You're reading State of the DAOs, the high-signal low-noise newsletter for understanding DAOs.
Sometimes it feels like DAO governance problems precede DAOs themselves, and in many ways they do. Teams may be building for the future, but their mental models of how to design agile, resilient organizations have not caught up to the technology with which we work. As a result, we see DAOs of all sizes suffer from a kind of disengaged governance paralysis, a state of affairs where innovation goes to die.
Rune Christianson, co-founder of MakerDAO, recently came back to the protocol with an ambitious proposal to fix MakerDAO governance by dissolving much of the current structure at Maker, and instead remaking it into an organization reliant on subDAOs. As siddhearta writes this week, “Think of subDAOs as project teams that are focused on a specific mission — for MakerDAO this could be growth, innovation, borrowing, or RWAs. Each of these subDAOs has its own governance token and structure, empowering them as circles of consent with autonomy and authority. They self-organize, vote, create business plans, and if they succeed, they get rewarded.”
In this week’s editorial, siddhearta analyzes “The Endgame” and posits that the best way for teams to decentralize is to first ‘degrade’ from decentralization to a more centralized model, become resource efficient, and then decentralize. Progressive decentralization isn’t just a buzzword, here it is an actionable plan: one step down, one step over, and one step up.
In place of DAO Spotlight this month, be sure to check out the details of Bankless Publishing’s media partnerships this month with Shelling Point, Ethereum Singapore 2023 - Infinite Garden City, Token2049, and Zuzalu!
As always we conclude with a TL;DR on some of the most recent DAO ecosystem takes and thought pieces, making it easy for you to cut through the noise and learn everything you need to know about the current state of the DAOs.
Contributors: angelspeaks, Quilia, KingIBK, Warrior, Boluwatife, Chameleon Kornekt, trewkat, siddhearta, HiroKennelly
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Author: siddhearta
Cover Art by Chameleon
During the prolonged bear, DAOs have had to come to terms with a hard-learned lesson: you can’t simply give people governance tokens and expect them to govern well. DAO after DAO has been struggling with low participation, misaligned incentives, and slow, drawn-out governance procedures.
Let’s face it, DAO governance is a pain. The future of work is a decentralized decision-making dystopia.
MakerDAO is no exception. Rune Christianson, the co-founder of MakerDAO, has described their situation as a broken system. In his recent Unchained podcast interview, he describes out-of-control expenses, proposals that aren’t aligned with the DAO’s long-term goals, and unnecessary bureaucracy that stifles creativity and innovation.