#19 Governance Series
TLDR: We cover the latest and greatest DAOs tools to turbocharge their effectiveness. From treasury management, communication, product development and event reputation systems. Web3 has its own killer set of native tools, setting itself up for the next growth phase. StableLab will be here to cover all the latest trends.
The rate at which DAO tooling has grown in 2021–2022 bodes well for decentralised organisations. Not only has the research and lessons learnt, but the tools are better than ever. This article will take a snapshot of the current landscape of Governance tooling.
What are DAO tools?
Before we dive right in, a decentralised autonomous organisation (DAO) is a collective of actors working independently on a goal. Web3 DAOs require various tools, from treasury management and product development to community management. However, that’s only the first part of the puzzle, as these tools must interface with an on-chain world to reach true decentralisation.
Instruments for treasury management
Many DAOs manage a treasury, and the essential part of treasury management is to be a project’s custodian over time. The tools treasury managers have come a long way. Out with the Excel and in with the web3 version.
According to Dune Analytics, no tool is more widely used by web3 projects than Safe, with an estimated $30 billion stored. The industry-leading multi-sig wallet allows users to secure funds using configurable signing mapping. For example, I have eight managers of a DAO, and I want 5 of them to agree before signing a transaction. Safe allows you to execute transactions if 5 of them sign the transaction, safeguarding the funds in the multi-sig from rouge actors.
With the support of all the L2s and a growing developer community building plugins for Safe, such as their Zodiac module, the feature set of multi-sigs and their adoption is likely to continue growing.
Coinshift wants to become the treasury management dashboard. Built on top of Safe multi-sigs, Coinshift aims to become the one-stop shop for all treasury actions. It adds a beautiful UI to an industry characterised by unnecessarily complex user interfaces. It should be a default tool for any treasury team.
Coinshift has made treasury management for organisations more accessible through a specialised interface around Gnosis Safe contracts. I am excited to see their risk assessment integration allowing more prudent treasury management decisions for teams. — Stefan George
Streamed payments are one of the most potent primitives in the space. Imagine managing your entire payroll in one deployment or paying for a service you use per second. Anyone can do the math, but using a payment stream quantifies the time value of money on per second, minute, and hourly basis. Superfluid and Sablier are the leading teams in the area with some excellent out-the-box solutions. Both protocols offer friendly developer tools for any protocol to use their primitives and a plug-and-play UI to get set up immediately.
Remember when I mentioned a while back that with smart contracts, we should be able to replace recurring payments with continuous streams? It looks like someone [Sablier] did it… -Vitalik Buterin
Product development within a DAO environment
The Apps and Dapps we all know and love are built by dedicated developers who commit, push and pull our products into shape and deploy newly requested features. Web3 development is still reliant on the titans of code collaboration.
Radicle is looking at becoming the sovereign development hub for any project — the web3 Github. This is one of the essential tools for the ecosystem. Web3 is all about the code we create, and most of the ecosystem still runs on web2 platforms. GitHub and its competitors have always been developer-friendly, and Radicle aims to be user-friendly and genuinely peer-to-peer.
The mission of Radicle is to enable genuine peer-to-peer code collaboration. I encourage any team looking to start their project with Radicle.
Identity and reputation
Building a reputation is as essential in web3, if not even more critical, given that spinning up a new account is trivially easy. Also, some accounts are so well known that their activity is closely monitored. For example, in the delegated voting space, a specific delegate’s reputation is built on their historical actions.
The concept of identity and reputation are blurred when we think of famous, clearly skilled anons. Instead of your education, country or personal characteristics being a deciding factor, it’s your ability and reputation. Being able to bring a reputation outside your features makes contributions more meritorious.
ENS is the gold standard for domain names. Whether personal or domain names, the ENS ecosystem brings the identity of your choosing on-chain. Much like how internet domain names changed how we interface with the internet, Ethereum domain names will change how we adopt the growing industry. We all know to go to google.com to search the web and not 220.127.116.11 (or whatever IP google is assigned to in your local area). Humans intuitively want to work with you and your name as an identifier, not some fancy address that is meaningless. This can also extend to any contract — your favourite NFT project contract can now have a name.
Coordinape takes reputation and allows people to be compensated for it. The system relies on attestations to bring to light the most valuable contributors. A Coordinape system moves the decision-making of compensation to members since the boots-on-the-ground members contributing can better gauge contributions.
An example: A group within a DAO works towards getting an educational platform together. The effort is divided amongst the member, and each contributes to the overall goal. Compensation is dished out based on the number of attestations your contributions received from other members.
A slight drawback of the methodology is it quickly devolves into a Sybil attack of popularity (not unlike many government elections). The coordinate team is aware of this and working to resolve this issue. Nonetheless, a grass-roots compensation plan for the community by the community has a clear route forward in vaulting the best and brightest within a community.
