Virtual DAO Summit

Transcript

[Music] so [Music] hi all thanks for joining i'm connors

fallacy and i organize this event with the help of some of the folks speaking today and many others i'm a former lawyer i'm the co-founder of the blockchain association and i'm the founder of the dow research cooperative so this is a news probably to anyone who's on this call but dows are cutting edge organizational structures and they're very limited precedent to help douse stakeholders understand how to operate dows dow stakeholders are starting to think through best practices for legal for governance for treasury management other critical issues that i'm sure many of you are thinking through right now with your communities but much of that foundational learning and research is really captured and siloed within those communities so we started this summit to encourage people in the dow community to

collaborate and to help identify the most pressing issues for dows and strategies for resolving those issues our goal is for today's sessions to have clear outputs that can act as foundational building blocks for the community as we start to develop precedents that make it easier for you and for the next generation to operate daos i'm also doing this work through the dow research cooperative which is an organization currently funded by compound uniswap and ave grants it leverages pooled dow resources to purchase and open source necessary information information necessary to the operation of downs now at the dao research cooperative we're going to host more events like this and we're going to encourage more participation and and cooperation between dao's so if you're

interested at all in getting involved just reach out to me on twitter at under at sea underscores fallacy now uh just sort of a housekeeping item none of the information provided by speakers today is legal or investment advice unsurprisingly and with that i'm honored to hand it over to dan bonay a pioneer in crypto and a co-director of stanford center for blockchain research and then we'll get to your illustrious embassy david hoffman co-founder of banquets awesome with that thank you connor yeah welcome everyone to this virtual dao summit um it's a pleasure to be here and uh it's wonderful to see this event take place um let me just introduce myself briefly and then we'll get to the topics of the

day uh so let's see so i'm a professor at stanford i uh i love blockchain technology i've been in this space since 2014 and um i absolutely love the technology that is driving blockchains and enabling dows and so on uh because of that we set up the center for blockchain research the stanford center for blockchain research which includes about eight faculty doing research in the area in different areas or blockchains i i particularly focus on technology for blockchains particularly cryptography uh consensus and things like that um i should say that the center for blockchain research cbr as we call it offers many courses on blockchains if you're interested in taking all any of our courses they're available online just go to check out

cbr.stanford.edu you'll see a list of the courses and anyone is welcome to uh to sign up in particular i would recommend our cs251 course which is sort of an introduction to blockchains takes students all the way from zero to writing smart contracts and launching d5 projects as well as potentially launching new blockchains so why are we here today well the goal is to sort of bring together a bunch of dow communities to discuss common issues and i'm really looking forward to the talks to the upcoming talks we have a wonderful collection of speakers coming so this should really be a fun event but i guess before we do that i just wanted to say a few words of introduction just to kind of make sure everybody's on the same page so first of all let's start at at the beginning so

like what is a dao well you know a dao technically is just a smart contract that basically interacts with the public right so it takes proposals people vote on the proposals and then those proposals get deployed that's at a technical level what a dao is but really it's much more than that right in reality a dao is kind of a way for a group of individuals to pull their resources together or as we like to say it's the dao is sort of an internet native business that man that's managed by its members by means of a governance yeah and the question is of course how to how to run governance correctly and those one of the things those are one of the things we'll talk about today what's interesting is that the root of trust for a dao is really just the public source code source code for the dao

smart contract right so anyone can inspect the source code for the dao gain confidence that the dao really does what it's supposed to be doing or what it's claimed to be doing then become a member and start contributing to the dao community yeah so that's basically kind of uh what we're discussing today and there are many examples of of dials maybe i'll just mention two or three of them again just to make sure we're on the same page so i guess there's a malloc now which is kind of a well-known one this is a dial that's used for funding ethereum development so people who want to get funded for particular things for developing particular aspects of ethereum can uh you know write proposals post them the dow members vote on which proposals to fund and then the sent to developers yeah so

it's kind of a really cool way in which code can design can can influence what gets implemented in the ethereum ecosystem there's a a one that's actually a really fun one that's formed recently you probably many of you heard of it is the the pleasure dao um pleaser dao sorry pleaser dao which is a dial that's meant to collect art and in fact recently it bought a piece of art that was created by the tor foundation this was a wonderful way to fund the tor foundation so this is an example of of a dao that's actually having a very positive you know societal impact argon is a way to create those so these days it's not even that difficult to create dials you don't have to write the

code yourself there are systems already in place to do this for you and there are many many others uh that one can can can mention uh i guess what i wanted to do before we move on to our first speaker i just wanted to kind of list through some of the challenges that the dao community is facing and those are the sort of things that we'll be discussing at our at our event today yeah so i think one of the main issues fixing daos is basically how to properly run governance yeah so basically how do we weight the different votes um are they weighted by the amount of funds contributed or weighted by um just by the individual behind them uh how do we encourage participation right this is you'll see in many dows they run a lot of votes but then participation

is not as high as one would uh would like so how do we encourage participation and then finally of course in in a year of governance like what happens if the members decide um to accept a particular proposal but it turns out to be a bad idea how do we how do we recover from basically from bad decisions so i hope these things will be discussed in the in the meeting today but there are many other issues that affect dows so for example in recent weeks we've seen a couple of smart contracts that have had significant bugs in them and that caused you know serious uh problems so one issue is how do we deal with bugs in the dow contract itself and the dow code itself what do we do about that what do we do about privacy for the members right not everybody wants to be known as

a member of a dow not everybody wants their votes to be recorded publicly so how do we do how do we provide privacy for members this is a pretty interesting question that's that's very closely related to the things i work on what do we do about transaction costs right now scaling is always scaling and transaction costs are always an issue in blockchains so can we actually do something about you know perhaps introducing layer two perhaps uh introducing um other other blockchains perhaps perhaps changing the way transactions transactions are priced and so on as and there's active work in all these areas i guess other things that they come to mind is um one of the topics that connor mentioned is measuring the managing the dial treasury again these are topics

that will be discussed today what's the what what are good ways to do that and then i'll just mention uh things like regulation compliance you know how do we make sure that that was you know um abide by uh sanction u.s sanction rules and so on and similarly how do we do accounting taxation taxation of profits and things like that for for dows so there are lots of really interesting questions around daos these are kind of new as connor said these are kind of new organizational structures that do in interesting problems and that's exactly what we're going to discuss today okay so i think i'll stop here i'll just say that the center for blockchain research is sort of a resource for the community so if anyone in the audience has interesting research questions for us that you'd like our help with feel free to reach out to me

and uh we'd love to help that we're basically set up as a resource to help the blockchain community and i'll stop here and with that i'll uh hand it over to dave david so all all yours david you're muted third time's a charm hey everyone thanks for being here at the virtual dao summit i'm excited to introduce our first guest and i think this is absolutely the right place to start because at the start of this event we need to uh take a broad level view and so we are bringing on joel monegro and mario lau joel is a partner at placeholder vc a venture capital firm that invests in

decentralized information networks and web three infrastructure he is focused on blockchain-based solutions that help reshape capitalism by creating and distributing digital capital over the internet he's joined by his co-worker mario lao who is a researcher over at placeholder vc and focuses on blockchain-based financial and governance innovations and more broadly the interplay between technological change and societal development and we are here in this particular uh survey of the dow landscape to really discuss the current state of dao operations dow governance and overall the dao ecosystem this is one of the realms of ethereum the realms of crypto that is really changing almost it seems

every single week and so joel and mario have their fingers on the uh have their fingers on the pulse and i'm excited to bring them up onto the stage to talk about the current state of dao's so joel and mario if you could come join me on stage here joel great to see you hi david mario um and thank you for the intro yeah of course all right guys i'm gonna just let you guys have at it um so tell us about the current state of dows we will and we actually prepared a couple of slides so that you're not just looking at our faces while we do that um let me see let me know if you can see the slides we are up and running great um

so we're gonna split this brief um survey into two parts um i'm gonna start with just some high level concepts very quickly to level set on on how we think of taos and take a quick overview into the current state of the infrastructure and and development of let's say the concept of a dao and then mario will take over with some more specific ideas and thesis about how we think about thousands how we think we should think about thous and we're going to try and get it done in 15 minutes i realize we may have some some buffer afterwards if there are any questions that come up um so first of all thank you for the opportunity um we're always happy to

talk about these things um as david said we both work at placeholder which is a venture capital firm and that invests around the web3 ecosystem and a lot of the time that means that we invest in dows sometimes we invest in dials directly through a smart contract sometimes we invest in companies that uh go on and create vows um sometimes we buy into those that that that have already existed and and sometimes we have an opportunity to work with uh core development teams in designing their governance systems and they're signing their dows and so we have the privilege of looking at these problems or these questions from a variety of angles

and and i would like to start with um how how we think about dao's in the most general sense and and let's say that um we think of them as as part of the shift the overall trend in in humanity to move from paper systems to digital systems um we're investors in aragon for example in in in our aragon thesis blog we talked a little bit about the the dow thesis so this is from a piece from last year and we focus on what happens when you replace paper contracts with smart contracts with digital contracts the main observation is that um that was really just um organizations in in the most basic sense um with the

different key difference being that the organizations that were used to operating in today are paper organizations in that they're they're actually set up and constituted by by legal contracts written written in words and you know executed by lawyers and it turns out that most societal structures are just these networks of contracts um you know companies just a stack of different contracts all the way from the uh original organizational contracts down to the employee contracts and the lease and so on and so forth all of those are paper contracts and societies themselves or nation states are ultimately organized also by these um paper contracts um but now with with blockchains we have a new tool which are

smart contracts um these digital contracts that allow us to create agreements written in code instead of words and so it's kind of natural to then expect that organizations themselves would then turn out to be created via digital contracts and that's exactly what what dows are um and we're very excited about what this means overall over the long term because overall we see it as a technology that lowers the cost of creating organizations and more importantly it it opens a new kind or it opens the design space to new kinds of organizations that maybe would have been difficult to create with a with the kind of paper contract system

and that's this part of this um quote here that talks about well you know what about those systems that would be too expensive or too complex to create with paper contracts things that you know for example something that's larger than a facebook group but smaller than a company but then also things that may be much much larger than than than a company uh you know what you you might call a mega organization um where you might be able to have thousands or tens of thousands or potentially even millions of stakeholders all distributed across the world that is very very hard to do with with paper contracts so trying to pull us back to the present a little bit um we we pulled this from uh from a nielsen uh report that's looking at the dao infrastructure stack and and

this is kind of a quick view into what the from a kind of technical standpoint the infrastructure for daos looks like um and this this report kind of segments and segments it into these categories there are frameworks that allow you to create the house and this is what um we were talking about in the very beginning of the session um that is now easier to create a dao as these frameworks emerge and reduce the amount of code that is required to to create them um and then on top of that we're starting to see more tools emerge to tackle different aspects of dow management so to speak so in a typical organization you have different departments right you have the base layer contracts and then on top you have

accounting and you have legal and you have hr and you have treasury and you have all of these functions so we're starting to see different components uh or different tools or protocols emerge to tackle that different functionality so here the layer of controllers you know we're seeing tools that deal with voting uh in the in the uh layer of treasury we're starting to see tools emerge that um help dao's manage their funds a lot of dows uh come down to to fund management in many cases um we see protocols that deal with uh you know human the human capital in daos and what humans do and we see everything from um uh code collaboration to

um uh work management and and and how whatever the the dials do for work um and then we see aggregators as well that are emerging which are platforms and user interfaces that aggregate activity across all of the dials or across a number of dials that make it easier for people to participate in many dials at once and it's a very young and emerging ecosystem and it's worth saying that it includes web 2 tools while the the companies and protocols that show up in in in the stack are mostly web 3 focused uh a lot of that activity happens on places like github discourse uh chat rooms like telegram or or discord and a lot of the conversation happens on

twitter so it's this very interesting mix between web3 tools and web 2 platforms i'm i'm not going to go through this whole list this is another look um at the dao ecosystem from a different perspective we can share this presentation afterwards if you want to click through or just search it um by this link below and and really encourage you to go explore if you haven't already all the different dows that are emerging um this isn't really focused on infrastructure this is all the different kinds of dials that that are coming up um and we see that they're in very different categories and it's a very diverse ecosystem we see thousands that deal with protocols um dao's to deal with

oh oh let me see let me restart it can you see it um okay so you're actually behind do you see the all the different dials yes we are looking at a page that says dao infrastructure stack uh now we see you uh starting to share screen again there we go so now at a page that just great

awesome um so this should be the one that starts with dao operating systems and then protocol the house and investment dows and so on yes looks like it's working now thank you great thank you um so yeah here the point is um that dows aren't confined to a single type of dao in terms of what they do as that was explained in the beginning of the conversation we have daos that work in media we have taos that are social networks really we have dao's that focus on doing grants um those that collect art and so on and i think it's really a testament to to the how broad the concept of a dao is if you think of it as a digital organization

just as we have many many different kinds of organizations uh in society today from companies to religions to nation states um all of those can be or all of those categories can show up in in the dao ecosystem and potentially will uncover new categories as a result of the lower costs to create the house this is a quick view into just some top-line metrics of the current state um this um this is from a screenshot from a page called deep dow um where we can see the downloads by aum at um in this context it means the the value that they're holding in the dao's treasury as digital assets um and and we can see that you

know we're getting to a point where where these numbers are important um like the rare rolled out um sees a um a an aum of uh about 130 million dollars api three has about a hundred million dollars in treasury and and so on um and these figures have been growing over time they tend to be to be somewhat tethered to the market in the sense that a lot of them hold uh in their treasury either their own tokens which have volatile market prices or assets like ethereum or or btc or representations of btc that are quite volatile um and so we've seen the house basically go from you know 20 million dollars in aum all the way to 300 million and then all the way back to

