DAO Stack Essentials: Where Tooling Is Needed Most?

Transcript

Uh hello everyone. Uh welcome again to uh our panel. It's called Dow uh stack essential and where tooling is needed the most. Yeah, I'm var from Q Labs. Uh let me give you like a brief context on like uh on this panel. So uh in general uh Dow has been promising you know the future of coordination but uh in reality as if you already been in one we all realize it's messy and just a lot of friction right and the gap between the reality and what's uh promised is what uh folks here in this panel has been you know uh working on you know uh creating some solutions on that and yeah since we

have a very short 30 next session here. Um, we're going to get start to the uh point right away and uh just to kick uh kick off start um I'm going to uh pass it to our uh panel our incredible panelists here uh like uh a quick uh starter round. So uh uh we you please introduce who you are, what are you working on and maybe uh one uh number one pain point you you're you're obsessed in solving in in in the house space. Yeah, let's go with uh uh Jordan first, man.

>> Yep. >> Hello guys, I'm Jordan. Um I'm the solutions lead at Aragon. Um and yeah, we build uh custom tooling for Dows. We also focus a lot on uh value cruel tokconomics and that's really the number one pain point we're focusing on right now. It's everything is downstream for us of making the token work for token holders, making value acrew for token holders. And how do you build governance systems and capital allocation systems that mean everybody's happy when things are going well, everybody's happy, governance works. When token price breaks down, that's when all of the problems come through. So for us, the number one thing, acrew value, acrue value, acrue value.

>> Hey everyone, my name is Nicholas. I'm a co-founder of Hats Protocol. uh we work on enabling Dows to give specific roles, responsibilities and resources to subsets of the DAO so that they can act on behalf of the DAO and to save costs. Um we're trying to get away from DAO votes as much as possible. And the way that I articulate the problem that we're solving is that there's a trillemma between effectiveness of decision- making, the costs of decision- making and then the decentralization or hardness or resilience of each uh delegation that the DAO makes. Um so that problem framing has helped us think about the first principles of dowing and

of organizations generally. And I think um as we build technology at Hats to solve that that's that's the main way that we we look at the all of the problems in the space. Hey everyone uh I'm T product manager at powerhouse. Um, powerhouse originated from maker dow sky by now and there we had this firsthand experience of of the chaos and information overload of of one of the longest running DAO experiments in the space and all of those pains we've then started translating into an open- source back end. Imagine it a bit like a a Google Drive that you can have your own custom documents in to run your workflows and and very specific business processes that that Dow require. But now

with um uh the tools that you you would expect to see such as an operation history that's signed with your eat address or whatever address and um it's those structured documents that we hope um to that you get can can work with can start with um to bring more clarity data clarity structure and also consensus within your DAO or open organization so that um we can yeah escape this information overload and and chaos that we're currently still experiencing. Hello everyone. I'm Gonza, co-founder of Wakeup Labs. We have been helping startups and Dows for the last four years in the crypto ecosystem and we have been helping Balora for since February this year. Um related to that,

it's very interesting to be here because Bora is a very good DA, very healthy. We're very proud of helping them. And related to that the biggest issue that we have been seeing is that those sometimes lacks of leadership or technical experts having this amazing protocols are great to use it and to improve governance at all. But as well you will need people there helping and achieving the task that the DAO is looking for. for example, grow the TVL, make the price go up, help generate more transactions and maybe that's the issue

that I have been uh paying attention lately. >> See, that's amazing. Uh yeah, so uh next uh this will be more of a open discussions, you know, picking pain points. So as you mentioned uh Jonah mentioned about uh value occurring uh tokens. Uh how do you see uh that in in in in play in like how do you see the trends going right now regarding incurring uh values to token holders? >> Yeah, I think you're at a point where um we had this period where you could just like add governance stick it on the end and that would somehow magically acrue value. That's turning out that's not

played out. Um and so I think what we're going to see over the next certainly six months is uh investors um and the market in general are going to be demanding that there's some sort of like mechanism where your protocol has to do something that uh has value. Like that's a baseline. You can slap whatever fancy tokconomics you want on top of it. >> Um that's not necessarily going to drive real value. um you need to create real value and you need to have a way that that like feeds back through to the people who invested in your project. And in an ideal world, this is decentralized permissionless. So it doesn't matter if that person is a VC or that person's like someone who just, you know, hopped on chain and bought whatever it is, maybe like some hats tokens or something

