---
title: 5.1 Decentralized Autonomous Organizations (DAOs)
description: The DAO revolution and its promise of change for data, users, and value
---

# 5.1 Decentralized Autonomous Organizations (DAOs)

_“A DAO is a capitalized organization in which a software protocol informs its operation, placing automation at its center and humans at its edges like how DeFi is programmable money, and NFTs are programmable media, DAOs are programmable organizations of people. The promise of DAOs and crypto-economics more generally is to be able to establish collective intelligences at scale. The defining attribute that makes DAO’s different from past organizations is the use of the blockchain as a root of trust such that the inputs and outputs from decisions that matter are immutable and auditable.” - [Riva Tez on Vitalik on DAOs ](https://www.youtube.com/watch?v=Srl9tHz9OQA)_

We have seen up until this point, how the systematic inversion of crypto is applicable to the very nature of value, fungible value and by extension decentralized science, as well as non-fungible value for creators, communities, and artists (among others. The focus of this module, outlines another field that is ripe for disruption from the web3 paradigm - namely - Governance - and to be specific, coordination and collaboration mechanisms. 

This was originally subsumed under the heading of Decentralized Autonomous Organizations or (DAOs) but as time has gone on, new terms like On-Chain Organizations, and Network States have also emerged in this area. Now, an entire sub-industry focused on governance has emerged: This encapsulates tooling for DAOs (to allow users and builders to create their own), protocol governance, treasury governance, and community governance. In parallel to these developments, there is avid interest from legacy industries on how on-chain governance can be used to disrupt and re-create a number of processes - from politics, to scientific funding decisions, to institutional governance. 

## The What and How of DAOs

For our purposes the DAO revolution has the promise of changing the manner in which data, users, value, and systems are managed - outside of the usual legal and institutional wrappers. With DAO’s we outsource governance and management itself into the domain of software. 

**Let’s start with the _What:_**

**What is governed on-chain?** 

* **Communities of Users:** Organize together to make decisions together, share capital, work on common projects, or engage in some other activity (RAID DAO, DCD). 
* **Treasuries and Pooled Value:** To manage value, revenue, investments. 
* **Protocols including token issuance:** To manage emissions, rates, access, open-sourcing, and gating of assets or code bases. 
* **Rules and Mechanics for dApps and Systems - Games, Network States:** For allowing engagement with a system be it a game, country, or agency (similar to community but more structured). 

So in essence, the _what_ encompasses broadly things like human systems, revenue, stored value, and mechanics or levers of on-chain systems. 

And now we get to the really incredible benefit of DAOs and OO’s which is the _How_. If we get a little technical, on NEAR DAOs are created according to a specific set of rules and logic, encompassed by the term ‘DAO Factory’. What this means is that it is up to the user to program their organization with specific rules, policies, and procedures as they see fit. We are only at the very beginning of this product’s emergence. 

If you are familiar with Vitalik and his writings, DAOs used to be token weighted - meaning the more tokens an account held the more its vote weight would be. Those rules have now been superseded. On NEAR we can design a DAO or an Organization to an increasingly complex logic: 

**Vote Policy:**

* Token Weight 
* Role Weight 

**Permissions:**

* Councils with specific permissions. 
** Approve
** Deny
** Move to Vote
** Call a specific function


![](@site/static/img/bootcamp/mod-em-5-multiple.png)



And as an open-source library these functions are naturally growing by the day! 

Okay so we have spoken on a high level about the what and the how of DAOs - as an equally powerful product that is entirely complementary and different to NFTs. 

What, simply put, is the improvement or promise of DAOs and OO’s? 



* **Simplification -** Creating a new channel to move value or coordinate a process that has become bureaucratic. Molecule DAO for investing in BioTech. 
* **Velocity of value -** Automating the flow into and from a DAO, using software. So that fees from one exchange can automatically go into a DAO to finance a forest project. 
* **Transparency of fund distribution -** Organizations, political parties, governments, budgets are all done transparently on-chain. Value flows are visible. 
* **Co-ownership -** Building ownership and management power into the organization itself. 
* **Access (this is akin to people getting more financial access than ever via Crypto vs accredited investor rules → i.e. to a sports team, or a scouting agency).** Retail participation in any type of process - globally.
* **Organize, Act, Coordinate in Networks.** Global participation, non-discrimination, minimal rules and bureaucracy, easy access, and streamlined value flows. 



