to their purpose so um so shareholder governance you know has always put the shareholder in the center of the of the equation obviously it's pretty simple you know make as much money or die pretty easy but it's very short-sighted right when it comes to representing the wants and needs of the broader set of community members stakeholders we've everyone's heard about this larry fink puts out a annual shareholder shareholder letter about this that you know talks about how they want to push a prep of like good governance in the uh you know companies that they have influence in um and they want to push for climate change and representative kind of like stakeholders um at the end of the day though we've seen very very little action here right so it's really given way to a lack of coordination and transparency when it comes to truly representing stakeholders uh the broader subset of stakeholders so now we've reached daos right so dows are completely reinventing coordination completely reinventing how we think about allocating talent and capital um and as more and more activity shifts into the digital realm and we've seen that you know be incredibly accelerated by things like covet et cetera it becomes really important that we develop these frameworks in order to essentially actually be able to communicate and coordinate um in the web space the internet age whatever you want to call it as you guys can see from this graph the 2020 chart is one i put up i think when it must have been made 2020 and that was like what i saw as the dow landscape back then obviously that's exploded in the last year um and i don't even want to think about what it's going to look like in six months probably won't fit in the slide um but at the end of the day dowels are just frameworks right they're just frameworks to make decisions to essentially establish rules that are enforced on chains sometimes off-chain but create a governance mechanism for us to be able to communicate and coordinate with each other the thing that doubts aren't though they're not mechanisms to actually scale products scale community build very specific things so predictable issues have popped up right when it comes to scaling these communities scaling these different products um essentially there's too many operational decisions for governors or stakeholders to actually be involved in all of them the volume's too high there's a lack of specialization as well there's a lot of folks that may not be knowledgeable right there if you have 10 000 different holders with governance power over a network it's very unlikely that everyone knows everything about how to run or operate that dow and there's just general apathy right in general token holders stakeholders governors they don't care i mean how many people actually care about governance day in day out you really only care when you really have to care right so anyway we've seen all this happen and over the last six months to a year we've seen the doubts have really started to outsource uh responsibility and governance power both internally but most importantly externally as well so internally we saw the rise of what we call governance 2.0 with some dials like urine and index et cetera developing internal working groups so these are akin to departments right skeuomorphic ideas that we're transferring over um from the corporate world and saying hey why don't we actually structure ourselves with departments that specialize and allocate delegate responsibility to them this can be marketing bd product etc depending on what the dow does um but really interestingly though we've seen this um you know the rise of external outsourcing of responsibility um and this comes you know with these new types of entities that some people are calling subdials service providers whatever you want to call them um but they're essentially spinning up to service the dows and help them scale you know in a variety of different ways and we'll dive into some of those as well as we're also seeing some non-profit foundations different initiatives etc also spin up to try to push different mandates or enable kind of like community members to you know climb the ladder a number of different things she 256 for example is a great example that they're really involved in the governance of a lot of dows as well so um this is unlocking some of their tragedies et cetera but at the end of the day what's important to remember is that um we're seeing kind of like a breakdown in the traditional theory of the firm right the entire reason why the firm exists is to reduce external transaction costs and you have this firm boundary right so you can actually have the flexibility internally within that corporate structure to be able to communicate and you know coordinate talent and capital now we're seeing that break down a little bit because dows are transparent they're open they remove that boundary a little bit so that external cost is greatly reduced as well when transacting dow to dao or business to dow which is really interesting because we're seeing an evolution from just like a traditional um you know corporate structure to a hub and spoke model which was governance 2.0 that we talked about with those departments to just a networked model where you get all of these transactions and dows interacting with each other in a very very flat structure which is super interesting so and most importantly though all of these service providers all these dows et cetera are these sub dials they're actually aggregating governance power now which is really exciting so over the last six months we've seen that um i'm using two examples here of amazing dows that are that are essentially leading the pack in the meta governance realm um rabbit hole for example offers um an onboarding service a marketing service and customer acquisition service for dows to be able to onboard new participants through very simple tasks they actually charge the dow treasuries through governance and you know they may charge them 100k and they take the 20 fee of that and that goes into the rabbit hole treasury that treasury is now holding native governance tokens of that dow they've interacted with so suddenly rabbit hole is now a governor a stakeholder a community member of whatever dow they just serviced similarly index develops indexed products as well that hold a ton of underlying governance tokens and these underlying governance tokens obviously have power the index meta governance token actually enables anyone in that community to vote on external governance systems so index members can actually vote on how to vote on a uniswap proposal so suddenly you start get to get these uh this interesting diversity in like perspectives and interests all interacting in a governance system now it's just it's not only just internal stakeholders or shareholders etc trying to push governance forward now you also have the service providers non-profit foundations all these different types of entities actually pushing their goals and their own mandate in that individual dow so i actually expect to see that every single dow is going to have a meta-governance pod essentially an arm that just focuses on external governance and the majority of stakeholders of dows