like that. Um and you need to distribute that. And I think we're going to see that like more and more mechanisms need to be built to sort of properly institutionalize this into the space. It's basically about growing up, right? What an amazing milestone that our industry is actually allowed to think about this building the best possible assets. They're not only programmable, but they're value acrewing. They have revenue, real revenue backing them. We're seeing buybacks across the space. Like this is this we could not talk about this two, three years ago. It's a complete shift in the way the industry is. And I think that the investors that are investing in these assets are actually much more mature than they were a few years ago, too. So, it's a it's a really interesting time to be building

these types of mechanisms. >> You guys have any other takes on that? >> Yeah, I can I can only allude to that like it's a it's a time of growing up. It's a time of professionalizing. It's a time of taking it serious and we're seeing that in every part of the stack. Not only the tokens or the or the protocols, but also how do we communicate with each other? How do we how do we send over files? How do we uh create projects that actually have uh deliverables and and milestones um where we can hold somebody accountable when somebody's been grifting or politicking or using back channels to to get his own stuff promoted. I think we're we're always talking about transparency but

there's actually very very little transparency in Dows and there's a lot of um hey I know this person can you get me to do that uh done. Uh I think we're yeah we have seen that we're lacking that data clarity and transparency in in bigger organizations. Um yeah we're hoping to to bring it back. >> Talking about accountability and like transparency. Uh I know that uh there was this one of your articles Nicholas you were uh uh you you shared on on uh Twitter uh X I mean uh like what's your view on like those areas like that needed to improve the most? Um so when you have the cap you rely on the full

DAO vote for capture resistance you um can ultimately like your accountability comes from the democracy that sits at the top of the DA but that is very expensive to use in terms of uh like attention costs. So we can't vote on everything. We don't like in the United States we wouldn't vote on everything in a government you know it doesn't make sense. So then you get to this this question of like okay how do we delegate specific power to individuals to subdows to councils security councils committees in a way that we can hold them accountable and uh a lot of the legal engineering we've seen um creates different foundation structures and labs corps that that introduces that sort of accountability. Um but really we we have

this amazing tool called the smart contract that lets you design any accountability mechanism that you want. So one one that really we're really excited about is um staking you know having financial stake for a given role. So uh you are going to sit on the grants committee. You're going to give out 50k and 5 10k chunks with four other people. um if you guys will each put up one ETH that can be slashed by the Dow if you start to abuse uh your role and the DAO can also revoke your power. Um and if we add things in like reputation systems that you know show how you were a good actor or bad actor over time I think that type of onchain mechanisms could be very very very interesting for getting

to this different level of professionalism um in the space. >> Yeah. Uh Gansa uh I believe uh you are uh one of those core contributors you know you're building a lot of stuff for for project stuff uh and you have like a direct experience you know delivering a lot of projects and you know uh how how do you what's your take on this as you know the one who's involved on that? Yes. Um I really like what Nicholas was saying. A good DAO contributor will be someone that showcase what what's the value that that person has been adding to the protocol to the DAO. But at the end of the day, the only one seeing that

is the one writing that. So it's great to have tools that enables the accountability to be taken serious. Um and like the guy says now you have the tools to to do that. We help for example to build the distribution mechanism for rewards and gas refund and you don't want the company behind the protocol to run that kind of projects because you want a third party to run that service.

We build that and we showcase every month how the distributions are done. We put in the forum and ideally you go through a process that you start automating the whole process avoiding any person to be in the in the whole process. So you can really run a DAO because here we are talking about technology and finding how to improve this ecosystem with the less amount of people. So having I think that we are in a a particular moment where the tools are ready to be built. You have amazing people building good products and the Dows are mature enough to start taking in count that kind of products or tools.