50. so you know these are volatile numbers but in general i think it's a testament to um you know when they work they can work quite well at the end of the day we have downs that that manage assets uh that are greater than than many companies we can also take a look on on deep down at um the top downs by members and it would be this column here where we can see how many uh people make up or at least entities make up uh the membership of a dao and we can see some pretty significant numbers here um you know sushi and balancer which are the top two sushi counts 52 000 members or over 52 000 and balance your accounts over 35 000 and i

can't really think of a company in the world having maybe there's a couple but having over 50 000 uh stakeholders um i know that there are some large uh unions and organizations that do have that kind of membership but it's pretty rare and and critically it's pretty expensive to maintain and i think the main point here is that you can you can really have organizations that scale really well as a result of smart contracts in the sense that and they can scale to tens of thousands of members and i think eventually millions of members um whereas while the cost to manage all those stakeholders doesn't necessarily scale or grow as much we can also look at top dows by number

of proposals this would be kind of nuanced so i'm not going to go too deep into it but a lot of what a dow does at the end of the day is really coordinate uh human decisions and a lot of that happens through proposals and also we can see how many people vote into those proposals so i would encourage you to go to deep dow if you haven't already and explore those numbers um this is from uh a report by lee and and that is recent that counts the composition of droughts without treasuries in d5 and this speaks to the different assets that are held in the treasuries and that's also an interesting aspect of it dowse by and large manage digital assets and they can be quite diverse uh in in what they hold

and um finally you can also take a look on deep dow at the concentration or token concentration about dao participants um and you know you can see the the aum held by by the top uh participants in daos and that yields some interesting some interesting data but um really uh going to deep down playing with the numbers yourselves is is an interesting exercise um and with that i'm going to pass it on on to mario to talk about some some more thesis driven stuff cool thanks thank you um yeah i'll add a little bit of broader context and say a few things about um the major theme in the dow space which is governance while also committing the cardinal sin of having a bit too much

text on my slides but there it is um so the way we see blockchains and daos are first and foremost a process or institutional innovation and this innovation is centered around uh four things first improved access to digital services in a way that is more tamper and censorship resistance that resistant than traditionally this is related to cryptography and decentralization second program ability which is related to software development and software-based automation composability which is related to the idea of interoperability which in the blockchain space as many of you know

is still largely network specific but eventually i'm sure we will have inter network composibility and finally governance which is most closely related to the concept of daos so i define governance quite abstractly as a process of applying any design feature or control mechanism to maintain or steer a system the reason why i'm defining it in this abstract way is to make sure that it includes some things that i think when people talk about dow governance are occasionally under appreciated as forms of governance for example

this includes establishing some control mechanism within the system in a relatively permanent way for example through software protocols which is actually a form of institutionalization as well as mechanisms that don't require active participation or involvement by humans to achieve some tasks which is another way of saying automation as itself a form of governance so besides software-based automation what are some other examples of governance mechanisms in daos there's the the core software and organizational development process which includes producing the official documentation

doing communications with the outside world this together with the pre-launch decision-making process especially around things like resource station is usually at least initially spare headed by the founders of the dao or the core team who provide the initial leadership and and ideas that others can then gradually adopt and reproduce and depending on the organization there's a more or less formalized process uh around submitting and handling governance proposals uh if there's a token and often in the context of daos there is a token uh token holders have the ability to vote on these proposals uh and often there's

also a requirement for a digital signature by a smaller group of people before the proposal can be executed and finally there may also be technical councils or other ad hoc governing parties participating which again may be elected by token holders or occasionally um appointed by the the core team some uh challenges in dow governance um i think we're running a bit short on time so i'm gonna cut go through them fast i was lucky enough for the previous speaker to actually touch on some of these but by and large i would say that apart from some unique ones related to

cyber security and you know running a decentralized organization and covering it in a distributed way a lot of the challenges that dows are facing are actually very similar to what traditional organizations are struggling with starting from the need to balance the interest between different stakeholders both inside and outside the organization how to divide tasks how to structure the organization to what degree should the organization be using delegation to achieve its goals and if it does use delegation how does it address the principal agent issues that arise from that managing change resolving conflicts keeping the community engaged especially

in the context of dallas where the participants the token holders are expected to actively contribute and also participate in the covenants procedures so that's that's an important challenge and of course like any other organization unless the dao is somehow capable of soliciting voluntary contributions on a long-term basis dao needs to have some kind of an economic or revenue model around the use case of the primary service that they're providing to the society and finally a few very quick things unless david wants to cut me short on some recent trends in dao governance um

first especially in larger and more established dows there's been a trend towards a more strict division of labor and specialization daos are organizing themselves into domain teams core units or describing themselves as daos of taos i already mentioned grant's allocation and treasury management in general has become a core focus of collective decision making in many dao's delegation again bringing the principal agent issue which naturally leads to growing recognition of the needs for checks and balances and accountability in different roles and finally one thing that i'm observing is that dowser increasingly exhibiting what sociologists call in other concepts

context institutional isomorphism which is a term that basically refers to growing similarities between different independent organizations and what drives these similarities in the case of daos is first of all imitation if an organization is faced with a problem or a task and the it's uncertain about how to achieve this the goal it might look at other organizations and just imitate what others are doing standardization for example uh things like good noses multiseek wallet or the compounds governance contract and other forms of standards that are merging in the space and finally as the space professionalizes um which is increasingly the case with

things like treasury operations and financial analysis and other roles in the dows that also drives similarities um in the space i will end with that i hope the very short overview helps set the stage for the rest of the event and if you would like to learn more about how we've been thinking about these and other topics at play solar you can visit the website on the slide or follow us on twitter thank you very much mario joel thank you so much for that presentation that was absolutely fantastic and i see a lot of what you guys were talking about in that presentation with my experiences with dao's as well um so as we move forward we are going to move into our next topic of conversation which is our first working session uh which is key dao functions and how they can and are being

handled by legal complexity and so we have the moderator of this whole entire event connor spelsey uh to introduce the rest of this panel connor if you would please take it away thank you david and thank you uh mario and joel it's nice when there's so much content that it flows over because then we just have free content for the next event it's already done so i'm going to start by introducing our illustrious panel here martha belcher to start with is the general counsel and head of policy at protocol labs she's the board chair of the filecoin foundation and the file coin foundation for the decentralized web she also serves as a special counsel to the electronic frontier foundation marv nomore is the chief legal counsel the chief legal officer rather at

uniswap and a civil liberties advocate and scholar best known for his work on network neutrality and internet freedom issues and mark boyron he's the general counsel of dydx an open crypto trading platform prior to joining dydx mark was doing a ton of work in blockchain as the securities and blockchain fraternity at manat phelps and philalips with that i will kick it off immediately into questions because i know we're gonna get a lot of great answers from this group to start with um the question that i posed to you guys previously and provided written answers which we send out to the group but i think it'd be great to to re-engage with this question because i think it's gonna be one of the most important ones you know for at least five to ten minutes how should the dao community prioritize

use of limited resources to enable dao's to operate with a higher degree of legal clarity and maybe let's start with marvin on this one thanks connor thanks for inviting me you know i think there's been a really good example with the uni governance community where there was a proposal by the harvard law school blockchain and fintech initiative to fund a defy education fund right and you know the idea behind the fund is to set up a an organization a team that can direct funds for educating policymakers around the world on all things d5 and anything that might

touch on d5 regulation including crypto where it affects d5 so to me this is an amazing use of funds uh it's a very you know it's a very outsized impact you know when you look at some of the things holding back the adoption of defy and cryptocurrency uh and even legal clarity around how to govern these communities when it comes to uh dows and smart contracts you know this is this is money very very well in fact um you know i sort of have a preference for getting money out into the community and the folks who can do something with it even ahead of uh you know i guess i'm a fan of treasury uh fund management i think everything's so

good at managing funds and giant pools of money but to me i'd rather see the money endows be deployed relatively um quickly out in community rather than um you know two things with them marta mark any additional thoughts on that yeah i mean i entirely agree uh with marvin on what he said the thing i'd add in terms of like you know what how to think about this is like right now we're at a point where like doused you know in a way they've existed for for a long time right we could you could go like pre the dao but you can easily point to the dao um

but not at scale in the way that we see them now and so what exists right now is a lot of low-hanging fruit on just like dows and and what they mean from like a liability perspective from a tax perspective um from an operational perspective there's a lot of things that need to be figured out and on while there's like some differences across dao's almost all the house are trying to figure out the exact same issues and most of them are doing it with some little discussions and coordination but a lot of independent efforts and i just think there's an opportunity for daos to

work together more collaboratively and reach conclusions um that frankly all dows will benefit from kind of the efficiencies that they would get from from working together on these issues um and so you know i think that's one of them and i think the d5 education fund i think particularly is interesting in that you know it's trying to solve an issue that frankly isn't just particular to uniswap although i mean it would have a probably a disproportionate impact on unisoft but that's part of the reason why the defense the goal is not just for the una swap treasury to to fund it but also for you know other dows to to fund it as well

and that's just kind of one example of dao is kind of working together on an issue that clearly impacts everybody in a very similar way um i would add that i think that there are questions about liability um that uh really apply to dowse even when they're not about daos so there are all sorts of um places where you're seeing regulators and lawmakers grapple with um where to assign liability in a decentralized world so just as one example the sdc brought an action against ether delta which was a decentralized exchange and um it was really interesting to see the language

that they were using about where the liability falls um when you're talking about decentralized technology and so in in that particular instance they actually wrote the sec actually wrote that anyone who provides an algorithm can be liable for for violating securities laws and so um that was i think a particularly uh egregious case where um you can see how the sec is is grappling with these questions of liability and um in that particular case um uh uh rainy reitman and aaron mackey and i and and others at eff wrote to the sec to to basically say we actually think that that language you're using is

a violation of the first amendment um but i don't think that that's going to be the last time that we we have these types of this type of language that is is seeking to really take liability in a decentralized world and put it places it shouldn't be so i think that the community should be really keeping an eye out for those types of uh those types of situations and even outside specifically cases involving taos super helpful and so now in reflecting on and mark uh i really love your point about uh dao's cooperating and it's a great opportunity for me to indirectly plug the dot research cooperative of course but uh at the same time i would love to see what contraction you're seeing on

that cooperation front obviously you guys didn't make the defy education fund proposal but some of you may have been following it and so what is your sense of the appetite for other dows to to work together you know obviously i imagine you know much more about it from from maybe the legal regulatory advocacy side um but even more broadly what have you been seeing well how about i jump in i think there's a question for mark but that i'll jump in and say nice things about mark which is you know the d5 education fund uh the proposal included uh seven members on the committee who could direct the funds to the highest uses

uh and i mean it's an all-star team right it includes mark uh at dydx that's you know they don't have a dow at the moment but uh it's another leading project and we you know we talk quite a bit uh rebecca reddig the head lawyer at uh the ivy companies uh which launched the obvi protocol and the abbey protocol obviously has a dao instead of other people who have thought about dao's jake travinsky from compound obviously it's also you know all of us uh you know borrow their governance system so the that's definitely collaboration and i think the more you know often collaboration works kind of step by step right you know you begin with everyone on the same committee working together

people on the same uh you know kind of brewing in the same direction and then it can lead to those communities saying hey this thing is working and it has been working and we can contribute funding or we can contribute in other ways right it doesn't it doesn't have to only be financing when it comes to some of these political or legal matters it could be other coordination now one thing that i was thinking about uh is you could also have uh dials not collaborating with each other kind of attacking each other in kind of a you know i would say short term um close-minded uh theory right where some folks from one project or a fork decide to try to get

