The future of governance, decision-making: Why I’m excited about DAOs

For those of you who have yet to hear the term DAO, it stands for Decentralised Autonomous Organisation, and I happen to think the concept has the potential to shape the way we work, the way we govern and the way we make decisions.

The way I explain the concept of DAOs to non-crypto natives is by using the analogy of frequent flyer points. The current frequent flyer programme is very much the “web2” model, meaning the decisions about how many points are earnt per mile travelled, how many points must be accrued to upgrade to business, the number of points needed to purchase your favourite perfume, or whether your favourite perfume is even an option at all — these decisions (and more), are made by a centralised body for which you the point holder have no influence. You the point holder, and the points, well they’re the sales strategy to incentivise past customers to become repeat customers (to make the airline “sticky”).

However, “web3” turns this model on its head. Let’s say Singapore Airlines decided to launch a Krisflyer DAO. You as an existing Krisflyer member might gain instant membership, and your Krisflyer points will be automatically transferred into Krisflyer tokens in a wallet. Depending on the rules and governance system of the DAO, most likely the tokens in your wallet enable you to vote on proposals made by other Krisflyer members regarding all measures of decisions. You could even earn additional / bonus Krisflyer tokens by voting regularly on proposals. You could submit a proposal to the DAO to request your favourite perfume be listed and propose the number of points needed to exchange points for perfume.

Put simply, DAOs empower stakeholders to engage in the decision-making process in which they have some form of investment or interest.

Transformation of trust

One of the most significant features of a DAO is that its financial transactions and governing rules are recorded on an open blockchain. Using smart contracts to automate financial transactions eliminates the need for the oversight or approval of centralised intermediaries or human gatekeepers of power.

To keep with the travel analogy, the smart contract could be compared with the development of the automatic check-in tellers that replaced or significantly reduced the number of human check-in clerks. Where clerks previously had the power to move your seats, give you an upgrade & check you in, the electronic booths do the same using a pre-define coded sequence that processes these standard requests digitally. Notably, if the airline were a DAO, then every check-in, upgrade and seat move would have been processed via a smart contract, and the details of those transactions would be publically accessible for review by anyone within the DAO (so any clerk sneaking upgrades to friends and family would soon be detected).

DAOs represent the move away from centralised concentrations of power in limited individuals and move towards a future where all stakeholders participate in decisions in a way that is transparent and facilitated communal accountability.

DAO Teething troubles

However, the very potential I recognise for future disruption and transformation in governance and decision-making, is by no way or shape a certain destiny, and could easily become stifled and de-railed.

From my perspective, the most significant obstructions are:

• accessibility (the vast majority of individuals who should and could be helping to shape the development and design of DAO social/legal/ technical infrastructures, have no real understanding of the potential of this space, many don’t have a crypto wallet, or know where to get started)
• regulation (the lack of regulation, and the short-sightedness of the regulation that does exist [e.g. prohibiting founders from voting in a DAOs earliest stage to prove “arm's length” distance] has perpetuated the distortion in the direction and design of self-governance)
• communication tools (Discord seems to be the channel of choice [previously Telegram was the rage for “building communities”], and yet the UX associated with the vast majority of the active DAOs on Discord is terrible, often requiring the user to turn off notifications, or scrolling for hours to make sense of the most recent developments)

This is by no way an exhaustive list or analysis of the current barriers to mass adoption or uptake of tokenomics, DAOs or Web3, but its enough to break the ice for individuals who are deeply passionate about solving current impediments of local, national and international governance and decision-making, and hopefully might lead them to do some deeper research into the potential DAOs might offer to advance or improve the way humans work together and make decisions.