>> By the way, that's exactly right. It's going to get automated. It needs to be automated. It needs to be commoditized. like we need to stop playing around with financial engineering at the core and move the product to the core. And so everything you just said makes total sense. It like it needs to you need to have these robust distribution systems, these robust sort of ways of working, automate it, delegate it, and then get people focusing on building like actual meaningful products 100%. >> In the future, of course, we are people, right? But an agent could do a will do a lot of things and we need to start building the tools to let the agents operate Dows or help us operate the

Dows. So it's a great moment to to be here. Uh do you think like right now uh uh what what kind of the tools that we're we're still missing that you think should be one but uh we we're not having much of that yet? >> Well, I think as uh as Nick said like there's been a little bit of a lack of a willingness to engage into some um tools because of a regulatory point of view. So these is especially like there's a bad word dividends there's um yeah securities tensions um again you have to grow up like resolving that tension is like our job um so we have to figure out some good structures that you know

institutions can use like people can use in the US like you know at the end of the day um but I think yeah the big ones are like flexible distribution tools, flexible um allocation tools um systems that work with existing governance structures like systems that work in existing legal structures I know there's been a lot of talk about tuners and Borgs and things like that. So, I'd be interested to see how that plays out. It's not my full expertise, but yeah, exactly as people have been saying is good automation systems that get the Dow tooling out the way basically.

>> See, there's a couple layers of Dow tooling, right? So, that a lot of the stuff you just talked about is like contract level, organizational level, the stuff that competes with uh legal contracts and capital formation and traditional markets. Um, I'll tee up tea here and say that the the other side of it is the coordination suite, right? Like a lot of us are still using Google Docs and notion because those are good solutions or you know people have played around with Charmverse and Fileverse but they don't quite go all the way to being able to facilitate a fully professional organization million managing hundreds of millions or billions of dollars. So I think that like there's a huge opportunity for uh communications um uh file sharing and I I'll let T jump

off from there. >> Yeah. Um 100%. I think Vitalik has been even mentioning a couple of times that he wants to see these products being built like open-source uh document editors um tools to to run your businesses on uh instead of uh running it on on the Google suite. Um and then on top of that maybe to go back to your question Barrett something that we are missing is within that coordination infrastructure an actual identity or reputation that you can that is functional and that you can make use of. Um we haven't really cracked the the identity and and reputation problem in in our space. Yes, we have CT which has a very weird type of reputation and and and fame uh going

on there, but you want an identity that is very contextual uh to the space that you're in because a trader has a different set of values than uh the governance people here and uh that that reputation needs to be able to change based on the context and and the environment that you're in. So we're we're looking at okay if you have a coordination infrastructure uh where you record all of the modifications you do to your documents or your the contributions that you do can you also track them and can you let them flow into a reputation system that is functional and contextual to the organization that you're in very low-key not something that needs to spread out of the organization but within your organization can be very functional. So we're we're doing the first experiments

there and I'm I'm very hopeful for for any other initiatives to also go the same way. identity is something that you must you need to show you and be accountable but as well for example the tool that I really like is something like hatch protocol in a way that okay for this period of time I will take this role I'm doing this for this particular DAO let me be for example the one leading finance keep let me do defy on top of this treasury and after a period of time you can take that role out. I think that that will lead to at the end of the day to more accountability and to more

ownership which is something that Dow lacks like okay you're responsible of what you do but at the end of the day it's a group of people and there's no one one particular leader. So who will be the one that say okay you did the things wrong having particular roles for particular moments in time is a must and I think that that's for example a tool that I'm really looking forward to to start gaining more and more adoption >> just to jump off that and thanks for the shout out they um I think that we can simplify the problem of like who who is the right decision maker or set of decision makers for each decision

decision that the organization needs to make and one type of decision might be um you know running a a marketing you know group. Another type of decision might be uh holding the marketing group members accountable right and I you can sort of bake those down into a single primitive which is a role or what we started calling a trust zone. Um and I think that that that frame of like okay here's the here's the simplest building block of a DAO. The DAO is a trust zone. You know, the marketing committee is a trust zone. The accountability person role uh that holds the marketing committee uh accountable is a trust zone. And then trust zones have some sort of certain parameters and they can be held by people or groups of people or

also by AI agents and make this like super uh AI forward in our Dow structures. I think I really think there's something there um that is going to start to unfold in the next um six to 12 months. I I recognize you guys are mentioning a lot uh uh the topic of like reputation, right? So uh uh what do you think uh uh reputation uh system wise right now? Uh uh what's what do you think is like the most important thing right now and is the what's the issue with the current reputation statement now?