into uh the discussions and the debates uh that are going on over the treasury uh you know allocation or a proposal for one dow so imagine if um you know lawyers for or uh token holders for one project are trying to spread fud dishonesty etc in the proposal of of a rival tao right let's say let's say they were to happen i mean the interesting thing is uh you know we're working on a lot of things when it comes to dows but having the votes align with token holders and a lot in that kind of alignment is almost like uh the way to you know it's the way that um

you know you have an economic incentive essentially to thwart these kinds of attacks so even if you have a bunch of trolls and nonsense and fud the folks who actually have real alignment are going to vote in favor of proposals that make sense so you know when i look at even the d5 education fund proposal but that passed overwhelmingly it was like 80 million to 15 million and there were some legitimate questions and i think you know the question around delegation and oversight these are really fascinating questions uh but i do think that a lot of the fund was from folks who had almost no alignment and it was good to see uh you know essentially the community rebuff an attack full of some fun on the edges yeah and i i was going to say like point

to the d5 education fund is like one good example of like the beginning of collaboration like that i it is worth backing up and saying like you know have we actually had a lot of collaboration in the past and in a way we have right so we see a ton of right if you take it from a technical perspective right like all the composability and integrations that you see across d5 a lot of that is actually like one now integrating with another right if you you know yearn be maybe the the best example of one that's do that that's a form of collaboration and it's the form that like most naturally happens in a technical kind of ecosystem and so that that's existed and questions like

what about on the like the social layer rather than the technical layer and i think the social layer is where i think we're starting to see that i think again the g5 education fund is an example of that um i just think that there's a um an opportunity for even more of that to happen at the social layer um because we definitely have it at the technical layer which is when we see like the massive benefits of that and i think you can get it on the social layer too no thank you i mean i would love to keep diving more into the the cooperation aspect i want to get to a couple more things um i definitely agree with you and it's important so marta this is kind of gonna spread the new instruments we obviously have a lot of folks uh some of

today who are active in building dows who work on teams that run downs who contribute to governance in daos and so i've fielded a lot of questions from folks in that camp who are thinking about like legal risks that they may be you know um that they may be opening themselves up to by virtue of the work that they do like do you have a sense of how those folks should think about mitigating those risks for themselves and the organizations they work for yeah well i mean i think one big one is the advocacy piece that we've already really we've done a deep dive into um and i i would really emphasize that that the the um keep keeping the concept that code is first amendment protected speech

um alive is is is very important um in the u.s for for ensuring that liability uh doesn't fall places it shouldn't um and and i would also say just from uh at a at a at a less large scale i think that the dow community should really be doubling down on efforts to have daos recognized by laws in various jurisdictions so similar to wyoming's new dow llc law i think that even if these laws aren't perfect having this kind of legal recognition is a really good step towards legitimacy and will really help with policy efforts in the future and i think that um you know wyoming's law for example really does do uh do something

to help address individual concerns about liability mark and marvin uh maybe yeah i don't know if you have further thoughts on that or also would next love to to kind of dive into to the formal versus the informally associated dows well so so the question is an important one it's a question of you know developers worry about their legal risk when it comes to working on a dow uh you know as marta said one of the ways to reduce that legal risk is to support policy efforts one obviously the default education fund will i think could be very helpful

there's lots of other efforts out there that it will be funding that exists like coin center and um the fight for the future is very active on the activism side blockchain association define lines there's a whole group of them that are working towards us um and sort of being supportive of those efforts uh there are moments where you know uh them being a constituent of a particular person or them kind of contributing in a certain way or building a tool even for activism could be useful so one on the policy side too uh i think it is important to to know that you know the law exists right like i i wasn't like a early internet lawyer i remember when

larry leslie wrote the book code i remember reading it and it's the you know it's when there's a famous line code is law and explains how uh how code can shape behavior along with other things that were not code and what we learned over you know what we learned over the decades of the internet is that code is not law right it affects behavior but law is law people knocking on your door and arresting you is law and uh people finding you threatening you with force that's law and all of the early internet companies that thought they could sort of operate without borders and do whatever they wanted and just focus on code were actually wrong right there were limits and there were restrictions

obviously as marta mentioned code has first amendment protection but there are cases where despite that protection people lose and sometimes they win so there are some existing legal tools that are kind of behind the curtain that people don't even notice right so marta mentioned the wyoming bill and like maybe incorporating as an llc under wyoming and that to some people seems like oh man we don't need no stinking corporations but you know corporations aren't straight jackets they're like iron man suits they actually protect you you can be a vigilante but you know you get all these protections liability protections all this cool stuff you might want to think through hey is there a way to get the purposes we need for this style of governance and and uh and mass

participation um while well while doing it effectively under law while we're changing laws to to make them uh apply better to us so i don't think people you know and when you look at a lot of companies right people realize most of the companies they interact with probably have dozens hundreds of entities under them right google probably has an entity for everything they do under the hood for every country for different kinds of products right there are lots of way and venture funds all the venture funds other venture capitalists that are going to be speaking today or at crypto conferences who have a big following they have multiple different entities for every fund they do right and so under the hood people will use entities for their benefit and i don't think the community should be opposed to using an entity where it furthers the purpose of

the dao if you structure the governance the right way if you come up with a few little innovations so i guess what i guess what i'm saying is you know we might as well use the law to our benefit rather than against us in a way that furthers our real principles that really matter which are not avoiding entities but really participation community ownership uh you know kind of open source development the thing i'd add is about kind of being meaningful and thoughtful in how you approach it so you know when you create a you know four of seven multi-sig to start a dow and that it is going to be developed the entire software code within that dow

and then deployed from that dow and then grow the community from that dao there are so many different like layers of risk that exists in what you're doing at that time um that is very different from a dow that exists and and more particularly um seven identifiable people in most clay cases including those who want to be anons but you know don't successfully do it um and so i think there's a very big difference between a dow that is you know 7 10 20 30 people even and a dow that is you know a hundred thousand token holders or or more

um you know in terms of like who's the actor what risks are they taking like i think when you have such a small group it's a lot more problematic uh on top of that when you look at some of the risks with respect to the dows like around partnership and liability type issues um you know there's like a you know a definition of when something constitutes a partnership and when it doesn't um and you know what stage that dow is at whether it receives fees or not things like that are actually going to play and communications between dao members and what their intentions are that's going to play into you know potential lobby for

for the dow members um so i guess my point is just that you need to be like intentional in how you create these and when you create them and what activity you're taking or you're you're engaging in as a tao um verse when it is that maybe you should be using an entity and then at some point um you know distributed token become a dao um or when it might be appropriate to be a dao with a legal and you know as a legal entity right off the bat um so i think it is very it's not ideal to say it's like situational and you know depends on the circumstances but i think i think everybody wants to approach things in different uh ways and have different values you know some some

believe that from the beginning it should be a dow because that's just more consistent with the ethos that just brings different risks and so i think people need to be cognizant of that and i mean to that point like so i think this is a really interesting question um and i've definitely haven't upon this a few times in helping just to help teams think through who they need to be in touch with like what lawyers they should connect with and how they should think about some of the issues that are flagged for them early um but a lot of them don't have anyone to really flag those issues for them so they just start building and then they all of a sudden have a dow and then maybe they have a billion dollars uh aum and you know one thing sort of leads to

another so how do you think and this is maybe a difficult question but um to your point about this being situational it's difficult to hand out a guide to all crypto teams and say hey here are the best practices in forming a dow because it strikes me that we're not there yet how do we communicate this to the community in a way that can help mitigate risk for individuals who are trying to build you know amazing products i mean from my perspective it's about identifying those who are handling dow matters in a way that are consistent with the way that you view them right and you know ideally if you go to one team that is doing that talk to them like

that's probably not enough because maybe they're doing everything wrong um and and so i think the key is to to speak to look this is not a community that's like hard to get in touch with people and pick their brains on like what they're doing and how they approach it and so you know i think it's it's important to to identify those who are doing things in a way that that you think are are good go talk to them and you know usually you have a pretty good idea of whether they're just you know flying by the sea the pants or whether they've actually paid attention to these things and if you talk to a broad enough group of of you know folks who have been involved in dallas you'll start getting up like a pretty good idea uh of what to do and eventually you'll run into a lawyer who

might give you an idea about how to think about some you know liability risk protections and then hopefully introduce you to a lawyer who'll be able to help you yeah i i think where mark ended where which is you at some point you want an outside lawyer probably to help you if you're early on um you know somebody whose job it is to advise you and has a food you know fiduce your obligation to you and all that stuff turning client privilege um the problem is i can't just say hey call this lawyer at ex law firm because uh you know you should begin with talking to projects whose dow structure you like and find out who they

used one of the issues is a lot of these good lawyers get taken in-house mark used to be my outside lawyer now he's in house somewhere marta was when i was at protocol labs our outside lawyer then we hired her in-house and they just keep shuffling and all the good lawyers get snatched up there's like two or three left and but you know we have to use outside counsel too and so uh ask around and you know the latest lawyer who's good before they go in-house we will connect you to and and hopefully they can be helpful now this is also where i say nice things about connor right connor you have you have a project you're setting up to help people think through dows and i think that would be very very valuable right

because it is uh it seems like it's not going anywhere unlike my outside counsel who always goes somewhere so connor why don't you just remind everyone what you're setting up yeah and so we're setting up the dow research cooperative which is a group that pools uh funding for multiple dows right now we have contributions from ave compound and new swap grants and it uses that capital to resource some of the issues that are key to many daos at this stage and then provide white papers at this stage in response which could be really the foundational building blocks so the things that we build legal advice upon in many ways um but i almost want to turn the question

back to you guys uh you know if you're interested outreach cooperative of course reach out to me on twitter but um very practically speaking and i think it's a great point you make marvin and i've certainly heard tons of different different lawyers complain about the fact different gc's complain about the fact that all the best lawyers are being pulled in-house including they're complaining about mark they're complaining about marta they're complaining about jake of course etc many others but if you are a crypto project today um how do you go about so obviously you connect with pro you like and whose structures you respect and want to imitate um but when you're speaking to the few lawyers that are available in the space like should you approach those

few lawyers who are currently really burdened with many other clients and can just charge infinite amounts of money or should you take a flyer on a new lawyer who isn't as well you know well-versed in the space or maybe doesn't have the same reputation how do you make that decision as a non-legal person and i know that's a tough question yeah so let me say i wasn't quite complaining about mark and marta their lives are much better now that they're in house and they can sorry i should i should have clarified they're complaining about marvin for uh getting these people brought in house so they're no longer here but i had nothing to do with marketing i tried to keep them outside again against the interest of the greater community in my interest but for the for the greater community they can get a lot

more done in-house right and it's good all the better people going in-house is is better for the community um so what people should do if they're looking for if they're looking for a lawyer i mean as mark said in this community you'll know other people in the community they know you right calling you and chatting with you you probably will have the latest information that's volunteer your time but if they are close to any projects who who have lawyers on staff or who've gone through setting up taos i think they asked that kind of advice you know in order to you're sort of asking you know uh are there some some kind of specialists smaller lawyers they could go for versus some of these bigger firms

it's hard to know but but the but so a lot of the bigger projects do use bigger firms because if you're dealing in the crypto industry you know there is no crypto law there's like uh there's corporate law and transactional law and derivatives and tax and securities and you know sub-specialties of all of them and the biggest firms tend to have whole teams and that's why a lot of times some of the better outside crypto lawyers will go to some of the bigger firms because that way they have a whole bunch of whole team behind them so you could go you could you could do well a smaller shop if there's like a really excellent generalist but often you'll see at least bigger projects going to bigger firms

right and and you know if i were one if i were someone who was not a lawyer and was was building in the space i would honestly call you or or somebody else who i thought would be receptive if i knew that very fair um okay last question so uh recently we've seen some foundations transition transition into dao's and obviously this is the aspiration of many foundations maybe most famously of late a maker has transitioned into a dao so how do you guys think that organizations generally should should think about when the right time to transition is taking into account i'm sure obviously the legal piece but then maybe the governance piece from what

you've seen with projects you've worked with where other considerations projects should keep in mind um marta or mark do you want to talk about transition sure i mean i think i think you know makers uh one example where they're they're doing it very gradually which i think is important to go from centralized to decentralized i think they recognize that it really needs to be a step-by-step process so that you can protect against any threats to the long-term uh existence of the decentralization protecting against power vacuums and providing stability

