Rapture #148: DAOs Need More Structure
At EthDenver, respected industry leader and previous CTO of SushiSwap, Joseph Delong, had a panel where he discussed the need for hierarchy in DAOs. In his talk, Delong pointed out that structurlessness isn't a viable methodology, which is a direct criticism to how most DAOs operate today.
I could not agree more with Joseph Delong, and have written extensively on this issue in the past. In one post, I discussed how structurelessness leads to a small largely undefined political cohort running the show. Additionally, I have pointed out that most DAOs are developer dictatorships with very few checks/balances. Finally, I have even worked on designing alternative structures to the current shit show that are DAOs.
For this post, I want to go over why current governance in DAOs is unsustainable and what can be done to address the issue.
Developers and DAOs
Now, I don't like to overgeneralize, but for the sake of describing the DAO problem it is helpful to contextualize the cultures of the people who work in crypto.
If you asked me to write solidity code day in and day out, I would bang my head against a wall. While I consider myself fairly technical, I am not the guy who writes code nor do I enjoy being the guy who writes code. I nearly failed out of my intro to Python class in college.
Why, then, would it be any different for developers who are tasked with coming up with solutions to largely social organizational problems?
Crypto is largely developer dominant at this stage, and developers generally enjoy solving technical problems. Scaling solutions, creating specs for new financial products, and MEV are all largely technical problems. The developers I know are ecstatic to work on these problems.
Yet when they are faced with designing organizational structures that require the skill set of a US founding father (i.e. social organizations) rather than the engineering a new financial system, you can almost audibly hear the collective groan from Discord and Twitter.
On average, developers do not want to build formal governance structures, especially since they are largely in crypto because they hate the traditional corporate structures.
As crypto is dominated by developers, it is no wonder that deep thought has not been contributed to DAO structure design.
Lack of structure causes problems
Yet this lack of thought in designing governance structures seriously impede the long term sustainability of any project. Yearn, SushiSwap, and many others are currently facing significant issues in prioritizing what problems to solve first, how to solve them, and who to involve in the decision making process. In my opinion, innovation across these projects has largely stalled not because of developer talent, but because they lack organizational structure. Getting the first product out is relatively easy, as usually a small team pushes it and then launches the DAO. Creating a sustainable organizational structure that repeatedly innovates is far more difficult.
Solution
Eventually, new structures will be designed with robust checks and balances between different levels of hierarchy. While I have designed some structures that I think could work (see paragraph 2), we are just at the beginning of seeing what type of new organizational designs can be developed.
Right now, crypto is akin to the late 18th century in politics, when you saw an explosion of new political governance apparatuses come to market in various nation states.
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