>> Do you know? Um we uh as we looked at the trillemma the the third dimension which is hardness which we got from uh Josh Stark from the Ethereum foundation wrote this wonderful piece called Adam's institutions blockchains you have to read it if you haven't read it it's formative thinking for Ethereum um he get he says basically that smart contracts offer uh this property called hardness which is like reliable future outcomes um reput so what we can program into the smart contract is hardness what we can't program into the smart contract is uh how much we trust one another and reputation really solves that half of the problem. So if I know that if you put up a financial stake and I can slash your stake as the DAO and I can kick you

out of the DAO if you misbehave. Um but then look that you have some relative autonomy in a given role. Um I need to trust you that amount. Uh, so if if you put up one ETH, but you're in charge of 10K, then I'm then I'm, you know, sort of giving you trust equal to 10K minus one ETH. And that that should sort of be able to be quantified based on your prior actions and um the the transitive trust from people who vouched for you in the organization. I think that's something that we're we're starting to see, but we still really need to to quantify. I remember like there were these um I think it was Gearbox um who had a little they had smart contracts where you could load up function

selectors and then you would allow someone to do under collateralized lending if you met certain function selectors. Even as I'm saying that there's a good chunk of people who are like what the hell are you talking about? And so when you talk about reput reputation, I'm thinking there's a problem of auditability in like you probably need abstractions for the average person to engage into any sort of onchain reputation system in a meaningful way. Aka summarize what these actions actually mean for someone who doesn't want to spend their time even if you are a solid developer like going through what such and such wallet has done and what that means and what the implication is and what the second and third blah blah blah blah blah. So maybe something like an abstraction layer, an AI layer is actually essential for this.

Yeah, in in terms of reputation, um I'm always hopeful for for these initiatives such as the decentralized identifiers or the the uh verifiable credentials to really take off and to see that composability. Um but since that hasn't really taken off, there are like initiatives such as hats protocol that that do show um that it's another layer that you could could stack into um on top of other tools. So if you're asking me what what's the issue with reputation, it's maybe that uh interoperability composability being able to transfer parts of your reputation from one organization to another, show what you're doing here and there. Um that that might be uh might be one of the the the missing pieces that

we're currently looking for. >> Do you think uh reputation should be portable like across organization? I think it definitely should be portable but it should also be um it you should be able to hide it. You should have uh selective disclosure like nobody knows me as the same person. To every person I am a I'm a different person. Uh and and that should also be possible in the in the organizations or the the spaces that you operate. You don't necessarily want to uh yeah open the closet and and show all the skeletons. uh like sometimes you just want to start with a fresh sheet and that that should definitely be possible.

>> Um before I stole the term interubjective and made it mean exactly one thing. Um I think people in the reputation space used to talk about subjectivity in reputation and that is overlaps a lot with what you just said like uh how much I trust you is very different than how much someone else might trust you and because we have a a diad in our relationship and quantifying that's really hard and then making that transitive so that someone can look at my trust for you and then make that mean something. I think that that's a very very complicated problem. But if you could put some math and primitives that complex the compress the complexity of that um and make it sort of more available to people then you could have

meaningful portable reputation systems that had that subjectivity built in. >> See it's very interesting. Uh yeah. Uh yeah. Uh any other uh issues you want to mention about beside reputation? I think uh we went pretty deep on theation just earlier. uh any issue you you guys think uh this that's still unsolved and uh something that uh you guys want to want to mention about since >> I I'll maybe bridge a prompt from reputation to something else we talked about which is uh you know we talk about human reputation but also AI agents

having reputation is a really interesting design space and you know that those systems might not need to be that different so I'm curious what you guys think about My take is that people think about their people I mean to your person your first person as something very relevant but in internet you can create multiple personalities and you can act at play different roles on each of those. Um and I think that we are like letting our physical person have a lot of of course you you will take care of you you

will is the the one that most represents you but in internet you can create multiple personalities and you can play different roles and I think that that's what will happen with AIS >> so for example you can create a new sodonim and start being a defi expert do that role for several years, grow your p your sedonium and later when the AI is built right then you can adapt AI and let that person work by by themselves. I think that the future will look like something like that. Um it's it's hard to explain but well I think that's at least my

