If you've worked in the DAO space for any length of time, the question of legal incorporation is bound to arise. It seems the reflex impulse to wrap a newly formed DAO in a legal wrapper to attain increased legitimacy or supposed legal protection. It sounds reasonable, but a careful unpacking of terms and concepts reveals deep confusion.
The dominant meme of DAOs as internet native businesses, while helpful, is insufficient. Not only are DAOs not legal businesses, but they can't be and retain the essence of what it means to be a DAO. In this paper, I will argue that DAOs are dramatically more than new forms of incorporation.
I will attempt to do this by defining several fundamental legal categories, then the term DAO itself, and comparing them. After demonstrating the deep incompatibility of legal constructs and DAOs, we'll examine promising paths for how DAOs can leverage legal tools without being ruled by them. We'll conclude with a call for all DAO operators to imbibe the vision of our predecessors, the cypherpunks.
DAOs desperately need skilled project managers. As every skill set required by a project is potentially an entirely different agent or collection of agents, the need for a kind of general contractor to piece together disparate deliverables is essential. Traditional models of team forming/norming/storming do not work when people and groups themselves are transient and lack reputation systems. Even existing highly skilled project managers must reinterpret and reassess the tools of their trade to prioritize the unique incentive dynamics present in the Web3 context.
I love DAOs and their potential, but we are in danger of cascading failures if we do not create better coordination and execution patterns. I wholeheartedly endorse dedicated PM Guilds within DAOs because of this and am trying to introduce more Web3 concepts to traditional audiences through channels like TheModernAgilist.net to bring these two worlds together. I observe several antipatterns and the responding mitigation strategies as I work with teams. By sharing them, I hope to highlight the value of having a PM/Agilist as a part of the DAOs arsenal and as a resource to help teams directly.
Not everyone who joins your Discord server is a member of your DAO, and neither should they be. Different levels of community engagement have different privileges and expectations, and to conflate them is a disservice to your community. Some people want to participate casually, while others are seeking full-time employment. Some join for leisure, while others aim to untie the Gordian knot of decentralized governance.
Other issues arise from misaligned financial incentives. Members with a $500 investment are inclined to think differently than members with a $5,000 or $15,000 investment. Responsibilities differ as well. Asking someone to take notes in a meeting differs from managing a $25k project. In the latter scenario, the community assumes risks in opportunity costs, even if the funds are safe in a multisig. Consider the following questions when thinking about the organization of a DAO:
Decentralized Autonomous Organizations (DAOs) are the next evolution in human organization. They are enabled by the Internet and will, most assuredly, have an impact just as large. While their present state is one of early infancy, they are the ground soil from which the world’s first true digitally native nations will emerge. It’s in their core design to enable outputs and outcomes of greater efficiency than traditional organizations could ever hope to imagine.
This is wrought through at least three unique mechanisms made possible by the peculiar characteristics of blockchain and smart contract technology. These three mechanisms are dramatically improved coordination through programmable agreement, aligned incentivization through shared tokens, and radical inclusivity made possible through permissionless membership and global digital access. To put it simply, the purpose of a DAO is to accomplish more. More info: State of the DAO