Viewpoint: Does the DAO that everyone cares about is more like a company or a community?

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DAO not only represents a new coordination model, but also represents a new economic model.

Original title: ” Former Ernst & Young Blockchain Leader: Is DAO a company or a community?
Written by: Andrew Beal, former head of Ernst & Young’s Blockchain Translator: Yangz

Recently, more and more friends around me have joined DAO. Some are passive members, and some are active contributors. I think this is largely due to the fact that DAO is currently a hot topic in the industry, (after all) this is an interesting trend worth observing.

Observing this situation triggered my thoughts–is the DAO a company, a community, or both? This is an interesting question.

I have been discussing this issue a few weeks ago, but when I hit a wall, I let go. But sometimes you just don’t have enough pieces to connect something together. After seeing some tweets and graphs that sparked some new ideas, I picked it up again this week.

Let’s zoom in and see…

Company and community

To emphasize the difference between a company and a community, let’s compare a technology company with New York City.

The businesses run by technology companies have very specific value propositions. Companies have target audiences to solve problems for. It hired a group of people to provide this value and hope to make the company grow.

On the other hand, New York City offers a wide range of things for the people living there. Basic necessities such as water and electricity, housing, school, food and job opportunities. The target audience of a community is the people in the community.

Simply put, the purpose of an enterprise is to serve customers, and the purpose of a community is to serve its members.

Now let us look at another example, this example involves a DAO…

Imagine a new company establishes and launches a DeFi agreement (business). In this example, the agreement is a product/service managed by the company. Two years later, the company launched a token and transferred control of the protocol to a DAO. The product/service (agreement) remains unchanged, but the management of the business has changed.

This simple example emphasizes that DAO can operate a business like a company.

Earlier this year, the DAO was granted limited liability company status in Wyoming, which protects members from general partnership responsibilities and allows them to maintain ownership. So maybe DAO is more like a company? But it is too early to draw conclusions. let’s continue…

Community Involvement

Community is an interesting topic and requires in-depth research. My whole life has been part of the community-neighborhoods, schools, churches, sports… and now there are cryptocurrencies. But if I’m telling the truth, before writing this issue, I never thought about the scope of community involvement.

The community is inclusive in nature, and some are even permitted. You are part of the community simply because of where you live or where you go to school. This is also a revolving door; new people always come in, and old people go out. On the other hand, having any power or authority in a community is exclusive, and often requires election, appointment or employment to obtain a formal position.

In order to visually represent the scope of participation in our community today, I stumbled upon Archon Fung’s “Types of Participation” model, which describes the most common form of public participation in local democratic governance.

For the picture above, I will not elaborate on Yiyi, but I want to discuss a few of them, reversed from right to left.

  • The Public Sphere has the lowest barriers to entry, but it is also the least influential. An example of this is participating in public protests.

  • Lay Stakeholders (Lay Stakeholders) are unpaid individuals, but they participate because they have a strong interest in some public issues.

  • Professional stakeholders (Professional Stakeholders) are different from non-professional stakeholders in that they use money to participate in governance, such as lobbyists, consultants, campaign directors, or union representatives.

  • Elected Representatives are limited to those who hold elected positions, which means they must have successfully conducted election activities.

  • The most exclusive are Expert Administrators, who are the people who manage government agencies or agencies. What they do often requires certain certificates and experience.

Most people in our community are between public domain and non-professional stakeholders. Only a few people work full-time in or for the community.

I think Fung’s model is a good illustration of the different ways people participate in the community. Some are active, some are passive, and some people use this as a job.

Let’s compare Fung’s model with today’s DAO participation…

DAO participation

Just like participating in our local communities, so is the participation of DAO. Some people participate full-time, while others participate passively.

While creating the participation pedigree for DAO, I stumbled upon this simple graphic by @flynnjamm, which illustrates the different ways people participate in DAO.

Viewpoint: Does the DAO that everyone cares about is more like a company or a community?

Let’s look at each type of participation, from the most inclusive to the most exclusive.

  • Tokenholders are the most inclusive category of participation. In addition to holding DAO tokens, individuals can remain completely passive. Being a passive token holder in DAO is equivalent to being a passive homeowner in the local community. You have made a financial investment in the community, but you have not taken the time to build or improve it.

  • Bounty Hunters describe the categories of contributors who perform temporary tasks for the DAO in exchange for rewards. These are usually in the form of grants, awarded after the public RFP and proposal process. Funders can sell their services from one DAO to another, especially if they are professional in a specific field (such as financial management).

  • Core contributors are equivalent to the elected representatives and expert administrators of our local communities-individuals who work full-time for the DAO, and are almost always founding members or long-term contributors, with established reputations (like local political Family!).

Comparing these two pictures, I believe that the way individuals participate in the DAO today is the same as the way they participate (or not participate) in the local community.

So is DAO a company or a community?

This is my thinking…

Like a company:

Like a community:

The first revelation here is that DAO is a mechanism for organizing a group of people for a specific purpose. This purpose may be commercial, civic, social, charitable or other.

The second revelation is that the same technical mechanism allows you to operate all of the above things. Smart contracts and tokens will become the default structure for any online group to coordinate their efforts, especially when participants do not trust each other.

The third revelation is that decentralized projects, especially public blockchain networks and DeFi protocols, will always look more like communities. However, the DAOs that manage them look more like companies (see Governance 2.0).

Summarize

There are various communities online-your Twitter followers, Facebook groups, my Substack subscribers, everyone with a Bored Ape avatar, Yelp Elite commenters, $FWB owners. And our contacts will only increase.

At the same time, we have an emerging mechanism like DAO, which is used to organize people and capital on the Internet. These two forces will collide. Maybe instead of centralized platforms like Facebook, Instagram, and Youtube to manage the relationship between creators, users, and advertisers, DAO enables these three groups to work directly together, eliminate middlemen, and make incentives more consistent. .

DAO not only represents a new coordination model, but also represents a new economic model.

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