Section 9. The DAO of DAOs - Transcripts
Section nine. The Tao of Taos quote from metallic but Aaron, whereas most technologies tend to automate workers on the periphery doing menial tasks.
Block chains, automate away the center
instead of putting the taxi driver out of a job Blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly. We talked about decentralized autonomous organizations a bit earlier in the regulatory section, but didn't give them their proper do they really need a full chapter? Let's correct that. And close with a bang Because Dow's are one of the most important constructs in Crypto. They will change every aspect of the economy, politics and probably even your social life in the years ahead. If 2020 was about defi and 2021 was about
NFTS 2022 will be the year
of the dow. So maybe
we should start by answering
what even is a dow. I once described them over dinner to a skeptic as a governance structure that manages a community treasury. Not bad given I just blurted it out overhearing more specifically douse our fluid online communities
whose assets are managed by the communities contributors. The organizing primitive of the dow
is code committed to a public ledger versus articles filed in Delaware and the Blockchain guarantees
user accessibility, transparency and exit
rights via forks. The dow's token determines voting power allocates funds according to
group priorities, incentivizes participation and punishes antisocial actions. I also like the
simple definition proposed by the bank list guys.
Digital native communities that center
around a shared mission where the communities are bottom up flexible and loosely organized. They have a shared mission and protocol on the Blockchain. Internal capital and enforceable social
norms. And they can be used to manage just about anything.
An open source library and N F. D
collection, a social club, a newsfeed, pulled labor etcetera orcas, Julia. Rosenberg and
Maria Gomez try to formalize the definition to They wrote that does our one
open source and Blockchain based to
open membership, three
groups of independent parties that four use a
Token to govern a protocol and five allocate internal
Capital with the goals of six automating
A marketplace or function seven preventing
Collusion and eight incentivizing bottoms up community participation. As you can see we're
still sounding things out even more attempts here, how we talk about them will change in the coming years. But however they're defined, they're going to be big Section 9.1
enabling tools, wallets and staking What if the past 18 months was really just the necessary precursor and installation phase of the real megatrend the reorganization of society around token governed communities. If that were the case, you'd probably need tools that help you manage tokens securely and swap them peer to peer defy you'd want better ways to build and selectively share pieces of your personal identity, N F T s and you'd want assurances that you could navigate frictionless lee across communities regardless of which tech stacks they used L one L 2 bridges,
tada here we are the backbone of the web. Three economy and the wild world of dow's are your personal wallets which are sort of like your personal data vaults, whether it's meta mask or coin based on ethereum phantom on Selena terrorist station on terra or something else. These
tokens within these
vaults unlock your
access to the crypto
realm and will only become more important in the years to come in five years. People might look at the current wallet landscape and sneer at how primitive
we were. But some solutions e. G zapper
and Syrian show how we're getting
closer to a time when
our wallets can double as universal, identify IRS and data managers
joining a new social application point and click which avatars you'd like to wear in the new club
betting on a match, Use real money or keep score with your friend groups. Social credit
opt in none of that CCP ship applying to a new job, selectively share the
badges that correspond
to your skills and accumulated reputation. All of that is going to need a front end and the crypto wallets getting built today will be as integral to your life's operating system
as your cell phone
down the rabbit hole learning and earning
rabbit hole is at the forefront of one of the most exciting trends in crypto
learn to earn.
The crypto economy
user minds are melting from the pace of development and one of the scariest resources of all is attention and genuine user participation.
Rabbit hole offers
quests that help users test new products
and earn token treasury rewards. It's a win win win for all
token teams use their treasuries which are liquid capital
resources designed to be allocated for growth to fund customer acquisition costs. Rabbit hole gets a
cut for developing the user journey and users win at
The company estimated its users earned 170
five million in aggregate from a single quest registering and DNS domain. That's one way to get attention. Even if the mega airdrops are unsustainable in size, they're likely in their infancy in practice does have a lot of money,
lots of it and want users
and we know how
lucrative this market can be for those willing
to make the market
Coinbase earn is
doing 60 plus
million annualized in revenue in what is arguably the most underutilized part of its business. The learn to earn plays will be easy to integrate into the
Web three Wallets and
hosted wallets alike. Their user education initiatives that pay for themselves in the
form of more crypto natives and thus more long term holders. Every single Blockchain may have a rabbit hole too.