point of view. Are you saying that the agent is going to automate the work that the person has been doing? >> No. No. I I think that you need to build a personality, build a for example the specific topic that you will lead, talk about, discuss and after that you will transition in a way that you will let this new character, this AI or whatever to take that role and helps you do your role better. And what I was talking is for example in ado where you can be anonymous you can have a sodonim or you can be yourself is a place where you can play a little bit with this idea for

example you can play as a technical expert but in auto you can play as a very good marketing guy and I think that's an interesting space to explore these kind of ideas. Yeah, in terms of um AI agents, what we're mostly looking at is to within the coordination infrastructure that we're building to embed them um within uh the conversations that you're having with others. So because you are sharing documents and and context within a thread or a message um channel uh an AI can always help you with the more tedious tasks making sure that all of the data is represented well uh making sure that the the different files are in

the right location. So, we're currently imagining it more and more as a helper, as somebody that watches along over your shoulder and and just um increases your productivity um unbburdens you from from um yeah, smaller tasks uh and and yeah, eventually I imagine that the the responsibilities of those agents will increase as they become more uh more potent. I think what we saw is um you have to keep the system still decipherable to people. So you might use ro primitives, you might have like document primitives, but like someone has to understand that and then you can't put the cart before the horse, right? Like you can't have you can't say, "Oh, my system's so complex and so

rigid that no one knows how to use it except like these black magicians and then it's like, oh, we'll just stick AI and it'll solve it." It's like you need good building blocks like I said roles, reputation, like good ways for people to share information. Uh you need flexible financial primitives and then you can introduce AI. I think that that's a big risk in the space. Um I've been to a few DeFi AI events where the complexity's gotten so crazy that I don't think anyone knows what's going on. Um >> and yeah, uh that's that's not how you build organizations.

>> Cool. I guess uh since we uh almost time already. Um maybe um just uh quick uh uh fire uh answer round maybe uh uh what do you think is like uh future pain points or like future uh issues that uh you think uh beside what we mentioned earlier hasn't been tackled enough and uh yeah uh you think uh people should start like exploring ways to actually solve the problem.

people are going to run into real world limitations that in the real world um you have to build companies in real countries and you're going to run into banks and you're going to run into agencies and you have to be ready for that >> adoption like mass adoption like >> yeah but before mass adoption it's just like um yeah just dealing like growing up is the thing we said at the start >> I my sort of utopian vision of the future is that everything becomes a DAO. Um we can widely distribute the ownership of everything that we touch and that we are stakeholders a part of and then align incentives uh amongst all the stakeholders of that thing through

that ownership. That's like the most amazing thing about capitalism although it has some challenges. Uh so I think the the challenge like the core challenge is the the Maloian uh optimization competition downward spiral that um you know one of us can make the move of uh doing something selfish and everyone has to do that to compete. That's like the thing to solve and if we can solve that with smart contracts then we might be in a much better world. >> Mine is uh is very similar to yours actually. So, you're mentioning that everything can become a DAO. Um, at our at our team, we're often uh ideulating or thinking about why isn't there a decentralized and cooperative version of Uber, of YouTube, of Etsy, of Deliveroo?

Why why aren't the platform participants not owning that software? And uh yeah, currently we just aren't sufficiently able to coordinate professionally to to pull that off. Uh if we get to do that, if we can nail that, then hopefully one day we can also um stop with these business models that require algorithms to be maximally attention grabbing and and uh triggering. Uh so it has a lot of downstream consequences once we could cooperatively own these platforms that we're that we're part of or that we're contributing to. And I will be short. We are running out of time. And but I want to give my two cents about this topic.

And this hopefully a lot of things become a DAO. But as well the Dows that will survive will be the ones that are healthy. So the income should be higher than the outcome. >> Um so maybe you can do a DA with a group of friends because you have no expenses there. Erh but and as well about a good company who has a healthy revenue share or revenue mechanism. But it's important to pay attention to that because you have several Dows that are having a lot of trouble taking or earning some money and if the expenses are too high maybe soon you will be in trouble. So ideally

I'm with you in the future will be great but let's pay attention to that kind of a scenario just in case. My closing thoughts. >> Great. Uh yeah uh thanks again Jordan Nicholas T and Gonza for this in incredible uh insightful uh panel. Yeah. >> Thank you. >> Thank you guys. >> Thank you so much guys.