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Your DAO Doesn't Need to Be Decentralized

Sam Sklar

You just started a DAO and received a message like this…

Ignore him. Not because he’s wrong, but because he’s missing the point. DAOs can’t start decentralized. 

A DAO starts as a person or group of people that rally others around a mission that’s important to them. DAOs aren’t born spontaneously from the bowels of the blockchain. First, a community must exist. Then that community can leverage decentralization to increase its staying power. 

To create a community, you need tools to market (Twitter) and to discuss (Discord). You can’t even set up a decentralized twitter account!

To host governance votes of a shared wallet, people need to own the DAO token / NFT. That token sale doesn’t happen without human intervention. Someone has to get tokens into the hands of the community. 

Many important roles, such as the discord community manager or the digital artist, will be hired before the token sale. 

There were 24 days from the LinksDAO NFT Mint (Jan 1st) to their first governance vote (Jan 25th).  A decentralization maximalist might argue that Links DAO had no right to append “DAO” to their name until January 25th, and even now might not deserve the title. We at Barracuda say ignore the decentralization maximalist (he’s probably a miserable twitter troll anyway). 

Boldly announce your intentions from day 1 and the community will help you make your vision a reality. Then, as you scale and mature, progressively decentralize. 

How do you progressively decentralize?

Progressive Decentralization Playbook

Idea Stage

  • Identify the project / mission you want to work on
  • Determine if a DAO is right for you
  • Articulate community principles and guidelines. Example from MoonDAO
  • Marketing and community building! 

Token Distribution

  • Determine how much money, if any, the community will need to accomplish its goals
  • Choose your fundraising mechanics (NFT v Token sale, pricing, bonding curves / discount rates, etc.)
  • Create your multisig wallet
  • Fundraise!

Early Governance

  • Register on Snapshot (for off chain governance)
  • Host spirited debate in discord, ratify decisions in Snapshot
  • Depend on your core team to see through confirmed proposals

Fully Decentralized

  • Migrate to on chain governance. Retroactively backup snapshot proposals on chain
  • Burn multisig wallet access
  • All proposals are carried through via smart contracts that can achieve the desired end state without human intervention

There’s no one size fits all approach to scaling your DAO, but you will probably find yourself shifting through the phases above as you build out your community. Don’t feel the need to rush - setting up a successful decentralized community takes time! 

It’s worth noting that because full decentralization requires all proposals be carried out via smart contract, it’s completely infeasible for most DAOs today to be fully decentralized. If funds need to touch traditional finance rails, or the DAO is interacting with real world assets, real people will need to be trusted to see through work off chain. It will take years for the Defi tools to exist to enable seamless interaction between DAOs and traditional businesses. We’ll need to trust core team members more than we may like to at times. Fortunately, there are a lot of good people working in this space and the risk is worth it as we are all experimenting to unlock the power of DAOs.