Decentralized Autonomous Organizations (DAOs): Voting, governance, and lessons from history :: with Dr. Alexandra Sims
In this episode of Ventures, my guest Dr. Alexandra Sims (https://www.linkedin.com/in/alex-sims-833a8123/) and I talk about various academic and practical operational nuances of Decentralized Autonomous Organizations (DAOs). Alex wrote her PhD thesis last year on DAOs (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3971228), and in this episode we talk about the various types of DAOs, jurisdiction issues, voting and governance mechanisms, and advice for new on-chain organizations forming today to learn lessons from previous DAOs and traditional decentralized organizations that existed long before blockchains.
2:12 - Intro to the episode / general setup and motivation
3:02 - Alex intro / background in law, academia, Crypto/Web3, and DAOs in particular.
9:14 - Differences between a proto-DAO, pseudo-DAO, and actual DAO
12:16 - What are the things to look out for to recognize when DAOs aren’t quite decentralized yet. What is a healthy path to true decentralization for a DAO?
16:30 - How would Alex update her overall recommendation for legal/corporate setup for DAOs - and how they work - since her PhD thesis was published in May 2021.
18:11 - Brief introduction to Prota Ventures; why they are curious about when to recommend founders go the DAO vs. traditional route. Will - as a Managing Director of Prota Ventures - was compelled to practice it himself with BanyanDAO. (Background, motivation, and operations for BanyanDAO).
23:55 - How would Alex comment on the formation and incentive structure for BanyanDAO? (Recognition that the process has been indeed different and admirable…the importance of harnessing the power of community).
26:12 - For those interested in the power of DAOs outside of pump-and-dump schemes, “how are we going to get things done”? Is it possible to harness the power of a community to do something great with DAO mechanics?
31:04 - Importance of having practical experience about how to lead/manage a group of people.
31:38 - Voting mechanisms - Quadratic voting - explanation of the various types of voting, including conviction voting.
38:49 - Recap of voting types, plus a conversation about governance tokens.
40:00 - If Alex were to start a DAO that, say, was trying to build a product - how would she do it? How would she architect it?
43:10 - Who gets to decide who gets to be on teams in DAOs? How would Alex guide new DAOs to setup these teams? (An analysis of existing civil structures)
46:25 - Balance between self-assessment and community approval. Elections. And removals. What are principles to guide people building DAOs?
52:04 - Final words / final thoughts about this space from Alex. It’s not all about the online world; people are using it to coordinate - for example - natural resources. “Paleolithic emotions, medieval institutions, and modern technology” // Best way to get a hold of Alex. https://www.linkedin.com/in/alex-sims-833a8123/ // https://twitter.com/alexsims101
- Podcast series on OneCoin – really worth listening to https://www.bbc.co.uk/programmes/p07nkd84/episodes/downloads – can get it easily on ITunes etc. Also frustrating that the UK authorities did nothing about it despite lots of complaints!
- Article on the AssangeDAO - https://www.coindesk.com/layer2/2022/03/08/assangedao-raised-56m-and-quickly-split-up-was-it-still-a-success/
- Ensipral – decentralised organisation really worth looking at https://www.enspiral.com/ for a way for people in DAOs to co-ordinate - not a DAO (pre DAOs), but really worth looking for to decision making etc. It also created Loomio, which many organisations are using.
- Report from the Australian Senate, which recommends changing Australia’s company law to accommodate DAOs – can be downloaded from here: https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Financial_Technology_and_Regulatory_Technology/AusTechFinCentre/Final_report
- Good explanation and real world use case for Quadratic Voting - https://coloradosun.com/2019/05/28/quadratic-voting-colorado-house-budget/ - great way to allocate scarce resources in a DAO.
- Good explanation of conviction voting - https://medium.com/giveth/conviction-voting-a-novel-continuous-decision-making-alternative-to-governance-aa746cfb9475
- ‘Voting Options in DAOs’ – didn’t expressly mention this, but it goes to show how difficult things are to change once they are established and it shows/explains a number of different voting schemes: https://medium.com/daostack/voting-options-in-daos-b86e5c69a3e3. Also, what is nice is that you can use different voting schemes in the same DAO.
Also, three things Alex forgot to say which she wanted to pass along
- The number of and interest in DAOs really has exploded over the past few years. Eg I’ve had a Google Alerts set up for “decentralized autonomous organsiations” and “DAO” since 2017 and I would get an alert maybe every weeks or so and then normally for “DAO” it would be for something else with the same name or abbreviation, so a false alert. Now the Google Alerts come through everyday, normally with multiple hits.
- In 2019 when I was trying to find people in the New Zealand government to interview about DAOs, I couldn’t find anyone. And only found two in Australia and one of them, to be honest, knew only a tiny bit about DAOs, but did know a bit about blockchain more generally. Now it is totally different and I wouldn’t have any problem finding people.
- Electing people to be leaders/representatives is fraught with issues, ie they may be not good and/or there are better people but they don’t want to put their hand up as they would lose on a “popularity contest”. This is where lotteries come in handy: https://www.pushkin.fm/episode/the-powerball-revolution/). This isn’t new, ie the Ancient Greeks used sortition which is similar to this. Also, can be used when trying to work out which projects to fund, when funds are scarce. For the real world see see this for research funding https://mbio.asm.org/content/mbio/7/2/e00422-16.full.pdf. I’ve suggested to someone I know who has had various projects funded by the Cardano Catalyst that it should look at using a lottery system because you have people voting on proposals that don’t know how to access them properly and they are also influenced by who puts them up, so the rich get richer etc. But should keep elements of the current system for Cardano where “experts” review the proposals to see whether they are viable etc so that there is some quality control.