A Beginner’s Guide to DAOs
Decentralised Autonomous Organisations, tech compensation in Greek startups, community building for open-source, Skroutz future plans, funding rounds, jobs, events, and more
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🍇 A beginner’s guide to DAOs with Dean Pappas, co-founder of Grape
A new way of coordinating people is taking the crypto economy by storm recently, challenging the status quo in organisational structures, by decentralising governance and ownership. DAOs stand for Decentralised Autonomous Organisations and I’m pretty sure Confucius would approve them too (Confucians used the term dao to speak of the way human beings ought to behave in society).
So what is a DAO? How has this new paradigm evolved over the years? What are the different types and challenges? How are they structured?
I’m really excited to learn more about it as we deep dive together with Dean Pappas, co-founder of Grape, and discuss how governing communities, financing projects and sharing value change with DAOs. Dean and the Grape community (they operate as a DAO themselves) are building infrastructure tools for DAOs, which are already used by over 100,000 members.
Let’s get to it!
What is a DAO?
DAOs are a new way of coordinating work, resources, and decision-making amongst a group of people; an internet and crypto-native structure to decentralise governance and ownership in an organisation. DAOs are owned by the people who create value in them, giving them the ability to vote on the direction of a project and profit from its success. A relatively new idea, but one to be taken seriously. You can think of it as a company where everyone is a stakeholder, a decision-maker, and the execution of decisions is done automatically through code and a shared set of rules enforced on a blockchain. It can be small and informal or large and enterprising and anything in between. In any case, DAOs have socio-economic and socio-political elements and are becoming an increasingly effective way to internationally coordinate labour and resources with other like-minded people.
This is really a new paradigm for organisations. DAOs stand on the frontier of the coordination problem space with an alternative based on a trustless, autonomous and permissionless structure. They are attracting more attention as they continue to showcase how fast and effective they are at coordinating a group of people towards a common goal, already holding $13 billion worth of assets under management. A good example is ConstitutionDAO, a DAO focused on purchasing a rare, first-edition copy of the U.S. Constitution at a Sotheby’s auction, that raised $47 million, the most money crowdfunded in less than 72 hours.
There are three key benefits DAOs provide:
Trustless structure: The major innovation of blockchain technology is that it allows participants to interact publicly or privately without a trusted third party. In the context of DAOs, this also means the ability for people to coordinate, pool resources together, review actions and rules within an organisation, vote on decisions, and make sure that any decision voted and agreed upon will be implemented; all without the need for a centralised authority, but by using rules implemented via code and enforced on a blockchain. Decision making and discussion are public, and there is no gatekeeper in any part of the process. Until today, gatekeepers have been a fact of life. Decisions (and their execution) had to be centralised, because there was no other way to handle things like payments, hiring, or vote-tallying. Removing gatekeepers is now an option for organisations, made possible by a transparent ledger and the emergence of blockchains.
Autonomous structure: Organisations today are tethered to physical locations and legacy traditions like monthly payments and a 9-5 work schedule, creating high switching costs. DAOs leverage their decentralised and transparent nature to enable new involvement paradigms, where members can contribute in the manner they find most compelling, while getting paid on an hourly basis and working any time/anywhere. There may be guidelines, but more often than not, people choose their own labour and self-organise. Traditionally, the relationship between the individual contributor and the overseeing entity has been a subservient one; the worker acts in accordance with the company’s demands. That isn’t the case here. DAO members join in where and when they believe they can add value and want to do so.
Permissionless structure: Unlike today’s organisations that are governed by centralised entities, DAOs and their operations cannot be stopped. Truly decentralised organisations are censorship-resistant, in a way that anyone can transact with each other without third-party interference. Pseudonymous participation, resource allocation, and the tools required to maintain coordination cannot be shut down by external actors. De-platforming is a common occurrence on Facebook and Twitter, and those are only the digital examples of how organisations are threatened by third parties. In more extreme versions, government seizure of assets or arrests can destroy any traditional organisation. DAOs can last forever.
Can you share more about the evolution of DAOs?
To begin with, I consider Wikipedia to be the first version of a DAO, and it has been wildly successful. Setting up the framework for how information is posted and validated was the hard part of the work, and now it serves as the largest library of information available on the internet.