This world is just too big and the community too religious for this to be winner, take
all and I expect that
quest developers will end up being a lucrative occupation within dow communities. If you're in college,
I'd encourage you to spend the spring semester
maybe redeploy your book budget into each gas fees, learning and testing
different crypto protocols on earn rabbit hole and other places.
scenario, you hit the lotto
on a few more airdrops, Worst case you flunk out and you'll get hired on the spot by a crypto company once you show them your degen score
in the N. F. T. Merit badge library.
Seriously we get apps with degen scores and we like it much like twitter is better
than linkedin for networking,
learn to earn is going to slowly replace credentials and
largely gamify and invert the education funding model Section 9.3.
Working in Web three
after learning a bit about a project you might want to start diving in and contributing a little on the side that gig work could be spread out
or a precursor to a full time offer from a dow or one of its related companies. Part time
devops, research, governance, data science and more. Both the
centralized and decentralized
communities are also hiring for full time roles at a rapid clip, but more than anything
douse may present one of the most lucrative ways to build a portable reputation that will persist
compares down membership favorably to other historical analog saying like venice did for early modern europe Web three is redefining how global talent pools, their knowledge and work together and like the homebrew computer
Club in the 1970s communities of smart,
passionate hobbyists are gathering in forms to tinker with a new
set of primitives to build groundbreaking products and
Those communities are being organized today via douse the
Web three Group Coordination Primitive.
What's wild about the Web three ecosystem though is its global accessibility. You don't need to be born
in the right city or earn admittance to the right computer science program. The bottoms up model and opt in membership
of dow's invert the talent sourcing model, you can join
A discord server with one click, you can earn bounties and display your proof of work to earn
reputation points with the communities decentralized. HR community vouchers
you can apply for grants or submit proposals for full time employment directly to the dow membership. It will be very rare for people to effectively work for multiple douse at the same time unless it's a very narrow specialist role,
E. G. Creating
data, dashboards or other research reports or back office function. For most douse Hollywood will be the model. The dow production companies provide financing, project direction and
assemble the teams. Those teams, sprints on gigs, develops their personal bona fides, then disassemble and move on to the next The big dolls will be sticky employers but most douse including subtitles to the bigger douse will be more fluid. The key difference in the Web three Hollywood model
is that each contributor, no matter how small can retain
royalties tied to the products ongoing success. The challenge will have in the west is understanding whether this is accelerating
offshoring and farming out white collar work to the lowest cost bidder will douse worsen the poor labor dynamics that already plagued other marketplace providers in the gig economy, there's arguably much more upside than downside. Early contributors
will at least share in the upside of the platforms
they help bootstrap, even if those platforms drive variable labor costs. Either way, Web three token incentives are something that can't be un invented.
You'll work for a dow someday. Might
as well get started. Now while the alpha is highest. Section 9.4
hierarchies, pods and fluid organisms. If you join a tao, one of the first things you'll notice is that there's a new ceo in town, the connective tissue of most douse the chief community officer. These are people who sees the memes of production and command decentralized armies of hopefully
In the formative days of a project, they can usher newcomers to the right resources set the tone and culture
of a discord server and help curate early internal and external messaging.
That should bring a few questions to
do we balance between choosing new benevolent dictators and maintaining decentralized decision making Mario has some ideas. His canon of
token governance research is a must read.
How do we solve some of the challenges of coin voting and voter apathy or collusion metallic would like a word crypto communities have caught on pretty quickly to the fact that decision making endows needs to be stratified very similarly to traditional companies governance accountability
community HR user and contributor
engagement and communications etcetera
are all significant but surmountable challenges. Gi from Rory
Capital has a good playbook. He suggests breaking rolls into bubbles which allows for sub does and discreet fluid teams. Something
that urine pioneered and
currently uses. I think this is the right framing and it also pushes organizations to scale
via written documentation.