or governors of daos that are actually holding power won't necessarily be individuals but just entities you know that actually have their own mandate their own community their their own governance process as well um so you know all these providers customers etc they become community members and then they in turn want to uphold the interest of their own constituents in these external communities too which gets really interesting another benefit of this as well is that creates a very very modular breed breeding ground for governance experimentation right now you have two separate governance systems actually talking to each other interacting with each other as an example the index dow votes on snapshot and then they execute that vote on whatever governance framework that underlying token uses that could be compound governor bravo smart contracts that could be an aragon now it could be a number of different things which means that we're separating the process into two kind of like modular steps and it creates an interesting experimentation layer but also a very interesting defense line against like unchecked power necessarily because now you're separating that entire process into two modular steps um another very important thing that it creates is much better accountability in stark contrast to like traditional corporate structures where you have a very small number of controlling proxies with the same interests make as much money as possible even though they you know they don't talk about too much out in public now in the corporate world in corporate governance world two firms um this is for the fortune 500 just two firms iss and glass lewis which dominated like 98 of that market share um they're a proxy advisory firm so they essentially provide services to brokers etc and help them vote on different governance proposals on their la on the underlying assets they create um it's been calculated this was from a harvard uh review uh journal article that those two firms actually controlled nearly 38 of all shareholder votes in the fortune 500. that's insane right because these two first essentially have the same mandate make as much money as possible for shareholders and have no diversity in opinion and thought et cetera and the brokers essentially just take their recommendations and execute them this is obviously not the best way to represent stakeholders right the broader community um and the proxy advisory firms have dominated this corporate governance world honestly there's no reason why this couldn't also happen in crypto if voters are passive and just delegate the responsibility completely away as individuals right as individuals we don't really really care that much about all these governance votes et cetera we delegate that responsibility away there's it's very likely that that power is actually going to end up concentrating in these types of proxies as well it can easily happen in crypto right so what we're seeing these new sub-dials external dials become are kind of like coordination institutions right so instead of the individual now having to delegate that responsibility away or make those decisions it's actually a dow right it's like the rabbit hole now the index style that has its own process to make these external decisions and encourages pushes their mandate onto these external parties so it's just a framework right instead of individuals now we're talking about entities um however it's super super important that you know there's transparency and accountability to this entire process right if these external dows or other dows don't know what's going on in the other processes or governance systems then that opacity will cause all of this to be completely worthless right so we at boardroom actually see information data transparency as kind of like the cornerstone to all this to be able to map you know these proper systems in place but right now what we have is that governance interactions are very fragmented right what we have is in the web3 space we develop these amazing open source primitives sets of smart contracts such as governance systems etc that are fully forkable fully customizable what you end up getting is a lot of different standards right which is great for dao experimentation and governance experimentation but really bad for ux and data transparency um so explosive you know this explosive demand in daos is essentially driving all these open source primitives to be developed all these different governance systems to be built as well and as you know the myth of the infrastructure goes essentially kind of like apps and infrastructure develop in responsive cycles so we're seeing all of this tooling come to market now that creates a lot of fragmentation at the framework layer the governance system layer which means that if we really want to enable meta governance and dao's to talk to each other uh we need some sort of like glue or you know standard way to actually read all of this government oh it gives us governance information and actually compared apples to apples right all this diversity and custom frameworks et cetera dow can pick and choose to build on top of any of these um and by the way this is just a small sample of like some of the ones that we look at a boardroom there's hundreds more coming to market which is amazing for experimentation really bad for you know user interactions and the dow communication layer so i'm the founder of boardroom we're building a governance aggregator platform on top of all these open source primitives that just standardizes how all this data is consumed red etc to just open up a little bit of that transparency so meta governance can really flourish in this kind of like new networked model and structure so um we're actually launching a new dashboard next week and uh we're enabling any addresses ever voted on any governance proposal of any of the dials that we support to mint and nft to actually access the dashboard so you would be initial founding governor members of the new boardroom dashboard as well and as was mentioned before this dashboard provides a single interface for you to actually be able to view interact and govern over these dials as well not only for the individual but for the other dows as well so we're going to see this network model evolve hopefully boredom can help in that in that mission thank you appreciate it um i can take questions if anyone has anything or not i'll obviously be in the back too um yeah so we're really focused on reporting right so the just the initial step create transparency on data and reporting by the way the question was um the legality and you know all the stuff around actual meta governance too um it's really interesting because if dows actually hold other governance tokens in their um in their treasuries that essentially means that they are now kind of like shareholders for stakeholders and those other external doubts um right now we're kind of like leaving up to that help to the lawyers we're focusing on just transparency and reporting because if you don't even know what's going on in the first place with these votes then we don't even know what frameworks to build around kind of like proper you know jurisdictional oversight and tax implications