The first crypto DAO (actually called The DAO), launched in 2016 on Ethereum, with the goal of being a decentralised venture capital fund. Members contributed ETH and received DAO tokens in return, that could be used for voting on which projects the funds should be allocated. The group was incredibly successful in raising funds, 12.7 million ETH (the equivalent of over $150 million at that time, from more than 11,000 investors); a significant shift in the very idea of economic organisation. However, there was also bad luck and the first example of what can go wrong in DAOs. An exploit was discovered in the code, and a hacker proceeded to siphon off one-third of the funds in the treasury of the DAO. This was a critical moment in the ongoing debate between Code is Law and Law is Code. Some decided that what was already in the code must be respected, while others wanted to change the code to help those that were hurt by the hacker. As the community did not agree on how to handle the event, there was a fork, and the network split into two distinct blockchains, Ethereum and Ethereum Classic.
What followed was a DAO winter, which nevertheless let builders continue their work and prepare the stage with the emergence of a variety of new concepts and projects, which focused broadly on the categories of basic tooling and their application in creating DAOs.
We are still in the early innings of this revolution and we are just beginning to experience the proliferation of such organisations. More and more groups are forming DAOs, whose value creation ranges from aggregating capital for deployment (Investment), acquisition of NFTs and other collectibles (Collector), opening pathways to contributors (Grants), to building a protocol (Protocol), producing content (Media), and creating social communities (Social).
Below you can see an overview with DAO categories and some projects within each one.
How does Grape support teams launching, managing and growing DAOs?
The landscape of tools to support DAOs is also growing in parallel with the overall ecosystem. Pretty much every DAO is susceptible to the same high-level challenges as they grow, such as maintaining operational efficiency and coordinating decision-making at scale. Therefore, we need to build the appropriate tools to enable this growth.
At Grape, our core focus is on creating the frameworks and primitives that DAOs need to efficiently communicate and allocate resources. The first tool, Grape Access empowers the creation of communal spaces where only people that hold a particular token can access them. This is important for DAOs to ensure that all members have aligned interests and truly belong to the same community, which can be proved by the ownership of tokens. Before building this, there was no way people could know which comments and input in spaces used for discussing proposals and ideas were coming from actual community members vs. someone just trolling. Moreover, each member’s profile information is used by the DAO to setup votes and emissions, so it is crucial that these go only to the active community members. Other tools that facilitate voting by token holdings include Snapshot, Squads, and Realms (Solana Labs governance program).
The growth of Grape Access is a phenomenal representation of how fast this space is growing. We started back in May 2021, 6 months ago. In our first 3 months, we onboarded 10 communities and verified 5,000 members. Today, we have onboarded over 250 communities with 100,000+ verified members across those DAOs. This tool has been particularly useful for NFT communities, where ownership of the NFT is now able to represent inclusion into their DAOs. You can see below an overview of the communities that currently use Grape Access.
Future tools we are working on include IntraDAO payments, where DAOs will be able to easily send payments to its members, at any time-frequency (think weekly payments), without the need for an administrator. This operation is currently done manually in most instances, and where it is automated, the distribution is usually uniform across members without incorporating metadata or a role structure. With a DAO payments tool that can integrate with popular social platforms, payments can be handled automatically and amounts can be better calibrated based on contributions or roles. It's a vital step towards decentralised treasury management and payroll.
What are the downsides of having a decentralised structure and how can we overcome them?
Clearly, the biggest downside is speed in decision-making and execution. Making sure that everyone has ample time to see the discussions, research and learn the issues, and then have a vote that reaches a quorum is time-consuming. Whereas decision-making is centralised in the traditional organisation form, here we’re talking about a process where potentially thousands of people participate in decision-making and execution.
We’re working on the framework to help segment decision makers into their power areas, allowing groups to make multiple decisions simultaneously. All DAOs need to think with a bias towards taking action, because coordinating the use of resources is the hard part. Today, these problems are handled with a combination of tools including Grape, Discord, Snapshot, Google Spreadsheets and Gnosis. Although the spirit of the operation can be decentralised, there’s still a handful of users that actually control these accounts, leaving them vulnerable to the same issues that plague centralised legacy organisations.
What do you think are the next frontiers for DAOs? Where does Grape fit in this future?
The entire career path model will be rebuilt thanks to DAOs. Training, certification, and employment will all be handled within these kinds of communities where you will be able to join like-minded people and focus on the niche that really excites you. This has many implications for how people prove their skills too (proof of talent). Think about this for a second. Today, when you get a new job, you update your resume with your new role and credentials. Your future employer will call your previous employers to ask for references, validate the information in your resume and go through several rounds of interviews to test your skills. There is no real trust between the parties, because information flows are not public knowledge. There is no transparency and this is why we have all these friction points.
