Dear Bankless Nation,

The future of humanity rests on our ability to coordinate.

If you’re a long-time reader, you know about crypto’s efforts to slay the evil Moloch and be rid of his pernicious coordination failures (read here and here and listen to this).

Coordination is the reason crypto is here.

That’s why we’re so bullish on Decentralized Autonomous Organizations (DAOs). We see them as an essential tool in the new set of crypto economic primitives that will change the way humanity coordinates capital and resources.

Your kids will work for a DAO someday.

But we’re so early in the journey.

We’re still trying to grasp the fundamentals of DAOs—who’s in them, where are they from, how are people compensated, why is anyone interested in working for a DAO in the first place…

These are the questions Gitcoin DAO and Bankless DAO set out to answer their landmark report on DAOs. Over 400 DAO members participated to create this.

If you want to understand the future of work, the future of capital coordination, and the future of human organization in the digital age you have to read this report.

DAOs are the new frontier.

- RSA

View the DAO Report

DAOS: The New Coordination Frontier

TL;DR

Human beings compete for resources, but we also coordinate to survive.

We coordinate schedules, finances, groceries, international trade—everything. We are interdependent beings. We do not live in a vacuum, but rather depend on families, companies, institutions, and markets to survive.

So why is it that there are so many coordination failures in the world?  How can we solve them? Conversely—How can we accelerate coordination? How can we better coordinate ourselves, to inspire better coordination mechanisms in the world?

I believe DAOs stand on the frontier of the coordination problem space. Their permissionless, mission-driven, and community-run architecture represents a step function improvement for the future of work.

DAOs are still quite primitive. As always, we’re early. Yet, despite just barely learning to crawl, DAOs are already teaming with life and activity. Together, GitcoinDAO and BanklessDAO have compiled a comprehensive report that distills the insights of over 400 DAO creators.

We’re proud to present the first DAOs (The New Coordination Frontier) Report.

Ethereum is a foundation for creating more coordination.

I truly believe that Ethereum’s impact on the world will be significantly better coordination.

For the first time ever, we have a transparent, immutable, programmable, substrate upon which to build new institutions. Institutions that cannot be corrupted even if their founders are.

In other words, we can now invent new mechanisms upon an unprecedentedly solid and incorruptible foundation, and use this to fundamentally change how resource allocation is coordinated.

Improving coordination means better resource allocation, less corruption, and more symmetry between value created and value captured.

It’s bad for intermediaries, and good for everyone else.

Once we solve coordination for Ethereum, we can take what we’ve learned and export it to create better coordination in the mainstream.

The emerging DAO coordination space

So how do we solve for Coordination in the ETH ecosystem?

We just DAO it. DAOs are the fundamental building block for this problem space.

Each DAO has its own structure, but they often have:

1. A mission
2. A treasury
3. Governance of that treasury
4. Coordination to turn that treasury into outcomes aligned with the mission

Let’s begin to build a mental model for what a world with many DAOs looks like.

As the number of DAOs and creators doing work for DAOs grows, the space for resource allocation/coordination tools for them will grow exponentially (creators^2)(daos^2).

It would seem that if these trends continue, and if DAOs begin to subsume companies and/or become important institutions of their own, that DAO Coordination could become a trillion dollar market in 5 years. (not financial advice, do your own research, etc - remember, this is just a hypothesis!)

We are now entering a world in which in order to achieve their mission, DAOs are going to need to attract creators to their cause, deeply engage them, and coordinate them in a mutually beneficial way.

To succeed, DAO designers must design their incentives and curate their culture such that participants don't just act upon what's good for me now.  To thrive, a DAO’s Nash equilibrium must rest between:

1. What's good for me now.
2. What's good for me in the future.
3. What's good for us now.
4. What's good for us in the future.

This “Bento Box” of incentives is the foundation of a DAO’s incentive system.

Inter-DAO coordination vs intra-DAO coordination

So far we’ve been talking a lot about DAO/Participant Coordination, and for good reason—there are thousands of DAO workers and creators out there.

But there is another design space, at a higher level of abstraction, that is worth exploring. DAO-to-DAO Coordination!

In evaluating what this design space will look like I’m starting to think about it as follows:

For each DAO-to-DAO collaboration, what problems are solved by coordinating? What positive Sum Game is enabled?

Here are some early thoughts about problem/solution combos that could be explored.

1. Differing Types of Creators 👉 Culture/Creator Swaps
2. Differing Market Segments 👉 Diversification of Treasury
3. Differing Skills/Perspectives 👉 Antifragile Governance

We’re still very early in seeing what DAO-to-DAO coordination looks like, and I’m excited to see what kind of multicellular organisms evolve. Each of these design spaces are likely worth their own post.

There are many Inter-DAO Coordination Opportunities and Intra-DAO Coordination Opportunities as the space expands exponentially!

What's the status of DAO coordination?

As of August 2021, thousands of people are now working for DAOs. This is uncharted territory, and GitcoinDAO + BanklessDAO have banded together to begin mapping it.

I am happy to have partnered with BanklessDAO/GitcoinDAO to study the DAO coordination space. Together, we identified hundreds of creators who work for a DAO. The survey’s 422 respondents come from 223 DAOS in 290 cities across the world. We also surveyed founders of the top DAO’s in the space to help gather their understanding of the monumental rise of the DAO.

We compiled this information into a comprehensive report we’re calling DAO (The New Coordination Frontier) Report.

Ideally, this information helps us understand the new frontier of DAOs as the ultimate coordination tool. Here’s what we learned:

8 Bite-Sized Takeaways

1. DAO creators are a global cohort, though a vast majority of the 422 surveyed reside in China and the United States.
   
2. DAOs are incredibly easy to spin up with over 200 represented. Contrast this to corporations that require articles of incorporation, legal expertise, and approval.
   
3. Of the 223 DAOs surveyed, BanklessDAO, GitcoinDAO, Index Coop, DAOSquare, and dOrg were heavily represented.
   
4. DAOs were diversified between NFTs, social, investments, protocols, services, and grants.
   
5. A majority of responders were between 20-40 years old and skewed 80% male.
   
6. Most survey respondents were in 1 or 2 DAOs, but for the minority who were in 3-6 DAOs, feeling pulled in many directions was a real problem.
   
7. Participants have a feeling of fulfillment, meaning, and purpose not found in traditional organizations. Ownership fuels empowerment. Being able to be at the bleeding edge of tech and culture is also a draw for some.
   
8. There is much left to invent/discover in the world of DAOs. Compliance, coordination, benefits, recruiting + retainment of talent, income volatility are all large unsolved problems.
   

Let’s DAO together.

There's no doubt anymore that DAOs are going to define the future of human coordination. The invention of computers, the internet, and cryptocurrency were all just steps in a longer journey we are still on together, and the next step is DAOs.

To think that all these things happened in less than one lifetime really puts into perspective how we are still very early in this journey despite the inconceivable impact it has had on humanity and that it will continue to have for generations to come.

There is no industry more fulfilling, exciting and rewarding to work in than DAOs right now, and we are just getting started. - @META_DREAMER

For the full report click the slide below.

Action steps

• Read the report: DAOs, The New Coordination Frontier
• Understand the importance of DAO coordination

Author Bio

Kevin Owocki is the founder of Gitcoin.co, a community marketplace that allows software developers to *git coins* for working on Open Source Software. Gitcoin’s mission is to economically empower builders of open source software and the open web.