We'll need to see 100 x
improvements in information
flow and decision support tools. You can
cover a global dow
or subbed out with N. F. T. S or social currencies more easily than
you might. A global corporation. Anyone who's remote first and international knows what a
nightmare it is to set up this infrastructure but that doesn't change the fact that without delegated functions, progress in a DAO can move to a standstill
when every micro decision turns into a proxy vote. Orca protocol is working on one of the cooler implementations I've seen
they leverage N. F T. S as access tokens to give memberships to a pod some discrete responsibilities and doubt treasury rights. It's really as simple as selecting subcommittees and
holding them accountable for
results on a periodic basis. The oversight responsibility falls on the collective though. And the only thing that separates good governance from bad governance
in that model is good information performance analytics and voter incentives to overcome apathy. The critique is that our early douse actually aren't that diverse by design. They reward the early adopters and in crowd first that they formalize what we already know about governance.
Those with the money make the rules. Those are fair but
short term concerns. The upgrade from today's global plutocracy is that dow contributors and users can earn liquid political
capital and delegated authority with breathtaking speed and they can do so pseudonymously. But this is also where taxes are collected, benefits
offered and state compliance enforced.
It wouldn't surprise me to see some jurisdiction make it illegal to work
for an unregistered tao. As a result, then again, other
likely invite tao workers with
unique tax codes that account for the difficulty in
extracting tax without employer and banking oversight. It's so early in the token governed world experiment that it
almost makes my head explode. This is where Massari will be spending most of its resources going forward.
Section 9.5 dow Treasury management defies current bull market is one of the top wealth generating events in crypto short history. Any institution or
individual with responsible exposure to the
sector watched as their net worth slash balance
5, 10 50 Fold or more in the past
18 months. Some of the top defi
protocols themselves are now sitting on
hundreds of millions and sometimes billions of dollars in value mostly in their native tokens To the most active douse unit swap at four
Billion dollars and compounded $1 billion dollars sit on particularly large reserves. You might look at the number and think defi protocols are financially set for life.
But a deeper look into the composition of each Treasury suggests the
The vast majority of the value in these token. Treasuries is coming from the reflexive belief that the market will always absorb the new supply.
That may happen in bull markets. Things can unwind sharply
when volumes subside. In fact, that's
exactly what happened during May's market crash. Still, top project Treasuries haven't diversified much during black swan events protocol Treasuries are at the mercy of the market.
Even some of the best
projects that relied
on these reserves
In the 2018, Bear Markets struggled to survive.
That's before you consider the idiosyncratic risk of each specific asset.
Smart contract failures, hacks, oracle
deficiencies and coding
errors can take a tokens price even before the dow considers remedies that might make
it can create a vicious downward
spiral if the Treasury isn't managed properly. Other investors have picked up on this as well Yet despite the widely expressed need for better Treasury diversification and top
projects, most styles remain action liss. There are a few reasons for this
developer naivete or overconfidence.
The desire to avoid giving communities the impression
a large token holder is
dumping assets, regulatory challenges, etcetera. But in many cases it simply comes down to a lack of visibility and decision making tools. Data sources like
deep down are doing a good job tracking project. Treasuries
but don't provide the
full context that an elementary portfolio management tool could provide. Giving communities better Treasury analytics could greatly improve their governance, decision making process. It's not just about token treasury management best practices, it's also about the lack of professional treasury managers. The entrance of finance bros. Real financial managers for Taos presents a big market opportunity and would help protocols diversify intelligently to ensure they are well capitalized under all sorts of market environments.
won't like the first recommendation most Treasury
managers would make today start selling
a key one blow off top doesn't do a dow any good if the asset nukes 90% mere months later, Section 9.6 dow investor relations, I
kicked off the last chapter writing about how wild it was that anyone could create something that looked like its Q 3 10 dash Q
investor relations are a critical part of healthy financial markets in crypto. The importance of high quality information
Is dialed up to 11 since community relations impacts how the Dow communicates with investors, liquid
partners, technical counter parties, core
contributors, users and other net
promoters, strong, transparent financial disclosures are the backbone of good corporate governance,
but they're constrained by quarterly accounting
the flow of information to only a few times a year. Block
chains and douse offer a near infinite improvement to quarterly reporting. As information is open to inspection at all times and processing
speed is limited only by black
propagation times. The open and permission list nature of
block chains has led to a monumental shift that
redefines the relationship between protocols and their investors.
