<\/p>\n
Most decentralized autonomous organizations (DAOs) are \u201cterribly broken,\u201d says Rune Christensen.<\/p>\n
During an early morning interview on the third day of Solana\u2019s four-day Breakpoint conference, the co-founder of MakerDAO, one of the cryptocurrency industry\u2019s longest-running decentralized organizations, is tasked with explaining \u201cEndgame\u201d<\/a> \u2014 his plan to re-architect the decentralized organization to make it more robust.<\/p>\n The multi-year plan was heavily criticized as being too complex, but it didn\u2019t stop the MakerDAO community from advancing<\/a> with the proposal last year. The spotlight returned to Christensen\u2019s \u201cEndgame\u201d proposal in September when he floated<\/a> the idea that MakerDAO should hard fork Solana as the basis for its new application-specific blockchain. Though his proclamation stirred up celebrations and outages, dependent on the blockchain camp, nothing is set in stone.<\/p>\n Tucked within \u201cEndgame\u201d is a vision for the future of DAOs, which are self-organizing groups typically managed using blockchain technology. He thinks DAOs can be made more sustainable and fun by splitting them into organizations with specific focuses, or subDAOs.<\/p>\n \u201cThe main objective is it should be fun and it should stay fun,\u201d said Christensen. \u201cIt shouldn\u2019t be that experience [where] you get excited about the idea and then when you get into it, it\u2019s chaos and politics and drama and nothing gets done.\u201d<\/p>\n \u201cThis feeling of fun very quickly becomes a major disappointment,\u201d he added.<\/p>\n Many DAOs launch to celebration and excitement, only to crash and burn from governance challenges. Synthetify, a DAO on Solana, recently lost<\/a> US$230,000 in crypto when a hacker voted and passed their own proposal to steal from the organization. Meanwhile SuperDAO, an all-in-one DAO builder that raised US$10.5 million in 2021, recently<\/a> shut down due to the business model being unsustainable. The organization said<\/a> it had supported over 2,000 DAO launches, but most had a short lifespan.<\/p>\n MakerDAO, a lending platform that powers the largest decentralized stablecoin DAI<\/a>, is one of the industry\u2019s biggest success stories but it has struggled to make decisions and manage political\u00a0 infighting as it has grown in size. The creation of subDAOs aims<\/a> to enable faster innovation and experimentation going forward while cutting scope creep in Maker Core.<\/p>\n The problem with DAOs, as Christensen sees it, is that most people don\u2019t vote. Controversially he thinks most people shouldn\u2019t vote.<\/p>\n MakerDAO has two tokens DAI, a decentralized stablecoin, and MKR, its governance token. Anyone who holds an MKR token can vote in any Maker governance proposal.<\/p>\n Under Christensen\u2019s proposal, two new tokens will launch, which currently have code names NewStableToken and NewGovToken. While DAI and MKR will still be preserved, those who decide to upgrade to the new tokens will be given the option to participate in the governance of the subDAOs.\u00a0<\/p>\n Holders of MKR and NewGovenToken will be able to participate in the governance of Maker Core, while holders of the NewStableToken will have the option to either stake the token for a savings yield, which is something DAI holders can already do<\/a> via the DAI Savings Rate, or farm the tokens for a specific subDAO and earn yield in the form governance tokens for that DAO. Farming the tokens acts as votes of confidence for that subDAO.<\/p>\n \u201cAs a user, if that\u2019s all you do then that\u2019s enough, you\u2019ve now done your part [in] participating meaningfully in creating value for a DAO,\u201d Christensen said. \u201cGoing beyond that in any way should be entirely optional. It should be possible for those who are interested but the vast majority of people don\u2019t want to.\u201d<\/p>\n This makes subDAOs similar to corporate skunkwork projects<\/a>. They will live and die based on the allocation of resources.\u00a0<\/p>\n \u201cOn one hand you are choosing this subDAO should be getting more resources,\u201d Christensen said. \u201cAnd on the other hand, you\u2019re also being put in the position where if the subDAO does well, and with my increased resources does even better, I get part of the upside because I\u2019m farming tokens now.\u201d<\/p>\n SubDAOs can just as quickly fall into the same old governance traps if there isn\u2019t a focus on permissionless funding and innovation, said Pet3rpan, a partner at investment firm 1kx who helped pioneer one of the first investment DAOs, MetaCartel Ventures.<\/p>\n \u201cGovernance minimization is one way to achieve greater permissionless innovation,\u201d he said.<\/p>\n Pet3rpan believes a move to an outcomes-based resource allocation (OBRA) model<\/a> can help\u00a0<\/p>\n minimize governance by reducing the amount of time spent allocating resources through using quarterly KPIs that provide a check and balance on whether initiatives are delivering. It\u2019s a model DAOs are increasingly gravitating towards, he said.<\/p>\n Solana-based decentralized finance platform PsyFi struggled with governance engagement in its DAO. The DAO, which is governed<\/a> by the PSY token and has 29 members, uses a \u201chybrid\u201d model and is considering a further move to subDAOs.<\/p>\n \u201cIf someone wants to get involved, they have to definitely show a lot of initiative to stand out<\/p>\n and so they need to clearly understand what we\u2019re doing and where we\u2019re going,\u201d said Tommy Johnson, co-founder of PsyFi.<\/p>\nMake DAOs fun again<\/strong><\/h2>\n
Voting with your feet (or stablecoins)\u2026<\/strong><\/h2>\n
Changing the face of DAOs<\/strong><\/h2>\n