particularly when you have a bunch of partners uh in the space you need to make sure that those partners are feel safe with uh and they're that there aren't sort of sudden changes um so i i think i think doing it gradually in this case as maker is doing um is it really makes sense um and i think that it's also a process with uh really teaching the community how they can contribute to governance in a way that is is the most effective as well yeah i think what we saw if you go back to like 2017 this wasn't necessarily dowse but it wasn't all that different but what we saw was an attempt to um immediately decentralize projects it

was this idea of like hey we're going to raise money and then we're magically going to be decentralized one day and what we saw is like that didn't work right you you need some kind of traction you need some actual advanced communities forwards bring things forward it's like it just it completely failed um and so i think what we've seen more now and part of this is is when you're not creating a network and you're instead creating like a protocol on top of a network i think that that it's a little more difficult but you've seen more of a move towards like this progressive decentralization as marta was touching on um and and when that's the case i think there's there's a few key parts to this i think i think one is um the size of the community that you

have i think is is important right i think you know if you've got like a a very small community that's not very passionate like it's probably hard to create a tao that isn't just a you know massive liability risk but effectively what you still have already had um i think that once your community is more developed you're in a much better spot to be able to do that i also think that there's you know a question in terms of like just development in terms of like development risk around the protocol right i think that when you've um kind of worked out a lot of the development risk probably makes a lot more sense to have you know

a dow that is working you know on on the code and other aspects of the protocol then when you still have like very key aspects of the protocol that that's still that need to be developed um the third thing that is like one that i think is important for regulatory and liability purposes which is like um kind of touches on the same point as the first one but it's this you know idea of like having a more active community i think one of the biggest risks of a dao is this like re-centralization of of you know what what is going to happen whether it's marketing business development or um like technical development um you know there's a tendency because for for efficiency to just centralize

everything in one group like that's just how organizations have historically worked and i think there needs to be like significant efforts in terms of like decentralization uh under decentralization decentralizing responsibility right when we see we see like grant dows like as kind of sub-dials being formed um that i think help i think when you are seeing like grants actually being made um which creates kind of a more active community because those who receive the grants are then more likely to participate i think all of these and others are are ways to incentivize participation in the community which allows for a stronger more active dow that i think reduces the risk of this

kind of recentralization that creates i think regulatory risk and like easy like liability targets i think it's great answering almost like pull out one of those threads is uh is around the idea um so you mentioned the top of your answer like the id the one thing i realized relatively recently was that um even though i came into crypto and started working as a formerly lawyer and now as a non-lawyer in this space but obviously keeping a tab on legals is that the idea that uh that some things are done like some things are thought through i think people make assumptions sometimes in this space that like i remember when i came in three years ago three and a half years ago

governance was was done we we had uh someone who was working on governance and they they had it and we didn't need to worry about it progressive decentralization was baked like we were good to go and i think it's a really important reminder to everyone in this community that you have to keep building and researching and providing information to the community more broadly if you want things to actually change and evolve and don't assume that questions you may think that have been answered or feats accomplished because uh a lot of the time it hasn't been and someone might say it on twitter but it doesn't mean it's actually happened and so you should be very critical in your thinking but also you should be a contributor to building in this space if you want to see it move

forward and then you should make sure to open source that contribution from my perspective and uh yeah and i think the guys with that were at time and i wouldn't want to cut out from our next fireside chat so thanks so much marta mark and marvin we really appreciate it thank you thank you and i know if people do eventually want to reach out to you i know that you're all on twitter and can be relatively easily found right that's right we can yeah [Music] thanks so much all thanks all right

coming up next we have dan binet who is going to be interviewing robert leshner uh dan binet is the co-director of the stanford center for blockchain research and a professor of computer science at and electrical engineering at sanford university you guys saw him at the beginning of the event and robert leschner is the founder of compound big advocate for defy one of my personal favorite investors in this base and also is an investor over at robert ventures and we are going to be speaking about the future of dallas a pretty broad topic you guys uh take it away perfect thank you wow this has been going great so far robert it's great to see you again how are you dan you're doing great excited to talk about dao's defy and the future of the world exactly exactly um so robert you start a

compound can you tell us a little bit about what is compounds just to make sure everybody's on the same page yeah so compound is an interest rate market for ethereum assets built with smart contracts on the ethereum blockchain so you can think of it like a financial market that runs autonomously on its own 24 7. um built with open source computer programs that anyone can interact with build on top of um and nowadays govern yep uh perfect uh that's exactly what i was one was going to jump into the next so compound is a dao um it has a governance mechanism can you tell talk a little bit about how the governance mechanism works in dao yeah in compounds yeah so compound started off as

a an interest rate market parameters which assets are supported what are the interest rate models that each market you know functions by and what are certain parameters like how useful is an asset as collateral so there's a whole list of variables and parameters um that comprise these markets and there's also the ability to add new functionality and features um add additional contracts and change the behavior of the system so originally our team that built the protocol was the one who set these parameters you know we did so by listening to the community and taking you know their input but at the end of the day if a parameter had to change there was only one team that was capable of making a change whether it's

something really simple or something complex like changing the functionality of the protocol today compound is actually governed by token holders with no middlemen whatsoever so token holders have the ability to create proposals which can change the parameters or code of the protocol itself and vote on these changes directly on chain and it's a system that's designed to let the community you know actually um suggest and build and implement changes if there's you know a new market you know it's possible that the team that created that asset might actually you know do the work to add the asset to compound um it doesn't require you know compound labs um and secondly it allows people when they're governing compound

um to reach an agreement on which changes are good and which changes are bad and you know certain you know changes are relatively easy easy to reason about like oh let's you know add this market you know everyone can say hey it's a great idea let's add a new asset or it could be complex you know let's change the risk factors that you know determine whether or not the protocol is risky or conservative um and so token holders vote on these things um and all changes at the end of the day are actually computer code so whether it's changing a parameter we're saying switch to using a new even a smart contract to govern some type of logic all of it is basically voting on um whether or not you know different

parameters and lines of code get merged into the protocol i think that's really actually important to point out that you could literally switch to a completely new contract if the community votes to do that yeah so you can change the logic all together exactly what you can't do and this is interesting and different from a lot of dallas is you can't do anything off-chain so you can't have like proposals that say like oh please go out and build x y and z like you're the governors of the protocol are strictly governing the contracts deployed onto the blockchain um there's no proposals that are like you know let's change the load though all proposals like you know what are the variables and parameters that we'd like to see modified so before we talk about the specifics of governance uh i think

this was touched on in the last panel but i think it'd be good to hear from you as well like why did you make this change like initially compound was in control of everything it could still solicit proposals from the public and then it would just decide itself what to implement and what not to why why did you make it so that you're out of the loop yeah absolutely so there's really two major advantages that i see to doing direct on-chain governance for the system one is resilience so you know i and to determine resilience i actually use a test called the meteor test um it's a little bit silly but the idea is if a meteor came down from outer space and landed on the compound office with the protocol continue to run and

the answer is actually really important so you know you want to build resilience into like a financial market so the answer is yes like unequivocally like the meteor comes down the thing will continue to run forever um the really cool thing about you know applications built on the ethereum blockchain is the answer even when it was still managed by our team was generally yes but only in a short time so if a meteor came down and knocked out the whole compound team the protocol itself would continue to operate doesn't require any humans on a day-to-day basis but the economic parameters of it would go stale so you wouldn't see like the market evolving to the risk levels and the parameters of the crypto market itself um so eventually the

answer is if a meteor came down you know and it was centralized you wouldn't notice that day but a year later the system might no longer be operating efficiently i i have to add like just from a technical point of view what could in that world what controlled the protocol is a cryptographic signing key that allows you to make updates if the meteor came down and destroyed that key the protocol can no longer be changed exactly or if the people who hold the key are called it's not the people it's the key exactly that's exactly right that's the key um and so that's the first goal is resiliency you always want to make it so that somebody is around with the rights to upgrade it in perpetuity

it's not dependent on any one team or person um and that's you know adds a lot of like robustness to the protocols if you know it's going to be there working in you know 50 years you know you can build systems on top of it that are designed to last for 50 years if you know it's very fragile yeah you can build great things on top of a system like compound or you can use it as an individual user but you can't build it into larger systems designed to last forever so resilience is the first call the second goal is actually i think less intuitive but that's by removing one privileged party able to upgrade a system and open it up to one in which anyone can design and create upgrades to the system you theoretically

increase the rate of innovation now you know this is debatable um but it's one of the core theories behind how we design confidence and the actual mechanisms of how we built the system on chain it's designed so that if you know someone listening to this talk right now says oh i found an opportunity to improve compound you know lines 112 through 130 of this contract are inefficient you know i found a way to make this more efficient anyone can bring that improvement to the protocol it's not bottlenecked by just our team it's actually opened to an entire community and it's trying to hopefully harness the absolute best properties of open source software which is

anyone can make improvements to it now you have to convince a community that it's a good idea and get their approval before you do it but if you identify an opportunity to improve the protocol it's not bottlenecked and it doesn't require the permission of anybody at all to implement it as long as you can convince the token holders that it's a good idea you can make an improvement um obviously it doesn't happen necessarily without like economic incentives and grants so one of the things that's come up in the last you know uh six months has been a grants committee to actually reward you know open source contributions to the protocol but when all of this comes together you get a system that you know doesn't have fragility and is upgradable

by a larger community and there's the reasons and incentives to improve this protocol we're left with a system that can continuously improve and improve forever so ideally in 20 years you know if this experiment you know is completed successfully 20 years compound's going to be far superior to the compound that you have today so actually uh uh when it comes to that the the one question that's always on everybody's minds is you know communities don't always make the right decisions in particular you know we've seen examples in history where uh you know a community decides to appoint a dictator that is is going to be some benevolent dictator but that's

going to control everything from now on in principle that could happen right so what do you do if what do you do if a community makes a bad decision or decides to centralize yeah it's a great question um you know we've always taken what i would call like the extreme approach to um building on chain systems which is you know it's followed a model of like progressive decentralization but towards an extreme community has absolute control and like whatever they decide goes we've done this with some training wheels so one of the things that's been forgotten a little bit is that when we created this on-chain governance system we actually tested it you know with um

select members of the community first so we basically said we're going to have full on chain governance but it's not going to be open to every single user of the protocol it's going to be tested you know in the wild with you know people that only have positive goals and motivations and then after auction governance ran successfully for three months we then opened it up to the entire community and said all right you know we've pulled the lever there's no going back you know this is it um unless anybody votes for going back unless the community votes for going back hopefully that doesn't happen yeah um i actually think you know the system is generally working quite well um today um we've seen a number of different teams and contributors like actually upgrading compound whether it's

small things like parameters or large things like new contracts or markets or functionality and so i actually think this model is sort of the direction of the future which is like if you can build a system that's open to the whole world you know it's gonna move you know faster or have greater acceleration than the system which you know is you know permissioned and run by you know i want to talk about another another aspect of this which is uh participation so one of the things that i think is really exciting is that if you look at the compound governance dashboard you'll see that uh there are many universities that are contributing to their voting on proposals contributing analysis and so on you know like the stanford blockchain club is very

actively engaged in in voting on compound proposals so i have to say this is um an incredible educational tool i don't think this was the intent right but it but by making it so that by delegating votes to students have students analyzing proposals uh and learning much more about the d5 space by the process of analysis so i think i i don't know if the audience is aware of this but if it's worthwhile looking at the compound vote voters you'll see there are many universities involved it was that by designer that that just kind of happened yeah that's a great question so delegation was by design so what's funny is when you think back to the ancient history prehistoric era of 2019 when we started designing you know this

transition to decentralized governance there weren't too many examples of protocol governance it was very early so at the time you know we had very few examples to learn from so we learned a lot from the maker now community i'm actually a huge you know fan of maker now and mkr holder um that was one of the very first what i would say like on-chain governance systems um it had some flaws that we wanted to you know learn from um we actually really liked some of the governance structures of the tezos blockchain um you know that was one of the inspirations for it um we looked a lot at other layer ones we looked a lot at you know corporate governance of like listed equities in the us and abroad we

looked at a number of different governance systems to design and compound governance for what we thought as a useful and stable you know and mature on-chain governance system would look like um one of the key pieces of that was this act of delegation and so you know what we envisioned originally was that you know most people by nature you know their job is not to monitor or manage you know a financial market protocol on a blockchain there's some people that are going to be unbelievably passionate about this but the average participant or even user doesn't really care they just want it to run correctly and so one of the core ideas was that you know there should be a separation of the sort of ownership and rights to govern and the participation itself and that

delegation fills this gap and what we wanted was a system in which you know the people that were going to be super active you know and like really spend a lot of time in like you know getting to know the compound protocol and like how it works and the code base and the metrics and the you know risk parameters of it like those are the ones who should have a lot of votes and a lot of control um but they might not be the ones with a lot of ownership and that's fine and that's a good thing delegation allows you to take your tokens and ownership and assign the expertise elsewhere and if you want to participate in compound governance directly phenomenal right like that's even better but if you have comp tokens you can assign the votes yourself or to dan or to stanford blockchain club or to