In this world. Financial data
is transparent widely available and accessible at all times. Protocol stakeholders are capable of tracking the financial health of the assets they hold in real time and information curators like Massari and curate updates over an arbitrary time scale via a decentralized community of developers, researchers and data scientists token terminal fundamental data. The graph on
chain data. Nansen fund flows. Dune analytics, aggregated
metrics, defy llama, TVl and Massari market data and off chain events are now essential
tools that help users gain
a complete understanding of protocol level performance in the
hands of a globally decentralized analyst community. The combination of these data sources provides
remarkable results. Take compound. For instance, our quarterly report provides a glimpse
into the future of financial reporting. A single analysts and data scientists were able to team up to produce a summary of comms
protocol level lending and borrowing
activity over the previous
quarter, both at the macro and
micro level, as well as off chain events pertaining to community governance and the project's
technical roadmap. This order reporting might continue to follow a familiar quarterly
monthly or weekly cadence but the data
is real time and available for anyone to explore and combine.
While there is still much work to be done. The building blocks needed to establish the foundation
of a new and improved financial reporting system are finally here.
If executed well, crypto financial statements will look
much different from their legacy counterparts.
Instead of impatiently waiting
for quarterly earnings reports, protocol statements will be dynamic documents powered by live feeds of data streaming directly from the Blockchain.
All the pieces are ready to be assembled now it's time to build
Section 9.7 Massari tying it all together. What happens when you bring together, learn and earn on boarding incentives, marketing a vibrant contributor marketplace. HR improved treasury management and delegation tools, Finance and ops and project
reporting slash community relations management. You've got
the full stack of
solutions needed to build replacements to existing governance
constructs in politics, corporations and the social
fabric of society itself. I'm so ecstatic
to share our vision for Massari in 2022 we're building a
have you checked out Massari. Pro
Start your seven day free trial today with your pro membership, you gain access to our industry leading research and pro data tools.
Use code thesis _ 2022 for 15
Again. That's thesis _ 2022,
Section 9.8 legal framework for taos. There are generally
three things the government does to dissuade you from doing something. It doesn't want you to do tax you find you or expose you to huge personal liability or cut
off your banking services.
one of the things that is going to be a
real bitch to figure out is how does actually work in the real world from attacks, contract law and compliance standpoint on paper towels are actually pretty good
at eliminating the banking services concern given the entity itself
is a shared bank account, they're not bad at addressing the personal liability concern either.
If you're cool with working
anonymously and staying off the grid and you're confident that the
rest of your compatriots in the dow will do the same and feel comfortable taking on the group's liability risks if anything goes wrong. But they are
really bad. If you think you can join as a member, report your
taxes from the dow and somehow not tip off the government that you're working with slash
for an unincorporated partnership,
rolling the dice a bit,
aren't you? For most normal people fixing
the contributor liability issues and bringing douse in their communities into global and local tax, banking and
is going to be important. A 16 Z has some good proposals for how to create legal tao entities as unincorporated nonprofit associations that have flexible siloed sub structures. Lex node echoed some of the same ideas and Wyoming took the national lead on this already with its recognition of doW's as a type of LLC. Fun fact. Wyoming was the first state to recognize the actual LLC in 1977. It took 11
years for the I. R. S. To
recognize the status as well. This is also going to be
A requirement for most Dow two Dow or doubt a business contract work as well given how aggressive
this administration has been so far towards crypto and expect them to
take a similar hardline approach towards unincorporated
douse as well. So registering in the US won't be about meeting reporting
individual taxes and filing disclosures, but opening
up core token
developers to liability
in the event, the authorities ruled that these are
general partnerships that issued unregistered securities. I don't blame teams for moving outside of the U. S. Section 9.9, the new capital allocators,
I spent a bit of time talking about creator douse and social clubs in the section on N. F T. S. So I'll gloss over them here and instead spend the last two sections of this report
Focused on two particularly transformative types of Tao's venture douse and curation douse on ventured
out as the only constraint on the growth will be legal and regulatory in nature. The original, this token is definitely a security memo was the doW
itself. The demand in that original
community investment vehicle proved how much demand there was. Even then for community investment vehicles accessible beyond the gated community of
accredited investor land. Since then there have been efforts to iterate on the venture down model and make it well
legal meta cartel socialized the token investment
offered a vehicle that paved the way for fluid G. P. Incentives,
more work equals more rewards. The group can invest in anything that might be tokenized
Kryptos companies FTS other douse virtual real estate licenses, you name it. It's a sort of flexibility and speculation that simply doesn't exist in the real world and probably cannot exist in the U. S. Without upgrades to our century old securities laws. If you look at how insular the crypto community is, it's almost certainly the future too. Founders invest in other founders for strategic reasons, Goodwill and aligned interests on
partnerships keeping up on emerging trends, stay top of mind for other emerging projects, etcetera.
