Case Profiles of Decentralized Autonomous Organizations

Executive Summary

Decentralized Autonomous Organizations (DAOs) can be defined as global, digitally-native organizations which enable people to coordinate and govern shared resources and activities through the use of smart contracts on blockchains.¹ The explosive growth of DAOs since 2020 has led to experimentation, speculation, and investment in this emerging organizational framework.² There are an estimated 6,000 DAOs as of June 2022,³ with participation from contributors around the world and an aggregate treasury value of an estimated $25 billion.⁴

This series of case profiles seeks to compile a few examples of DAOs to illustrate the applications and current use cases of these emergent organizations. Below is the product of semi-structured interviews with 13 DAOs and 22 DAO contributors, combined with digital ethnography research which includes analysis of forums, group chats, on-chain activity, voting records, and documentation. The selection of DAOs took into account a variety of objectives and operating activities based on criteria including influence, team size, maturity, and treasury size. This report does not endorse any organization profiled, but seeks to showcase current examples of DAOs in practice. The information in this report was collected from September 2022 to May 2023, and therefore reflects the current state at the time of writing.

Common Themes

Throughout the research of this sample of DAOs, the team observed that many of these organizations face similar challenges or have established similar operational practices.

Common challenges:

1. Balancing accountability and engagement. There was a constant push amongst many organizations to continue to push decision-making out to the edges and keep the community engaged. Although for many DAOs, when too many decisions were pushed to the community, they observed community members experienced voter fatigue and apathy. To counterbalance this phenomenon, many DAOs proceeded to set up a delegation structure to represent the interest of the community. There seems to be a push and pull of how dispersed decision-making can be in practice.

2. Lack of legal clarity. Many DAOs face challenges with the options for legal entities that exist today– often choosing to remain entityless, register as a foreign foundation, or to leverage new legal wrappers such as the Wyoming DAO LLC. Some who interface with a DAO have concerns about their personal liability. DAOs also may struggle to interact with real-world assets as there is no common way to represent physical property or assets on-chain.

3. Scaling down. While scaling up and growing the organization is often exciting and results in less conflict from the community, scaling down the organization can be incredibly difficult. Community members may turn against one another when deciding who to let go as a full-time contributor, or when faced with external pressures and challenges when things don’t go as planned.

4. Token voting. Many of the DAOs interviewed were moving away from a 1 token to 1 vote structure and towards other approaches such as quadratic voting. Most DAOs faced decisions around how to separate ownership and voting rights, as well as if the tokens should be allowed on secondary markets.

5. Shadow hierarchies. While DAOs may structurally be set up for decision-making to be in the hands of the community, often shadow hierarchies and other social dynamics may emerge that make power less visible. This may show up as the original founders, early team, or big personalities becoming influencers within the organization– while not as explicit as a company org chart, these players can be equally as powerful.

Common observations:

1. Progressive decentralization. Several DAOs, particularly larger projects building software, started as a foundation or traditional company and progressively decentralized into a DAO with community ownership. (e.g. MakerDAO, Gitcoin)

2. Venture Capital investment. Many DAOs have received significant investment from venture capital funds and traditional institutions. In some cases, venture capital firms may control a significant amount of an organization’s token supply and have outsized influence on a vote which has been a source of friction amongst many projects.

3. Emergent best organizational practices. Once many DAOs reach a certain size, they begin to set up working groups or sub-DAOs which each have a specialized focus and degree of autonomy to do their work. Many DAOs also organize into “seasons” or quarters in order to set, track, and achieve measurable goals.

4. Common tooling. Most DAOs used the same tooling to run their organization. Discord and Twitter are used for community discussion, Snapshot is used for voting on governance proposals, Discourse is used as a forum to propose and discuss proposals, Notion or a native site is used for documentation, and Gnosis Safe is used for the wallet (treasury) of the organization.

5. Modularity of the ecosystem. The DAO ecosystem is closely linked as many projects are forked from one another (e.g. KlimaDAO is a fork of OlympusDAO) and people will spin out additional DAOs, staying involved in multiple projects.

While still very experimental, DAOs demonstrate a unique combination of advances in online governance, innovative potential, and scale in coordinating people and capital around the world. The following DAO case profiles illustrate at a high-level various activities, controversies, and missions of these novel organizations.