literally anyone on earth that you want including other computer programs and the idea was that by building essentially a very simple tool you know the world would figure out the best way to use it um and that's come up as academic organizations being large delegates it's really cool to see i was gonna say but it's also actually come up in a little bit in sort of machine driven uh governance as well and this is uh more counter intuitive things but we actually thought that governance would go to people like predominantly um one of the most popular use cases actually has come up where people are delegating to ideas um and eventually maybe they'll

delegate to like you know you know ai but they're delegating to ideas right now um and so you know in compound governance we have these things called autonomous proposals you know it's like um it's an idea in a smart contract that says if i get enough governance votes or governance power i'm going to create a proposal um for the community and so you could delegate to like this idea like oh let's add i don't know some some asset um tether you know to the protocol and if that receives enough delegation it can actually create governance for the community it seems a little bit like ai as dan mentioned but it's not um

but it's one of the first examples of like delegating governance of a protocol not to a person but to another computer program and it's really cool as a use case it's really really cool yeah really cool ideas so this is great but uh we're coming up on time but there's really one question i have to ask you we're supposed to also talk about the future of dials and kind of where they're headed which i guess you kind of touched on in the last answer but um i kind of want to ask you in the vein of the future of dallas if if somebody was starting a dial today what sort of advice would you give them yeah that's a great question so there's a lot of different types of dials right now um you know i'm focused on protocol dallas there's great dows that are

collecting art or being social organizations or investing into different things i think the thing to think about are what actions does your collective have to take with compounded simple manage the protocol parameters in others it's making like investment decisions um you know are we buying this piece of art or not or what are we doing in this way are we investing in like this asset and you should design the sort of on-chain systems and off-chain systems for a dow for the purpose of what you're trying to achieve um i think right now a lot of technology dials is very early there's great tools for voting um there's very bad tools right now for carrying out the outcome of votes so i've seen a lot of dowels like voting on

like what do we do as the group and then relying on the humans to enforce those decisions um i think the thing to think about is how can you like productionalize this and institutionalize the down such that it doesn't still have to come back to relying on humans to carry out the will of you know a community um the more you can make this not rely on humans i think the more powerful dolls are going to become yeah and in fact uh i guess the the the compound uh governance mechanism is a good good source to learn from right there the the the uh proposals are enforced actually by the code not uh there's no humans involved so that's a really good example um fantastic actually i think we're at a

time so this went by really quickly so thank you so much for coming robert this was fantastic it's great to see you again and it's wonderful to see all the things that compound has achieved and uh yeah looking forward to what you guys do in the future thanksgiving david back to you fantastic conversation really enjoyed that one coming up next we have a conversation about dow treasury management and management best practices uh moderated by myself and we also have uh king joel shah who is an investor at blockchain capital uh investing in the future of crypto assets and blockchains and she is also the co-founder of koro uh kimura ebby i might need a help on that pronunciation uh which is a dao

investing in female female and non-binary crypto founders uh we also have uh derek xu who is a co-founder of reverie a company that helps dao's scale and prior to founding uh reverie he was an investor at blockchain capital we also have uh two uh we also have a matthew graham who is a treasury uh is the treasury working group lead at index co-op a community-led initiative focusing on enabling the creation and adoption of crypto indices primitives primitives and a core contributor at llama we also are missing a panelist who might show up halfway through the show and if that happens then i will introduce them then but until then guys welcome to this panel we are going to be talking all about dow treasury

management and i want to start off with a really broad high level question why is this question so important why is the why is there a conversation at all about the relationship between dows and their own treasuries and i want to give each of the panelists here a moment to answer and let's go ahead and start with uh derek because you are on the top left derek why is this question important thanks dave for for for moderating um i think that at the simplest level people see the sheer size and scale of these dog treasuries and realize that there's enormous potential on how they can be used to

improve the long-term prospects of the protocol now that there's many d5 protocols with product market fit and there's fundamental value being created for the token and via just continuous fees there's just like there's a much bigger importance in sort of actually leveraging what you can essentially think of as a as a company balance sheet to improve both the core product um and the the core ecosystem of users of community which sort of can can appear to be pretty similar so there's lots of different approaches to this but that's sort of my thoughts on it

kindred same question to you uh when the conversation of treasury management endows comes up uh why why is this such a big deal what is what's at stake here yeah absolutely so um you know this might be a little bit a little bit repetitive with what derek said but i really think that the dallas is a new way of operating online right you're it's a new sort of um structure for coordination and in order to ensure the health and longevity of whatever it is that you're kind of governing i think um you have to do some some work around capital allocation and so over the past 18 months we've seen treasuries absolutely balloon up i think daos are now in possession of over 10 billion dollars worth of assets and so i come back to

the fundamental question of if i have a company what do i want to do you know make sure i have enough operating capital to invest into my uh products and my roadmap um ensure that there's alignment with all of my shareholders or equity holders or in this case token holders and then make sure that i have a way to sort of elongate our long-term financial health um through diversification or investments or whatever that might look like so that's a little bit more of like a boomer definition of like how does a company even work but i think that's generally how i think dows are starting to think about treasury management and it's important because um we want them to to grow matthew i want to also give you the same uh same uh question but also um we on the bankwest podcast we talked to joel

monegro who was an early panelist here and he really talked about how uh if there's there's only you only govern over things that are worth governing over uh and so there is no such thing as governing over things that aren't valuable and so to some degree all dows are are governance mechanisms and they're governing over assets uh so it is my question to you is a little bit different is this kind of the whole point about daos is how can daos manage their the assets that that they have on their balance sheet is this kind of the prime question as to what a dow really is trying to do i think the prime thing that dao is trying to do is probably build their community out and deliver their their products and their

edge to the market and you know contribute to their fine well leave some of them on and from there the treasure really becomes a tool to help them on that journey to help build their community out they'll get their their governance tokens distributed the products that are out there it's it's just a financial capital it's a tool of just way of helping the dow in the community achieve their goals and where they want to go so yeah i just can let the community go where it wants to go and use the treasury as a way of helping it get there and then also give it a bit of a backstop so that if the market does turn it can keep striving towards those goals independent of the market conditions matthew the index co-op dao has always impressed me with its level of

sophistication and organization and so i i want to keep on talking to you here uh what have you seen be successful strategies or successful treasury management you know strategies inside of index co-op and perhaps what you've also seen in other dials as well yeah so the next thing that's called skull up really fortunately there's a really really high energy like really active community there and when it comes to like finances it's something everybody seems to have an opinion on so trying to bring like a big big community to form consensus around what to do is a little bit challenging there's a lot of a lot of discussions and a lot of opinions around it i think your net scoop's done really well um after launching the governor's slogan by recently we just started diversifying

our treasury which is basically to go from pure governance token to basically have some stables allocation in there which is enough to sustain the community um independent of what happens to our governance token price which is which is really exciting that's that's our set for the next few years derek same question to you what have you seen as successful dow treasury management strategies and are there any dowels out there that you really think are pioneering like six um good uh management practices yeah i think the the that question is to think about the goals of a doubt right which is to at the end of the day find the best people and incentivize them um with

capital and ensure that in a bear market like this protocol has the resources to do that um i think wi-fi is a pretty sort of great example of this specifically where their entire approach to treasury management and basically governance as a whole is centered around the question how do we actually retain and incentivize the talented devs working for us long term regardless of market conditions and i think of the like around six months ago when they did the sort of twenty percent mint to sort of as part of the core define like that's treasury management it's not sort of

conventional like diversification earning yield like that that that's another category but i think wi-fi has sort of done this pretty well where they created this sort of fund built consensus around that idea and i've allocated initially small amounts of capital to specific functions and specific groups of talented people for marketing for for auditing for dev work for strategies so i think um that's one approach there's many other ones that sort of are interesting as well but um i think wi-fi is one of the projects that's furthest along in this design space

control anything you want to add on to what matthew and derek said um yeah i think i think they both said agree i mean i really do think it's all about deciding what the goals are of the dao and then how do we best achieve that with the capital we have so so what about so each dow has its own native token um you know uniswap has the uni token comp has the comp token uh and this token offers different optionalities towards daos and and it is part of the the treasury right usually daos kind of start off with their own token as the only part of the treasury and then the token kind of mutates into something else so uh king joel i wanna i wanna start with you is uh how what what

is the appropriate way to you for a dow to use its own token and how does that answer uh differ depending on what the dow is up to or or what stage of maturity the dao is in yeah so um i mean there's i think there's many different functions of the token two of the ones that i think are most popular today is you know you've got of course governance and voting so using your your token holdings to actually put a um a vote in and then the second is growing your protocol right we saw liquidity mining kind of blow up last year and one of the primary use cases for tokens was how do we incentivize protocol growth i think what we what we saw was that you know liquidity mining was a great way to kind of do like a growth

marketing hack and now over time it's really just becoming about how do we carefully design incentives with our tokens so you know users are um wanting to hold them long term um potentially they have to reach some sort of milestone to get more tokens or you know kind of showcase how they're commit you know committed and dedicated to building the dow and not just you know farming um for a shorter period of time so the to right now i really think it's all about growth and then um to a certain extent you know getting paid in your in your token to go do some some work for the protocol matthew we've seen the index co-op really go through a pretty fast pace of maturity at least in my opinion has the role of the index token changed as the

index co-op has has also progressed and developed as a protocol tough one um or or also how does the index co-op just leverage the index token as a valuable asset on its balance sheet yeah so the index token like when i originally started using the tool to basically um really push like uh d5 pulse index or dpi so it became a government slogan on the back of a product so it was all about product growth and driving and getting that product liquid that was it did that and then it was used to like commercially push it that way um through just liquidity mining and then other other incentives that happened thereafter but then now as the

community's involved there's you know there's more and more voting that goes on like the communities were actually engaged really trying to push index coop in a direction which means a lot of um proposals voting so it's very active that way so the government's part of it's huge and then through like the success of dpi there's like the meta governments so fortunate to have a product which holds basically other governance tokens which then means index coupe is now voting pretty significant portions of um votes in some of the other like leading d5 pro of course which is it's just a huge value add to that governance token you can essentially purchase one government circuit and get access to another 14 or so uh derek how do you see the appropriate

or perhaps inappropriate leveraging of a dao's native token to help the dow achieve his own goals i think it depends heavily on the the stage of a project has has it found product market fit how large is the community how mature is it um but i think like generally speaking um like if you look at traditional strategies for companies and core balance sheets it's like if they sort of need to raise operating capital then it makes sense to diversify a little bit sell some assets

move like basically have your traditional diversified portfolio so that you can survive in any in any bear market so i think that's um just like a really obvious thing for for projects to do when they're at the sort of appropriate maturity um but i think like more generally um like project native tokens can be used to um sort of work collaboratively with other protocols like how do we get one protocols tokens in the hands of the rabid community of another and and get them to be on our side and aligned

and ways that can happen um it could be the sort of token like m a approach which we've seen some some some projects try it could be the retroactive airdrops approach it could be um other stuff it could be just liquidity mining but i think there's like the most novel and interesting part of treasury management at this point is probably distribution and getting and leveraging that to um like have a robust and dedicated community because again like token holders can be parts of many different dows and projects and

treasury management is a tool and ultimately a weapon to to get them to be involved and loyal long term and part of that incentive for involvement and loyalty at the end of the day of course and the purpose of dow's at large is to really make the value of of the dow grow and if the value of the dow grows it's theorized that the value of the token would also grow really ultimately a dow is just trying to increase the value of the people that own the dallas native token you know in theory usually makes sense um and we've seen different dows try and approach different strategies to really get this done some dows i think are aren't there yet as in uniswap has not really turned on any sort of fee capture mechanism uh to go into the treasury

they don't really need to because they have a massive treasury but a dow like yearn has done both yfi buybacks and purchases of eth to put it on the balance sheet uh which again in theory goes to increasing the value of it of the dow um so when it comes to actually capturing value to return it to dow token holders do you guys have any opinions as to the uh the correct timing and also the correct mechanism for for getting that done uh and and kenjal i would like to start with you yeah definitely so in terms of timing i think this is this is probably like that a trickier question right because i think um it's not we're not completely sure when

dows have reached reach maturity or when um you know even like they've achieved product market fit i mean you could argue some of the d5 protocols already have that of course but i still think there's a little bit of a question there um the way i think about it though is probably a little similar to like investing so having those distributions come to users over a period of time where they've kind of invested their um interest in ownership of a particular token and then in terms of how it gets distributed back we've seen this in a couple of cool ways where um you know like unislav's retroactive airdrop which was you know one of the coolest things i think last year in the d5 world everyone was just so excited and i think it really um felt like it hit their goal of going