Today VCS are investing in
taos or douse of taos or registering as investment advisers in order to remove the
sec shackles that prevent VCS from going full
late stage investors are coming to series a the early stage
investors are moving to permanent
capital vehicles. It's almost like the smart money knows that
the capital markets are dynamic and evolving rapidly. Venture dolls are already hot and barring a
global regulatory setback. I bet that one of the most active and largest assets under management VCS is a dow by 2025 we've started to see Tao M and a pick up steam to the next frontier would be the acquisition of a Web two company to a web three company. Section 9.10. The new
information curators jesse Walden a variant said the internet
with no economic incentive.
Don't underestimate what the internet can build as douse.
If you've been following me and Massari for awhile. You know, I'm bullish on token powered information curation. The V one token curated registry primitive had some flaws but in general curation markets could replace centralized ad driven algorithms, improve
credentialing and social signaling, reduced,
low volume, redundant work and crowdfund. High value unique work in information services. Let's start with the most important premise curation markets
can create incentives
to crowdsource quality for mission aligned community
quality is very subjective you say and that is true. People seem to really enjoy the dopamine
or cortisol hits they get from their current
media consumption habits, which is why we have these sugary low nutrient sources of information in the first place. But there's three things Web three does a little differently that
Alter this number one
it creates incentives for Portable, open user generated data breaking the Web 2.0 companies data silos will open up a universe of possibilities. Number two, it allows you to reflect on what you
want to curate at any given time.
make me happy,
make me nostalgic,
inspire me, inform me.
Show me the conspiracy theories and all of the facts of this case three douse will allow you to align with a tribe or an individual signal booster and build
a curated information market around that entity
that opens up the possibilities for alternatives to google search that look less like page rank and more like a custom feed or to toggle information filters based on your mood. Or get
paid to be a bullish collar outer in the post
truth media establishment Substack
has already monetized the intellectual dark webs long form content. What's next?
Some of the projects in content creation that I'm excited about. Our pub Tao which aims to build a decentralized associated press. You don't need hundreds of versions of the same basic news story. There's Mazzari's hub. An analyst dow for decentralized token research bank list. I was doing some pioneering work crowdsourcing various channels and vertical izing crypto coverage across its
community. Art defied Taos
As we touched on
earlier. We're starting to see more experiments in how long form content is funded by a mirror
when it comes to quantifiable data sources. The prospects are equally exciting.
The graph turned a token curated model into a multibillion dollar to centralized Blockchain data indexing platform. For token metrics. There's metrics Tao by flipside and I'm sure we'll
see. Dune dow soon projects like index
coop have made it possible for curator's and information providers to
leverage their curative strengths and communities to propose low lift discretionary indices that power new synthetic instruments. These are
things that simply aren't possible in regulated financial markets or if they are take
years and millions of dollars to effectively produce outside of crypto. Biology has been thinking about content
creation bounties beyond
Crypto as well, proposing a competition to create a crowdsourced inflation dashboard. It wrote in 2017 when we unveiled Massari to the world that the Bloomberg of Crypto wouldn't be a company but a network.
As an industry, we
finally got the tools to make that a reality.