![](@site/static/img/bootcamp/mod-em-5.1.2.png)


## The Evolution of DAOs and the DAO Landscape Today

_“A DAO is a capitalized organization in which a software protocol informs its operation, placing automation at its center and humans at its edges like how DeFi is programmable money, and NFTs are programmable media, DAOs are programmable organizations of people.”_

As we circle this overarching definition of a DAO and the promise it holds for governance, we are also going to be looking at the evolution of DAOs themselves as a tech stack. This starts, first and foremost with the original DAO as launched (and hacked) by Ethereum. Early stage DAOs, were heavily token denominated in terms of voting power and decision making.

**Vertically:** In the past two years, we have seen DAOs evolve in the following ways: 

* **Token-based voting**
* **Token Delegation-voting to protocol politicians**
* **Role based Voting**

In the future, if we are truly going to place automation at the center and humans at the edges, we are going to be also including: 



* **Reputation Based Governance (Soul bound)**
* **Automated function calls**
* **Smart contract based tipping points and levers**
* **AI governed roles**
* **Legal Wrappers and Jurisdictional Compliance**
* **DAO to DAO governance **- System to System governance**

The point of this spectrum is to indicate where we are today, and where this is looking to evolve in the future. This is the vertical development of DAOs. 


![](@site/static/img/bootcamp/mod-em-5.1.3.png)


**Horizontally:** The horizontal development of DAOs refers to the scope from which we believe DAOs will reach beyond its small niche of theory and cyberspace. 

“_The promise of DAOs and crypto-economics more generally is to be able to establish collective intelligences at scale.”_

What have DAOs encompassed up until this point, and how do we see it evolving? 

* **Protocol DAOs:** DAOs in charge of governing the mechanics of an L1 protocol, including inflation, gas fees, and so forth.
* **Treasury DAOs:** DAOs in charge of managing the treasury of a protocol and any revenue that may accrue into the treasury. 
* **Investment DAOs:** DAOs devoted to collectively investing funds from a community or set of actors who have put funds into the DAO. 
* **Community DAOs:** DAOs representative of a group of individuals engaging in common activities and sharing resources, time allocation, or rewards. 


#### Where do we see this technology evolving into the future? 

* **Network States.**
* **Institutional Governance via DAO.**
* **Scientific Research and Learning.**

The thesis here is that the businesses, organizations, and systems of tomorrow will be running this graphic on some type of on-chain organization. 


## DAO Landscape and Tooling Today

![](@site/static/img/bootcamp/mod-em-5.1.4.png)
![](@site/static/img/bootcamp/mod-em-5.1.5.png)


_The promise of DAOs and crypto-economics more generally is to be able to establish collective intelligences at scale. The defining attribute that makes DAO’s different from past organizations is the use of the blockchain as a root of trust such that the inputs and outputs from decisions that matter are immutable and auditable.”_

What is important to understand, is that as a framework of DAOs is designed to harmonize with the existing product stack of crypto - meaning a successful DAO will most likely depend upon the quality of the account structure of the L1 chain it is built on, have the capacity to manage fungible token contracts, non-fungible access points, and other DAO communities. But the trend is clear: As the crypto product stack emerges, more users onboard to Web3, and more tools exist for plugging and playing with different governance frameworks, we will be moving towards this idea of _establishing collective intelligences at scale._

### Top DAO Tooling Infrastructures

This is a light overview of some of the most known DAO tooling infrastructures - if you are at a conference talking to someone they will probably ask if it is an Aragorn fork, if you are into Tendermint and the Cosmos ecosystem people will want to see if you know about DAO DAO, and then of course on NEAR, we have Pagoda’s incubated Astro DAO. 