back and saying we want to um kind of give our distributions back to our all of our supporters from day one so i think that's a really interesting mechanic um and then other ways or you know airdrops i think will be continue to be common but also thinking about how um different type different users will opt into different uh governance either strategies or committees and how you can potentially reward them people are getting paid now by many many different dows and so that's one way also of incentivizing people to get larger distributions um yeah lots to come there matthew what about over at index co-ops you guys are you guys at the the phase of development where you guys are are focusing on token price go up or token number go up

or is it still kind of in the in the realm of uh dow value go up and we'll worry about the token price later i'd say index keeps got like a very long longer term kind of frame for thinking about these things so very much about like you know ensuring what products are out there do well bringing more products to market getting them well integrated and set up really pushing those the integrations and using extrinsic use cases those products um we're also really focusing on like building community ownership so we want um now that we're a few six months or a long time past launch we um we basically want to start building more community ownership so again a lot of the contributors really start to think

like owners so very much just reinforcing that long-term trajectory so that's that's where we're thinking in terms of like economics but there's there's always discussions and ideas floating around it's um definitely a good talking point and uh yeah i think in time i think a lot of these government tokens will have some kind of um tokenomics kind of upgrades that as these powers that basically our model they're working to kind of grows and expands what it can do so yeah i think it's exciting to watch i would totally agree with um what matthew and kindle said i guess the one caveat i would i would say i mentioned is that um often times token price is sort of a shelling point for the

community and just like in traditional markets if amazon stock is doing really well or apple stock is doing well like they can raise debt sort of at better terms attract more like sort of employees i think the same still applies to crypto protocols um i wouldn't say it's the most like price is not the most important thing long term but it can definitely sort of create loops where you bring attract people because you have more resources they contribute more sort of to the protocol improve the fundamentals and it sort of becomes a sort of a nice feedback mechanism so i think it's i wouldn't anchor to token price if

you're going to pick like one fundamental metric or indicator like i would pick like volume or origination volume or whatever but i think it's also probably not accurate to say that it's like like i think it's very important how how price performs even when you just launch the token yeah and and price is really it's it's own marketing tool we've know this from bitcoin uh one of the biggest you know marketing tools that bitcoin has is is to break new all-time highs so that so many different you know reporting agencies will report on bitcoin once again and all of a sudden there's a new influx of buyers um and also you know you increase the the value of your native token you straight up have more value in your treasury more more capital

to to work with more capital to leverage i want to um control you brought up the subject of uh you know liquidity mining or yield farming and i want to to kind of dive deeper into that because at the end of the day that's all that's very much a intentional choice for a protocol to to leverage to as part of their their balance sheet and it really works really really well when the token price is high and doesn't work so well when token price is low um and i will so i want to get you guys opinions on this date of liquidity mining as a balance sheet strategy in 2021 and because it's very different than what it was in d5 summer when liquidity mining was brand new now liquidity mining has kind of become professionalized gamified do you guys um and we i've i've started to see

a decent number of uh protocols that have a token that have liquidity mining uh uh uh protocols or liquidity mining like offerings and the token price this is just my gut take isn't really doing so well and i'm worried about just the issuance of these things is really damping the price which really costs the the platform or the protocol the capital because they are allowing people to farm their tokens who might not be incentivized to stay with the protocol and are just really just you know are trying to be profit maximalists um kendrill do you share these concerns or how do you see like liquidity mining as a strategy for optimized balance sheet management yeah i i definitely share those concerns

i think that's kind of what one of our at least the community's big learnings from last year is um you know people are just kind of gonna farm the heck out of your protocol and then move on to the next one right and so like that's just human nature let's find all the all the opportunity for for guild liquidity locus um yeah exactly right and so i'm super excited about some of the experiments that people are you know different projects are doing for long-term incentivization so like uma has a really cool product called kpi options which is all about meeting particular kpis like we want to hit they did an experiment on themselves of you know hitting 200 million in tdl and then that would unlock a particular

i mean it's an option so um that was kind of cool of just thinking through like how you kind of incentivize a community i think rabbit hole is doing some great work where it's like instead of speculation you'll get you'll earn tokens by actually using the protocols and learning about them um so they have like launch these quests um and there are some other folks out there too so to me i think liquidity mining's like design space is is much broader and more open and now we're gonna start to see a lot of cool shifts to like long-term incentivization for users and then also for devs to come join these protocols matthew i believe index co-op has a liquidity mining uh program in collaboration with uh sushi swap can you talk about the decision making in the behind behind that in that endeavor

so liquidity mining in general for i think next cube's basically a way of um promoting a better user experience for the product so by incentivizing liquidity it just allows people to basically entering these that their trades or in our instance purchase products for a long-term hold hopefully um which then helps feedback into our revenue stream so we're looking basically creating a really good user experience and getting the liquidity of the product in in the market so that's that's kind of how we're using token distribution to do that i think what we've kind of seen is yield is very competitive so and if you go too high it does get games so you just gotta be really smart with how you do it

and really and really analyze the the knock-on effect so yeah i think some of the other options that are coming up for i think we're gonna give better returns to treasuries rather than just um straight shilling the token for liquidity derek you have any thoughts on the whole concept of using a balance sheet for a native token with liquidity mining yeah i mean i think at this point and and kendra touched on this like and you talked about this as well like it's probably not ideal for a project just to do vanilla large-scale sort of liquidity mining based purely on sort of the amount of capital um like liquidity mining is

like contributing capital to these programs is the definition of a commodity there's no um sort of differentiation so i think the industry is getting much more advanced and knowledgeable about how do we actually let people sort of show proof of work um that they're contributing something beyond capital in addition to capital um and sort of show that they're sort of incentivized and be aligned long term um like you could imagine like if like what if unit swap instead of doing their large-scale liquidity mining program back when they watch token september they were like only addresses that have sort of done a uniswap trade

or lpd in the past can actually sort of earn rewards and each address is limited to a certain amount of tokens like i think we're starting to see some projects try approaches like this um where it's like capping the total amount of capital it's available so you insure um because and the reason to do this is like you don't want to just compete with every other project on yields that's a zero that's like a zero-sum game it's just storing money um away oftentimes so it's like how do we design a sort of not artificially high rate but like um sort of a mechanism that actually

rewards i've been involved already and will continue to be derek i want to stick with you as i turn the conversation to something a little different um part of treasury management is straight up treasury management and there's different ways to do this with regards to a dow dows are you know token voting systems but not all dao some dows are multi-sigs where just a few members worked at the behest of the rest of the organization also to some degree some dows will choose to allocate the decision making of a particular treasury to a smaller set of individuals rather than have all of the dow have a say in treasury management so do you have

opinions as to the correct treasury management practices and the internal organization for a dow and also does that change with regards to where a dow is in its state of development derek let's start with you yeah this is i think it depe i don't think um yeah every aspect of treasure management should be left up to on unchained vote just like like that's not how like decision making is effective for for anything like there are certain things like okay setting a budget or finding the right people to staff these committees manage budget be the multisig members that's i think those are all important to let everyone have a voice in um

but i think yeah it's like the biggest problem isn't a lack of good ideas in in sort of trigger management or governance it's a lack of people actually doing it so i think like the approach i'd love to see generally is rewarding and allowing for a bunch of small working groups giving them all small budgets and sort of a small power and letting them run with specific ideas and you can design kpis and metrics and see if something's working use that program use that strategy scale it up but i think at this point it's just incentivizing like people to actually contribute brain power and

spend time and then just seeing which experiments in treasure management work control do you have any thoughts on how a dow should approach its own internal treasury management yeah i mean i would i would echo kind of what derek said i think like there's going to be some sort of um delegation of decision making that's going to happen as these things scale and we're already seeing it right now but hopefully that gets more codified when it becomes you know the best practices of like okay we've now voted on who's going to be in the treasury management committee you know barring any decisions that are not related to x they can make they have full sort of responsibility because i think the way to move forward into doubt

and to move forward any sort of project is to give folks a little bit of um you know power or maybe powers off not the right word but um just like the ability to act on on whatever decisions they're trying to make rather than having it all kind of come to a vote so i would agree matthew how do you guys do it over at index co-op i know i keep asking about the details of index co-op probably because i'm just innately curious but how is how does index co-op approach its own treasury and who gets to decide what happens with it yeah so probably some context around here is probably the size of the index foods treasury which is you know it's 30 to 40 million so it's not as big as some of the other ones

um so we use the the working group structure which works quite well and essentially it's why of just putting like really specialized resources assigned to focus on a specific topic and the way that that kind of works for us is um your regular community engagement the whole way through and then you end up basically putting proposals forward my governance forum for broader discussion and then you basically vote as a community around it so and that's that's all kind of community elect like who leads these groups the main contributors to it obviously you know the community supports what they do and then ultimately there's enough engagement there so everyone can kind of buy into it ask the questions and form that consensus so it still very much goes through the same

governance process um at least initially i think in time the smaller sums of money the more day-to-day stuff that will probably get you know assigned to someone because it's just it's just noise to an extent but then the big kind of structural um decisions you can find making with like allocations and what you want to hold budgeting forecasting stuff like that i think that's all going to still go through very much a real broad review cycle to get everyone to buy into so matthew do you see yourself and the rest of the working group being the the thought leaders and and uh just overall leaders of the index co-op uh dow or do you are you guys kind of acting as just

the uh just acting upon the wishes of the doubt like who who determines what the direction is is it you guys or is it the dao um so you can be a working group lead but really it's just uh it's just a group of people working on a common task and quite a lot of these people are cross-pollinating across different groups um and they're not you know tunnel vision one particular topic so i wouldn't think too much around it like they might shape some of the decisions in the direction but ultimately it's it's probably just refining some of the concepts and then take it to a broader audience that's probably how i frame rather than say this is the direction everyone follow it's

i think the community goes where the community wants and there's certainly a feedback loop in there too if the community is unhappy with a certain direction so really the the working group that's responsible for treasury management is just perhaps like the uh branch of the index co-op that executes upon the wishes of the broader index co-op dao rather than actually formalizes and instantiates your guys's own opinion you guys take input from the rest of the dow and just executes upon the dow's vision is that correct yeah i'd probably there's like a recommendation that comes from the group and then there's a review cycle that goes back through it um [Music] yeah so i think is that you've still got

the whole governance process you've still got the whole community thing it's just rather than having everyone trying to work out what to do you're basically saying you guys know so you figure it out and then come back and tell everyone else what you think's best then we'll have a chat about it so as we all know in these crypto markets they're extremely volatile things go really really high things go really really low and i'm reminded of when in 2017 uh when ether was trading above like 800 vitalik uh uh encouraged the ef the ethereum foundation to sell a bunch of eth to fund its own roadway over its own its own runway now the ef is not a dow but it kind of kind of acts like a dao kind of feels like a dao and so my question is

in these volatile markets where you know the volatility can break an entire company or an entire team even though if they had just you know had good treasury management they would have been able to stick it out towards the end how do you guys see the uh the intersection of dow treasury management and the volatility of crypto assets do you think it's appropriate for dows to be opportunistic when it comes time to sell into a good market or do you guys think that that's perhaps too much delving into the realm of trading and speculation um derek do you have any any thoughts on this yeah i mean i think those that ideas like like managing volatility is absolutely deeply intertwined with

protocol treasury management um the tricky thing is like because the whole point of downtree management is that it's an open transparent process and it's not like 2017 where teams could basically diversify and people other like community members wouldn't realize it they could do it behind the scenes now it's transparent um so it's in some ways more challenging because like most token holders don't want to see price go down ever not talking about the long term just like if you sell um tokens like you can have a lockup it

can otc like and increase the flow like people might be against that so i think um it's absolutely something to manage and think about and um it's important to socialize these ideas and and get people to understand that it's like very important to to think about these things um if you want to maintain and retain talent long term kind of you have any any thoughts on the same question yeah um i i definitely think like we saw a lot of just a lot of pain after 2017 when projects did not manage their their treasuries or

um for whatever reason right there just wasn't a lot of uh diversification into some sort of staple coin allocation i think that would have helped a lot of projects kind of make it through the bear market and the reality is that these are still very early markets and so the volatility is likely going to persist for for quite some time um particularly when you think about early stage projects right like if you were to go into an equity market and have like just as liquid of a space for trading shares of a project that's only six months old like you would imagine it's going to behave very similarly right these are all super young projects um so i think it's it absolutely needs to be intertwined i definitely agree that like token holders are not necessarily going to love you know they might have disagreements