Web3 promises to bring individuals together to achieve shared goals and share the benefits. It’s a beautiful vision. But getting diverse groups of empowered people working harmoniously to get things done is no small undertaking. It takes communication and effective feedback between contributors to align everyone and work towards a common goal. We practice this daily in the social workspace of DAOs, but we still have much to learn. — Coordinape
Good old governance
The scope of governance voting is ever-growing, with StableLab's long-form piece on off-chain vs on-chain voting. Every DAO member understands Snapshot — the most widely used off-chain voting mechanism. However, Tally has also made strides in being the central tool for DAO operations, including voting.
Another DAO voting tool worth exploring is Boardroom (StableLab has its delegate profile). As the name suggests, it acts as a delegate boardroom for faster and more contextually aware governance votes.
Governance is more than just tallying up votes and taking direction based on votes. Like real-life governance, there is much more to bribery, resolution and arbitration. Web3 holds itself to a higher standard where we understand that elements like bribery come into play when the incentives are right. MEV is a perfect example of how incentives for extractable value will always happen. The difference is that it can be baked into the system transparently and openly instead of in dark, smoke-filled rooms. While the moniker of bribing protocols has stuck, the realisation that being transparent about incentives only makes governance, delegation and project contributions much more robust.
Votium is an example of a protocol that rewards members with rewards if they vote in a specific direction. The value, who gets the reward and the entire bribe mechanic is placed in front of everyone. While the behaviour of voters is still the same, it does bring a sense of ease when you can see the forces play out in the open. Votium is specific to the Curve ecosystem and was instrumental in bringing about the famous Curve Wars.
We get it; people fight, and it’s more about the resolution. When it comes to dispute resolution, there is also a series of tools to use. Kleros, the self-proclaimed Justice protocol, uses economic incentives to get users to vote on the truth and be rewarded if they vote with the majority. In essence, arriving at the common Schelling point. A great example to understand where this is useful is to take an Oracle outage:
An Oracle goes offline, and contracts rely on the price. Smart contacts liquidate users or give them bad trades or any number of bad outcomes. The common sense answer is to say it was just an error and not have anything happen, but the contract was programmed to do what it had to do, and now there is a dispute. Kleros would introduce a sense of subjectivity into the discussion by allowing users to agree on the common sense course of action.
Currently, Kleros has been actively verifying Proof of Humanity Requests:
Another example of when errors led to needing a soft consensus and common sense approach was the DAO hack that led to Ethereum forking into the canonical Ethereum and the Ethereum Classic chain. In short, a smart contract bug allowed a malicious actor to drain the DAO’s funds, and the community agreed to soft fork to blockchain to revert the hack. Some users, mainly the original DAO hackers, protested the idea stating the hacked contract worked as intended. The DAO hacker then gathered enough support from miners to create a new chain, thus splitting Ethereum into Ethereum classic.
Distributing knowledge and learning within a DAO
Information is king and understanding some of the most exciting new projects and proposals is one way to keep up to date. We want to get right to the best bits and not have to read every forum post or troll through hundreds of Discord messages. I want to highlight two projects.
Messari Governor is the most helpful overview of all DAOs, proposals and tools. You can get a bird’s eye view of a good chunk of the DAO ecosystem and up-to-date proposals in one spot. The Messari team have been in the crypto information game for a while now and has a wealth of other helpful information sources, such as news and research.
A few features of the Governor are the ability to track and manage all team proposals, even vote on a few that support them, and track the outcome of votes. The perfect one-stop-governance shop.
Messari has also been at the forefront of creating a reporting standard between protocols with their quarterly reports that any analyst will be happy to read to track the performance of a project over time.
It would also be remiss if I did not add our StableLab blog to the list. We aim to provide in-depth insights on the latest trends in DAOs, governance and the broader web3 metaverse.
How about starting your DAO?
If you have gotten this far and are wondering how to start your own DAO, here are the best tools in the space for you to consider. Aragon and DAOHaus are great for beginning DAOs and have many other valuable tools around governance and voting.
This list could never have done justice to the work the projects are doing — I encourage any who found any interest to reach out more. There is also much to be said about how these services could be tied together to enhance their functionality. All the composability web3 has worked towards can be shown off front and centre with the creative thinking of linking building blocks.
Imagine a Superfluid payment stream where the stream is based on your community Coordinape attestations. In another line, your developer contributions from Radicle are linked to your ENS name.
I look forward to the LVL 9000 tools that will become the new web coordination standards. I could go all day thinking of ways to put two of the primitives together. If anyone is interested in working on this, please reach out, and we can discuss how to extend the Governance tooling space for the betterment of everyone.
Get in touch,
If you would like to support us in our governance efforts,
If you and your team need guidance on governance related matters, or
If you are a founder who is building something interesting in web3