**Aragon (Ethereum / EVM) - the OG DAO tooling:** [https://aragon.org/how-to/build-your-dao-tooling-stack](https://aragon.org/how-to/build-your-dao-tooling-stack)

Aragon is the OG DAO tooling framework on Ethereum, that has shipped a number of innovative DAO related products, usually geared towards crypto-native and internet users (reddit communities). The list below is a quick overview of some of the spin-up products on Aragon today: 


![](@site/static/img/bootcamp/mod-em-5.1.6.png)


The App and Client is specifically focused on governance and the ability to launch a DAO and token, as well as set parameters for users - whitelist, time delay, collateralize proposals, etc. and to set governance agreements. Aragon Voice meanwhile pertains to the nature of proposals - and how to create, pass, and set a vote policy for your DAO. Those interested in these topics further, and how Aragon is looking at the future of DAOs should refer [to their blog. ](https://blog.aragon.org/)


![](@site/static/img/bootcamp/mod-em-5.1.7.png)




![](@site/static/img/bootcamp/mod-em-5.1.8.png)
 

## Sputnik/Astro (NEAR)

The entire next lecture is devoted to the design of Sputnik and Astro as well as the opportunity present for DAO tooling on NEAR and Aurora. For now we can say the following: the power of Sputnik V2 is that it creates an extremely customizable set of governance parameters by leveraging the NEAR Account model, and a combination of highly customizable proposal-kinds (essentially what can be done by users in a governance framework on NEAR). 

Astro meanwhile, is the dressed up and more User-friendly interface of Astro, that makes the Sputnik logic easy to interact with as a user. Astro has additionally added open-source libraries of ‘actions’ that any DAO could make use of, in a similar way to how Wordpress had ‘widgets’ that any person designing a website could leverage for their own. 

This is such that remote accounts on NEAR, are in principle able to participate in DAO governance from another L1 ecosystem. Or, conversely, that an account with no access keys, could be automated to behave and fulfill certain function calls only when specific inputs are connected. 

**DAO DAO(Cosmos)  - [https://daodao.zone/](https://daodao.zone/) / [https://docs.daodao.zone/docs/recipes/diversify-treasury](https://docs.daodao.zone/docs/recipes/diversify-treasury)**

DAO DAO is a clever and necessary mention, largely because it is IBC enabled. So in reference to our earlier discussion on the Universe of Chains and the World of Dapps, DAO DAO is DAO tooling for the entire cosmos ecosystem - such that someone can manage a treasury on one Cosmos L1, and still engage with the token / governance of another chain in parallel. 

And in a similar vein to how Astro has an open-source library, DAO DAO has so-called _recipes_, or existing ways of structuring your treasury. 



![](@site/static/img/bootcamp/mod-em-5.1.9.png)


**Tribute Labs (Ethereum) - [https://tributelabs.xyz/](https://tributelabs.xyz/) / [https://tributedao.com/docs/tutorial/extensions/creating-an-extension](https://tributedao.com/docs/tutorial/extensions/creating-an-extension)**

We mention Tribute Labs in this very cursory overview, because of its integration of the OpenLaw stack with Ethereum governance tools. In short, Tribute Labs offers a DAO tooling kit that bridges the gap between existing regulatory frameworks, and the cyber-world of DAO tooling. 



![](@site/static/img/bootcamp/mod-em-5.1.10.png)


What we see from all of these examples, is that DAO tooling today is such that it largely centers around vote policy, and proposals from which certain recipes or existing strategies can be easily implemented by someone building the DAO. What has not been done, is customizing these libraries around the ever expanding vertical and horizontal use-cases that we referenced above. 

## Conclusion

We are at a point in the roll-out of DAOs, where only very early on infrastructure development has taken place, with the bulk of innovation depending on the state of the L1 Ecosystem (the account model, the oracle access, storage capacities, smart contract libraries), existing dApps and communities (protocols to govern, treasuries, investment DAOs, etc.) and new use-cases and designs that have yet to have been invented. Many are building what they believe to be _‘The Wordpress of DAOs?”_ but as we will see, there is much more customization available, that can be specified for specific verticals, libraries, and use-cases - both in a specific L1 ecosystem or for cross-chain use. We are only at the very beginning.