Testing A Dao For Local Organizing

20 May 2023

Summary: How and why to use a DAO to manage local organisations, step by step.

The promise of DAOs for organisations of all sorts remains one of the great hopes of blockchain optimists. Cutting out points of centralisation (like individuals who manage the bank account), transparent finances and voting, and programmable workflows are all part of the allure.

We’ll only really know if they can help by trying them out, so I’ve started experimenting to see where they might be useful.

Such mini-DAOs let us test examine how they can work to solve a certain problem and also allow an organisation to test how they fit with their work flows.

So here’s a test DAO with a social design group to manage the design of better storage solutions for the organisation’s event space. The budget is a small amount ~£200 from the organisational budget.

We need to explain how the DAO would be used by the members, for what actions, at what cost, and for what benefit. So I created the resource DAOs in practice to help.

Then, we began testing with a functional DAO. We actually used a DAO on a test blockchain, which can be used without spending cryptocurrency, that is, for free. If we decide that it’s working well, then we can establish it on a real-value blockchain.

To show the specifics of how the DAO is actually used, we track actions on this spreadsheet:

Costs of service

Much like other web services, there are costs attached to using DAOs, specifically transaction costs to run the various actions on the blockchain and make things happen e.g. finalising votes, paying suppliers, etc.

On a test network, such as the one we’re using for our experiment above, usage is actually free. However, the currency used on test networks has no value so doesn’t offer the full outcome such as real payments following a group decision.

On a real network, transaction fees vary so costs are not entirely predictable. This can be a problem with DAOs at the moment, particularly for small projects. Nevertheless, there are ways to minimise these costs and ongoing developments are pushing costs down – they should be negliglible soon.

Here is a sample of fees for a bunch of actions:

Set up a DAO with DAOHaus on Gnosis Chain.
Proposes a vote e.g. “pay wallet address X for doing some work for the DAO”.
10 members vote on the proposal.
Vote is processed and associated funds are sent to provider’s account.

Couldn’t we do all this without DAOs and blockchains?

Some critics say that blockchain is overkill and most projects can be done better without. It’s an important concern particularly as the technology can currently claim few successes.

Whilst we remain in this early age, it’s worth clarifying what benefits we hope to find by using DAOs.

Trust and transparency

Every DAO decision, including those that lead to funding actions, is made by and viewable by all members as a default.

A ‘traditional’ organisation could have rules insisting that every decision and expenditure is made by and documented for all. However, trusted treasurers can often act independently. This is just not possible if a DAO has been set up properly.

Customisations

Even today’s young DAO platforms offer rich functionality that gives custom design options for organisational activity.

For example, you can expect functionality that lets you set quorum for votes.

This can all be done in non-blockchain orgs by agreeing on the parameters and managing it accordingly. Having it run as standard reduces workload and helps ensure that the rules are upheld.

Wallets and voting feel empowering

There’s something powerful about having your digital wallet in your browser bar, ready to vote or spend tokens. This way of experiencing the web activates people and brings potential for meaningful, online collaboration.

This strikes you when you see a user make a blockchain transaction for the first time.

We hope that it may yield a renewal of civic organising.

» If you need help to understand if a DAO could work for your project, send an email.

More resources for starting with DAOs

Overview of the steps and considerations involved in establishing a DAO for organisational use: https://www.crypticalstudios.com/daos-in-practice

Quick, practical guide to starting with DAOs https://www.crypticalstudios.com/how-to-dao