On the other hand, working on DAOs and projects where all the activity is stored on the blockchain will lead to permanent records that nobody can alter or destroy, establishing trust between the parties. This will lead to the emergence of resumes, whose information is publicly available and verified; a public ledger of reputation that is visible with our talent and skills, leading to a much more truthful representation of our employment history.
Grape will be working on the certification process, keeping track of members’ accomplishments and milestones across all of the DAOs. Members will be able to opt-in to have their credentials updated and organisations will update information based on the activity and achievements those people have during their time with the DAO. This is a really exciting space, where lots of innovation will happen in the next few years.
Who else is behind Grape?
What started out as a small group of 8 people competing in a hackathon organised by Solana, a public blockchain platform with hundreds of projects built on top of it, back in May has grown to a community of over 25,000 members. Grape has also raised $1.2m from Multicoin Capital with participation from SkyVision Capital, Definitive Capital, LongHash Ventures, Double Peak Group, and Solana Capital, all of who contribute and consult with the Grape DAO. Something to note is that many of the core team members are Greeks. In fact, there's a lot of great talent in the country and we already see many of those leaving their web2 jobs to join web3 projects.
If you want to learn more about Grape, you check out their website here or reach out to Dean on Twitter.
🦄 Startup Jobs
Looking for your next opportunity? Check out job postings from Greek startups in Greece, abroad, and remotely. Company information is also available.
Grocery and retail delivery startup JOKR raised $260m in Series B, just five months after raising $170m. This makes the company a unicorn with a valuation of $1.2b, in less than a year of operations.
Mysten Labs raised a $36m Series A round from a16z, Redpoint, Lightspeed, Coinbase Ventures, and more investors, to build web3 infrastructure.
Plum completed a $24m Series A that will help propel the company’s expansion into Europe and grow its product offerings.
LANGaware, a health & deep tech company using AI to predict neurological diseases, raised €1.5m from Metavallon and strategic investors.
Amazon Web Services announced it will be creating an AWS Local Zone in Greece.
SenseOne, a provider of IoT solutions, was acquired by Space Hellas.
A list of teams that made it to the next round of this year’s startup competition organised by NBG Business Seeds.
Applications are now open for GSEA, a student entrepreneurship competition, until February 2022 and EIT Health, for early-stage healthcare startups, until December 18.
🤓 Interesting Reads
The first tech compensation report for Greek startups by Sanne Goslinga, Director of Talent at Marathon Venture Capital. A lot of insights on salaries, equity, benefits, gender ratios, locations, and more.
The Startups in Greece report by Foundation, EIT Digital and VelocityPartners VC with detailed data on this year’s funding rounds, acquisitions, and much more.
George Hadjigeorgiou, co-founder & CEO of Skroutz, on what’s next for the company. Some really exciting developments coming up, here.
A post on the current status of the Greek startup industry with five companies close to a $1b valuation, from Marco Veremis, Partner at Big Pi Ventures.
How to stand out in an established open-source community by Jimmy Guerrero, VP of Marketing at Arrikto, here.
Zaharenia Atzitzikaki, Design leader and previously VP at Workable, developing a framework to help with underperformers in a team, here.
Crypto design challenges by Paul Stamatiou, ex-Senior Staff Product Designer at Twitter, here.
Nikos Kafritsas, Data Scientist at Persado, on time series forecasting with interpretability, here.
A look into FORTH, one of the biggest Greek research institutions, and its spinoffs.
Thinking like a hacker with Haris Pylarinos, founder & CEO of Hack The Box, and Panos Papadopoulos, Partner at Marathon Venture Capital, here.
Reinventing Greece through investments in innovation, with multiple speakers and fireside chats organised by Innovative Greeks and SEV, here.
A podcast with Angelos Stavrakis, founder & CEO of Safesize, on the company’s virtual fitting technology for shoes, the changes that AI brings to retail, and much more.
“Scaling Agile” by Thessaloniki .NET Meetup on December 10
“Test anything with "static" mock injections” by Athens C++ Meetup on December 11
“The Prioritization Challenge by Upstream” by Product Community Greece on December 15
“58th Athens Agile Meetup” by Agile Greece on December 15
“MoT Athens Lean Coffee: 5 Myths about Test Automation” by Ministry of Testing Athens on December 15
“#6 Flutter Greek Community Meetup” by Flutter Greek Community on December 15
“Cardano Community Greece by Sapiopool” by Cardano Blockchain Athens on December 19
“Athens Helium meetup #1” by Athens Helium Meetup Group on December 19
You can find a more complete list of Greek tech communities here.
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Greek Startup Pirate 👋