there but i think it's just important to manage expectations um so you know it's important but potentially a little painful i think if you're just holding a pure governance token you're going to feel the volatility of the market um so i think ultimately you've got obligations you can compete um communities to ensure that you're going to be there and survive any kind of market downturns so the first step for most these dollars is going to have have some kind of balance of stable coins um even though the low volt assets just kind of get something tucked away for that rainy day and then from there you can kind of go back to focusing on

you know making the most of the upside and the good times and get back on the growth side of things so i think as long as you've got a safety net you can really go forward i think over time as your treasuries get get bigger and you're more established your risk profile changes you can probably start exploring other options which kind of uh allow you to have exposures to the upside and then probably have some kind of hedging to prevent some of that downside exposure so you can kind of protect your wealth a bit for the community um

so at the moment we've we are using just a multisig mainly um and that's because we're not really very active in doing any transactions so i think at the moment we're just distributing into our working groups and then basically pursuing growth um we've got enough stables we're still developing our treasure management and how we're going to start deploying it um so yeah we're still exploring what tools are out there and how we're going to do it for us uh uh derek any any thing to add about tooling when it comes to dow treasury management yeah this might be a cop-out answer but i think every d5 product

project is a potential tool for dow treasury management i think the like we saw compound yesterday come out with uh i think like um sort of product four percent tailored towards like and like companies um like that exact product or sort of like thing is something that protocols will use right it's it might happen differently it might look a little differently it's going to happen like more transparently on train but like at the end of the day it's just these dow triggers are pools of capital that need to do all the things that the average g5 user needs to do trade earn yield

hedge um like borrow land like all of these things so i think there's some differences between the average user or the average fund and dow treasuries but i think a lot of the leading projects today will be super important and are starting to be super important treasury tools and there will be new companies built here as well but um i think it's deeply de-intertwined like d5 tbl i'm not sure what it is right now um but like if you look at the dow treasury sizes total like if it when and if it flows back on chain um it's going to have a huge effect

kindrel anything to add with dow treasury management tooling yeah i would agree i would say like dow to doubt services is going to be like the new b2b in some ways um we're just going to see a lot of folks that are trying to um yeah go work with other dows and then i think there's some element of like how do we make treasury management more programmable and more easy you know easy to use when it comes to engaging with users that's starting to be figured out now so tools like like parcel or multi-safe are starting to work on this where it's like okay if you want to do payroll or if you want to like engage with your users and do payments or even like coordinate um there's some really cool things

happening there not exactly you know exactly treasury management but really thinking about like distribution and how we kind of kind of go from there so lots to come coordinate i think is fantastic infrastructure that really gets me optimistic for what daos could be and uh if anyone wants to hear more about coordinate we actually did an interview with him on the bankless youtube which viewers are watching at right now um just wanted to do a quick plug there guys thank you so much for helping illuminate the world of dow treasury management management i think it's actually perhaps one of the biggest questions about daos as these things are capital entities how they manage their own capital is uh incredibly important so guys thank you for for helping illuminate this this discussion thank you

thank you cheers all right guys we are moving on and the show does not stop so coming up next we have perspectives on decentralized governance with uh jonathan doughton jonathan welcome hey david thanks so much for having me can you hear me okay yeah we can hear you great you ready to take it away sir i am ready to go so pleasure to be here and thanks everyone for making time to join this incredible event uh big shout out to connor and team for putting this together this has been incredible so far um i'm i'm presenting some slides here which are going to cover some of the the topics i was asked to get into around figuring out what are the the precedents

that we can use to help guide the next steps for decentralized governance as a little bit about myself i'm a fellow at the center for stanford center for blockchain research and i'm also the director of the newly established starling lab which is at stanford and at usc which is using decentralized electric technology to advance human rights in my capacity here i'm going to talk about about two years worth of research that i've done on decentralized governance and specifically looking at the history of certain models in open source and and also in cooperatives and how they can help guide the future so first of all let's just give ourselves some context uh where are we in this moment in time there's no

question that we're at a moment of tremendous innovation with the corporate form and if you look at what taos have done they've unlocked discussions that have really been needing to happen for quite some time and what we're trying to do collectively is to get out of the orbit of shareholder capitalism and a lot of the troubles that have existed uh with applying that model to internet native businesses and by doing that we hope to achieve this escape velocity to basically get out of that orbit so the question then is if i if i'm going to succeed today is how can we maintain the enthusiasm and the rate of innovation but at the same time face some sober realities about some of the promises that we're making and make sure

that we take adequate steps to fulfill those promises so let's go ahead and begin and think about what some of those functions the daos are hoping to accomplish might look like we've seen essentially as everyone's talked about many times over this progressive steps of decentralization that have really followed the unfolding set of functions that taos are now handling so anything from protocol development and incentivization to now like as we're seeing people wanting to push into dows the entire management and governance of a protocol in a more way and then finally as kind of a call back to 2015 we're now seeing dao's focusing on how to pool resources and and make

investments so kind of making good on the final uh finally on the original promise of doubts so if we take these functions we can split them elegantly into two types of precedence um one is that we can look at how open source technologies can help with certain things that are quite familiar actually uh that they've handled uh the dowser getting into with uh development and incentivization and then finally we can look at the corporate form and how that can inform the types of things that daoists are trying to do and that's where cooperatives can be quite useful so so let's begin with open source in many ways if you go back to where open source began in the late 90s now we have over 20 years of experience with open source

communities it's a miracle what netscape did as a hail mary to go and fight microsoft for basically the future of the internet i'm succeeded beyond everyone's wildest dreams it didn't just defend the model of engagement on the internet and and saved it from centralized corporate control which is ultimately what microsoft wanted um but instead it really unlocked a whole paradigm of development and and really if you think about the economic impact of it it is tremendous and here are some stats from the eu to show really um what the power is of open source and i don't need to convince anyone here that that this works because basically all doubts are premised on the

idea that uh their code is open source so that it can be auditable and you can create these trustless systems um so if we look at the success of open source um one of the things that we can find is that actually there has been a tremendous amount of organization that has emerged over these 20 years for organizing open source communities and if you go to mozilla's website i highly advocate for people to check out the open source archetypes document this thing is is really an incredible document that explains how open source communities work what are their goals how do they form and the governance that's there um you can see here in the in the quick reference like there's this awesome level of depth and there's some really practical tools that people can

use to say okay how could we base certain dow functions and dao activities um on on the wealth of management and governance practices that have evolved over the last 20 years with open source but i want to focus on the realities which is that at least from an open source standpoint because it's generally speaking a non-for-profit activity um and it's not automated yet in the way the taos are um these are entirely human-driven processes for the most part and and therefore they're vulnerable um if you look at things like the harp bleed uh bug i mean it was it was it was a moment where almost brought the internets to its knees because so many people were dependent on open source software there and you had

basically you had to find somebody uh who was on a boat in the middle of the netherlands in order to go and have them properly update the code and now we're still dealing with zombie uh legacy issues from that bug so it shows the vulnerability of human processes we also have seen the last 20 years that open source works in terms of development but also the maintenance of open source communities generally speaking the larger and more successful organizations still rely on major corporates um to to work and to fund their efforts and that doesn't exactly feel right in terms of where dao is one ahead um and so you know that reality is there um there's

many reasons um but chief among them is that open source in its formation sought to embrace fortune 500 companies finally if you look at the results of what open source communities have developed in terms of code there's been a tremendous successes but then a lot of the problems that we're seeing with the web 2.0 that i'm highlighting here i mean this specifically came out of advancements that came through open source development so it's not to say that open source can't solve these things but it is a reality that these things will not solve themselves decentralization and just making something open source doesn't inherently make it more resilient and can deal with these matters and probably the most difficult thing here is that there's a an assumption that's me which is that

with open source technology open access which anyone can have doesn't necessarily yield inclusion and the stats really bear this out when you look at who develops open source code the challenge here is that open source while incredible is still very much based um as an activity that is for predominantly males for a young to do their work and when you think about that as uh especially in the last year as we've all started to look at systemic racism more seriously it's clear that open source is a long way to go um in order to to manage a lot of these problems uh with inclusion

so what are the some of those solutions well surely uh because we're all here for your douse we're excited about the new incentives so you can create with things like tokens that can potentially help get out of the nonprofit uh incentives that open source communities have developed and now into maybe for-profit activities and more formalized forms of governance um so it's in there that you need a better corporate form and that's where we get to cooperatives so let's talk a little bit about daos where they sit initially dows if you follow the progressive decentralization model they typically emerge from for-profit companies

that then place activities into non-profit foundations and dows in a way are really something in between all of these things um they are for purpose entities which is exactly what cooperatives are they they share in their dna they're very much of the same value um and so when you think about as we really want daos to consider their legal standing and potentially to formalize and to get out of that gray area where unregistered and unformalized stows are essentially going to be liable and classified as default partnerships if you want to avoid all of that and get corporate benefits then really cooperatives are a really good candidate

for corporate form and so the key design features that i think are the most appealing for dows are this idea that the rewards and cooperatives are awarded based on this concept of patronage the more you use a cooperative the more you get to share in its success and secondly cooperatives don't aim to necessarily maximize a return on equity they aim to maximize benefits or to maximize purpose and that's because the owners of a cooperative are both the consumers as well as the shareholders and there's a regenerative and a virtuous way to think about that type of ownership because that means that you don't just want something to give a return on equity and let's say a dollar value or token value but it means

that if you're actually using the product you want it to be awesome and you want it to continue to be awesome or if it's community you want it to have the values and to continue to espouse those values so the good news with cooperatives is that they are actually quite a sturdy and hardened form of corporate entity there's over 200 years of corporate history with cooperatives a really good example when you look at to really crystallize why they're so powerful is how cooperatives were actually the dominant form of corporation back in the late 1700s and you look at the numbers it's quite staggering that one-fifth of all u.s corporate charters in the united states in the late 1700s or actually with

turnpikes which are i would say the uh blockchains and tokens are really if you think of them as infrastructure and essentially new infrastructure for a new economy turnpikes were very much the same thing there it was infrastructure for a young country and so why i as a business member bought into a cooperative for a turnpike is because i wanted access to a road and secondly i want to make sure that my competitors couldn't force me out of it so the real logic of cooperatives is that at their core they have an incredible amount of success in um in dealing with antitrust matters and as a and i'll bury this here and come back to it later the way that works is that you make sure that each member

of the cooperative has a share and by that one vote as opposed to the traditional model of corporations today which um sorry one member has one vote in a cooperative versus the traditional modeling cooperative at corporations today where one share equals one vote and that's a major distinction okay where are cooperatives they are aware in the economy um sometimes they're noted as a cooperative like rei which many people might be a member of in europe and the uk and japan these are dominant forms of retail and healthcare and banking institutions um there's also uh you know many other examples my favorite probably is that the new york stock exchange uh at its uh inception and for many decades i was actually

operated as a cooperative so um when you look at how could we use these for taos i think that the first thing to acknowledge that there are many challenges with traditional cooperatives so if you look at your typical t corp or lca there are a number of different restrictions that are quite onerous um caps on dividends and limitations essentially on how you move shares around they're not going to fly for doubts that's just a fact and in in particular the way in which you do capital allocation especially in light of what was just previously discussed with treasury diversification um a lot of the requirements um there are liquidity requirements and are just not going to work and the tax liabilities that come with some of these responsibilities are enormous um and so

they're not necessarily the most tax efficient so the more modern form of cooperatives which most people should be looking at is the wyoming hybrid cooperative model which was acted in 2001 and interestingly what this allowed is for the commingling of members of cooperative that were both holding common shares that were classified not as securities and then third-party investment members that were holding preferred shares that are securities and that's incredible because that's actually what you want with a dow to an extent is you want to be able to delineate um you have a safe zone for people to operate with shares that are not securities and then if you still want to do things like

capital formation you can do that as well with securities the wyoming dow law which a lot of people have talked about which launches tomorrow is certainly a very interesting step in the right direction um and when we think about all the innovations that are to come with the hr and collaboration mechanisms like joint ventures and even the autonomous proposals idea those are incredible and there's no question that they're going to be able to take flight uh with these new tools and corporate structures um but there's a little bit of a faucet here and i'm going to explain which is that the wyoming bill while in theory it could work really well and could proliferate reality is that there's many things that could come in to

create trouble with that if the members of the organization are not well thinking about these problems in advance so as an example not all daos are necessarily willing to embrace open source ideals when we've taken that as a truth but actually there's been some new proposals that have thought a little bit how we can create ip regimes i'm not weighing in whether those are good or bad but there's a reality which is that um cooperatives themselves or doubts themselves really do need to think about their values and secondly the decentralization that comes with cooperatives doesn't always necessarily yield uh what we want the ap is held up as an example of a cooperative which is made up of thousands of newspapers and media

