The DAO Is Dead—Long Live the DAO
ApeCoin shuts it down, Jupiter hits pause, and everyone’s declaring DAOs a failed experiment. But what if the real failure is misunderstanding what DAOs are even for?
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Intro
This week appears to be a pivotal week for DAOs. And it got me thinking, is the death of DAOs upon us? There are many folks who LOATHE the concept of Decentralized Autonomous Organizations (“DAO”s). And based on what is happening on the ETH and SOL side of things, it would seem obvious the idea of DAOs are dead. I personally feel differently.
Context
Lets cover how we got here. Onchain DAOs have been around since the really early days of ETH. The DAO in 2016 raised 150m in ETH early on but subsequently was hacked for about 1/3 of that which led to an ETH hardfork to be able to save investors. After that, tech matured a bit from 2019 to 2021 with the creation of Snapshot, lowering the barriers to creating and managing DAOs. This also happened to coincide with a huge NFT boom and overall market boom. The creation of DAOs exploded in 2021 and many saw them as the future of governance and coordination on the internet and in real life.
DAOs (and crypto overall) were sent into hypermode. We saw the creation of Constitution DAO, Uniswap DAO getting larger with the new inflow of money and more.
I personally was a bit skeptical of DAOs originally back in 2021, mostly due to my role in technical operations irl which makes me a bit skeptical on how hard it is to coordinate people into one direction and thought DAOs didn’t really present unique use cases to irl to justify the complexity. So I mostly left DAOs untouched and focused more on collecting NFTs and participating in crypto in other various ways like making content. But DAOs continued proliferating past 2021.
So Where Are We Now?
Fast forward to summer of 2024 and I got DAO curious and started going down the rabbit hole before continuing with my assumption that DAOs don’t work. As I was raised to not knock something until you try it and in that spirit I went down the rabbit hole. More on this later.
DAOs today reflect a lot of what we see in the real world. We see multiple DAOs or groups within DAOs (think House of Reps vs Senate in US Government). We see a Public Goods DAO vs an Ecosystem DAO all within the same community. The maturity, tooling and structure continue getting better day by day. But many still believe DAOs are not delivering on what they promised (a better way to operate than irl).
And most of these people may be right. For example, ENS DAO to get a prop up you need 100k ENS tokens which on todays price is over 1M USD. 1M tokens for Uniswap which is over 6M USD today. We have voter fatigue, in NounsDAO for example folks have voted on over 800 props since inception with most major DAOs hovering around 100-200 and a few 300. People feeling like only the same teams, people keep getting funding or their ideas get support vs new voices. Voting on L1 can get expensive. The tools are still lagging.
Why This Week?
So why I am here telling you this week may be a pivotal week for DAOs? There are a couple signals in my mind that I see.
ETH Side
The first one is AIP-596 by ApeCoin DAO. ApeCoin DAO was created back in early 2022 and since has seen close to 600 props, really active like Nouns and with BAYC recently changing leadership again (with Garga coming back). This prop is going to pass and people are celebrating. Many will view this as a prime example of why DAOs don’t work. I think it is a more of a representation of where BAYC is now a project vs where it was back in 2022. As an example, a BAYC back in early 2022 would easily go for over 125 ETH.
The new leadership thinks they can be more agile with shutting down the DAO, and that is probably accurate. If they view DAOs as a way to run every single decision via prop then yes that will be cumbersome. What the team could have done instead is create another group, pass a prop to seed that group and you would still get the same result. A set of funds the leadership can use at their discretion without votes and move quickly. We are seeing this idea pop up even on the Solana side of things with Metadao talking about their Futarchy DAO launcher and how it will work to benefit not just token holders but also the founder. The same could have been recreated with ApeCoin DAO but instead now the sole responsibility will fall on the leadership and the bottoms up approach is gone.
SOL Side
This week we saw Jupiter DAO “pause” their DAO. With Jupiter siting it was to protect the voter which is a really weird thing to say. I personally vote in Juptier DAO and felt the seasons approach led to little fatigue imo. Maybe its because Nouns have now trained me to operate at a higher capacity but DAOs overall in the Sol side of things are depressing compared to ETH. If Jupiter is able to “pause” a DAO did you really ever have a DAO?
Surprisingly, DAOs on the Solana side of things were starting to feel a bit more fresh to me compared to the ETH side of it. The culture on the ETH side of things feels more monolithic compared to SOL especially on the Metadao side of things where they leverage Futarchy. My only issue with the Solana side of things when it comes to DAOs is the lack of DAOs to participate in, how there is less of a culture of it therefore the tools are non existent. For example, I would forget to vote sometimes on Jupiter DAO because there wasn’t a really easy mobile version for voting compared to ETH where you can use apps like Lighthouse and Goverland.
Jupiter DAO is one of the larger DAOs on the Solana side of things and I really hope the team doesn’t shut it down. They can definitely plan their structure and what will work for best for them and their token holders but pausing it really takes the air out of the DAO sails on the Solana side of things.
Why I Remain Hopeful
So even with all this news, I still remain hopeful and optimistic on DAOs. As many of my readers know, its in my nature so that might be playing into it. But I have now spent the last year diving deeper and deeper into DAOs and still feel this way. We all should not be rooting for DAOs to disappear especially this week which I suspect we will see people writing titles how DAOs are dead probably because of the passing of the prop from ApeCoin.
I still feel bullish on DAOs as a bottoms up approach to growing and building community. It is what I have been doing with my content for the past 2.5 years and its not easy, as anyone that has tried building a community in web3 can tell you. Many of the Discord servers I am a member of are dead, most projects are dead, but this doesn’t mean web3 is dead.
My take is, like everything else the truth is somewhere in the middle. Just like how many ICO projects are dead but we have some that survived. NFT projects became easy to create, but only few survived 2021-2024. Now we have tokens being launched daily, few will survive. This is the same for DAOs, many got created but many will fail. ApeCoin DAO may die, but many of the largest DAOs in the space continue experimenting which is something that is crucial for our space to grow.
Recent experiments and Ideas that give me hope. I participated in Optimisms experiment with Futarchy/Conditional Funding Markets and will do so with Uniswap. Metadao is tweaking their formula for Futarchy driven DAOs and it was awesome to participate in Flash Trade where people got to vote on what to do with the extra revenue. The lighthouse team, trying to find new ways to surface new ideas in DAOs with Signals Protocol. DAOs are not a one size fits all, it doesn’t solve all your issues, it may not even be the right fit for your org.
Fin
As always, have a great rest of your week. Keep an eye out as I have two exciting podcast episodes coming up with Cap from the Namespace team and Jango from the Juicebox/Revnets team.
If you enjoyed this article, I am also running a fundraiser to get myself to Devconnect this year as I have never been to an ETH conference before. So I can continue learning and sharing what I come across in case you want to help me out.
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