organizations and indeed it's been an incredible asset in creating objective and uh reliable news for almost two centuries but its current form um as a cooperative um while it's very appealing and we might even think of like applying it to things like twitter which has been proposed the reality is is that that's come through a series of very challenging court cases in which actually it was found that the cooperative was violating um various antitrust laws and the ap um went rogue and actually started to play a cat and mouse game with different courts to continue to evade essentially accountability so uh just to emphasize here um that um

accountability is still really important because doubts could you know get run amok so let me leave here very quickly with some lessons for taos one if it isn't been clear from the lessons from the open source community we need to think about diversity and embedded values proactively this should not be an after thought um the history of um co-ops has shown that they've been incredibly important for the civil rights movement and it urged people to look at that history as a really good model of how we can embed values second once we get the issues past the issues of liability taxation are really going to those issues are going to be a major fulcrum for adoption and look no further than the example of llcs

although llc laws were passed in 1977 it wasn't until 1988 that the irs actually ruled on how they would it was only after that that llcs became the such a dominant form of reform so we need doubts to figure out their tax model and finally i think it's worth looking at ways in which voting could potentially be to inherit some of the logic that comes from cooperatives with the one-member and one-vote strategy because that ultimately will create self-fulfilling prophecies around inclusion so with that i will yield the floor back to the rest of the panelists i hope these ideas have been helpful and

as i said if i've been successful everyone remains optimistic about the future of daos and hope that these tips and tools can help us evolve them to their next stage thanks so much all right thank you so much for that jonathan that was fantastic coming up next we have a really an all-star lineup on a great panel asking the question about how daos are better than c corps or llc's the theme of the panel is dow governance best practices and we have the moderator later larry sukernik to uh introduce the

rest of the guests uh larry ready to take it away let's do it all right so so uh as david mentioned we have an awesome group of folks here to discuss uh dow governance best practices you know to start us off i'll do a quick introduction and all of the panelists and then we can dive right into the discussion so we've got amy who is formerly with um maker in the maker foundation uh rafael from tally julia from orca scott from get coin and then kevin from boardroom and uh for those who of you who don't know me i'll be moderating so i'm not a panelist but um i'll be asking these guys some really cool questions so i guess to start off

with guys um how do you how do you think about um how daow's endow governance how how do you compare it to traditional companies whether it's c-corps llc's um and the other similar entities i can definitely start i mean from my perspective i think jonathan actually just recently did a really good job of kind of talking about this new infrastructure angle of what does are and like we kind of see corporations as like in my view like i think a lot of people in space see them as coordination tools first and foremost um and their coordination tools like like one thing i like to say is that like

corporations just like latin corpus like their body or body people it's just literally like groups of people working together towards a common goal and i think you know we've seen not a lot of innovation in that concept since corporations at least in like the western tradition like have emerged and like cooperatives are actually like as jonathan mentioned one really interesting new newish angle to that although they've existed for you know a long time historically um in in our conception we don't see them very well like a lot often used and part of that is because the infrastructure is just very challenging it's very opaque um it's very complicated for anyone to use so from my perspective dowser tooling that

not only make the coordination easier but also just more flexible um hopefully you can you know in in the future we'll see more coordination that allows for these sorts of cooperatives and new structures that are sort of like related to but maybe beyond corporations to emerge yeah i'd add on really quickly to that that you know firms for the most part exists to reduce transaction costs external transaction costs and establishing a trusted relationship between an external party and someone within the firm right so um i think the biggest differentiation is honestly that you know now with some of these governance structures for the process and rules are actually outlined you know sometimes on chain sometimes off chain sometimes by social consensus um you

know we can actually reach agreement and establish trust with a counterparty uh you know without the necessity of like that formal contract that honestly um you know incurs a lot of a lot of costs for for traditional more firm structures so it is really just about more of a you know if you look back to the theory of the firm um and simplify it to some extent um it is really just about reducing external transaction costs i mean that's why firms firm structures exist i think that's why there's sort of a lot of discussion around efficiency and to me that's like the biggest difference between dao's and these legacy corporations when legacy corporations i kind of have a design and operations background so i think about the structure and governance is like for

example a structure of rules but when i think of what's driving that structure with legacy corporations it has a lot to do with this idea of competition and a great example is like autonomous cars you see all these different organizations creating their own version using like their own kind of secret you know resources and that's driving the innovation and i think the difference with dows is that from um right away you have the success the reason adele uh it's built on is this maximizing of the collaboration so you have these managed um you kind of have these like pulled resources that this group people are trying to manage so of course you're just trying to maximize how that collaboration works best and

that can be down to dow that could be individual inside and a dao and kind of goes on and to me that's sort of the main reasons we need to like maintain that open network what i call like the network effect of dao's versus seeing that legacy corporation which is super siloed because it's looking for that efficiency and drive yeah i think to add on to that like i sort of wrote about this in the preamble that i think that a lot of a lot of like legacy corporations have really dehumanized um like human coordination which is really the structure of what a corporation is um and i think that with and like what we're all building today

um we're all sort of remembering that the most basic primitive within governance and these organizations is humans and human coordination i think we are like really revolutionizing the way that um we can coordinate and effectively collaborate as as people yeah yeah um great points from everyone i think i don't have that much to add i think maybe i'll just add one frame i'm using to think about how valves are playing out and how they might continue to play out and that's by kind of uh taking two analogies right corporate corporation analogy and also

the internet analogy and i think in some ways a good place to start uh is that downs are internet native uh corporations i think probably that analogy is mostly wrong uh in five years we'll look back on it and think it's mostly wrong but right now i think it's a good place to start and what i think that means is we'll see kind of a barbell effect just like the internet has made some really huge uh corporations and some really small ones i think taos will probably be even more of that they'll be really tiny taos um of just a few people or even uh uh just fractions of like fractions of a person's attention and then some really huge doubts because they're not tied to a single legal system they can be the whole internet or the whole world could be aligning on one

organization one project i think we already start to see that if you uh think of huge layer one protocols like ethereum or bitcoin as daos themselves then i think those are the really huge organizations and then we also see some really small ones because they're really cheap to start and really easy easier than incorporating where you have to file paperwork you have to either lawyer or pay a company like stripe to file the paperwork for you those can be much much cheaper and almost free there's a lot of talk here about um dao's reducing and companies reducing coordination costs and i think that's true and at the same time anyone who's really intimately familiar

with with some of the dows and kind of works for them as a contributor knows that they're super uncoordinated and everyone is kind of running around contributors running around with without really any sort of coordination is this a growing pain um do we need some sort of centralization how does everyone sort of balance that view yeah i sort of always joke that downs today are either decentralized or organized not both at the same time so we have like these two ends of the spectrum we have like the uber decentralized projects but as a result they can be really disorganized and then we have the uber organized projects as a result they're somewhat centralized so i think that we're still like very

early and finding some in between um in that spectrum of how we can kind of like harden and create better organizational infrastructure to serve like the very disorganized but decentralized projects um while also creating better infrastructure for some of these more centralized projects to um extend outwards and i think there's also no need to throw away 30 years of corporate governance out the door you know like sometimes some some efforts require specialization and departmentalization and um honestly you know the gov 2.0 i think movement that we're also seeing right now with a lot of these d5 bluetooth projects you know speak to that there has to be some delegation of responsibility there has to be um you

know some specialization in in these massive structures in order to you know achieve your goals and um i think what we're going to start seeing is you know very more specialized almost sub-dials or small departments guilds you know with very specific mandates to get an allocation from the bigger dao structures or bigger networks um and that are highly specialized and focused right on achieving a specific goal and i think you kind of need that i mean there's there's a reason why corporate governance and corporate hierarchies and structures have developed in that way and sure you know we don't need to necessarily apply all of those lessons to what we're building here because they are very different structures um but you know we can learn a lot from from the

past 30 years and i think it's it's sometimes easy to dismiss it i think one thing to note is i think we're doing a bit better than we think in some ways like we could definitely have more executive structure but like a lot of these dows kind of went from like a few people working on a team to like now you have like 10 000 plus participants in some cases and some of these protocols that are like now trying to coordinate it it's pretty reasonable to expect that like they would have trouble doing that um and in hindsight i do think kevin has a really good point that like we think about other organizations structure themselves but i want to think back to like you know why we're sort of introducing those coordination costs in the first place and like you have this like obviously like

history and governance of like monarchies and then like sort of like the centralized like more decentralized democracy type systems emerging and you sort of have the same history and like corporations where like this concept went to like founder monarchies was like a big deal and like that was like the sort of way things were going and now we have this exit to community sort of model and i think we'll probably reach to your point somewhere in between where like there are executive committees that can execute certain functions but like i do think one thing we should be cautious of is like taking to your point like the fact that there are these growing pains um to mean that we should like totally recentralize like the the doubts that we're looking to structure because i think it's very possible that we swing too far in the opposite direction so

not like a you know i don't have a good solution that but there's definitely some balance to be to be thought about i think a lot of turning i'm sorry oh sorry go ahead amy oh sorry i know that just on this topic i think the um way that we we kind of create a decentralized network that's somewhat more organized and maybe delegated is through more of these like peer-to-peer checks and balances so i think of the word like redundancy and a lot of people are when you think of that back to that legacy corporation where redundancy means you're wasting resources in in kind of open source i think that's not the case because what you're creating through that redundancy is actually resilience so when you even look at um for example

at maker there's these core units and these core units are the wrapper of like a mandate a team a lead and then like a the budget itself and anyone could actually propose that core unit you can have duplicates of that core unit and it's actually welcome to have duplicates of that core unit so that we can compare what's working or maybe this team is experimenting with something better and i think we have to sort of let go of that legacy thought of like we're wasting everything we need to be most efficient because in the end if we're going for the value of that resilience and kind of the the um i think robert from compound had talked about earlier it's like it doesn't go down because there's so many

like so many decentralized nodes in in many ways of of that happening that's how we can also think about organizations it's just not normal or natural to us because we're so used to that efficiency model ref i'd like to go back to something you said earlier which is um you know it's okay for us to call dao's internet um native companies uh but you know 20 30 years from now we'll probably have a different mental model or maybe framework for defining it i'd love to kind of double click on that and kind of hear how you think we will think about um you know dallas 20 30 years from now and then how everyone else here thinks um the community will think the

future as well yeah i think one thing i noticed especially in this just this question we're talking about decentralization i think right now we're focused a lot on means like what's the best way to do this i think in the future the means will be less novel questions and we'll be focused much more on ends so right now we have a ton of stuff to figure out um both in like the code part of the technology but maybe even more importantly the social part of it the social technology the social norms um and i think right now what i'm seeing in dow land is just tons and tons of parallel experiments there's so many people in the space with cool ideas and they're not together in small or medium or large

communities and we're going to see which things start to work and people are gonna just like an open source software forking code people are going to fork the social norms and the social technologies too those are going to spread and then long term um i think people will start to figure out and and reuse the things that work and i think we'll be less focused on um is this organization decentralized and autonomous and more focused maybe people will kind of agree like everyone will think oh yeah of course it's decentralized enough time autonomous and they'll be have more questions and more um focused on um what are we doing and how do we get

there let's add really quickly to that i think we've seen like a little uh spark of that already right like the fact that everyone just convened around this the norm of using discourse in a snapshot space or a bra umbrella fork right in like a discord server to spin up a dow is pretty insane actually if you think about it with this you know the speed that that's evolved and like has become a norm so i think as you know as ralph said like as we develop these like as we you know as we evolve these norms and like figure out how to best coordinate you know we'll be able to do the same at incredible speeds which were exciting so one interesting thing that i want to touch on is that like

corporations as a notion even like startups are kind of like being diluted like no one really wants to be a corporation even like like 20 years ago no one really wanted to be a corporation like the really web boom and i think part of the reason for that is you know it's just like known or like thought to be this bulky thing and like doesn't really have a lot of flexibility and like a lot of people now start to talk about this idea of like starting a business or sharing money as being as easy as starting a group chat for example and i think maybe that's one of the like mechanisms or one of the sort of like um frameworks we'll start using a lot more frequently is like what does it just look like to have like a to kevin's point like a discourse or like a discord

server or it's unfortunate that those like these like but like having tools that represent just sharing value with friends like creating like value together creating culture together like that sort of stuff to me seems much more natural and maybe some of those things will mirror what we already understand corporations to do in some contexts but like i think it's more of a almost as much of it as as much as it's like a mechanism sort of like a structural shift it's a sort of cultural or value shift as well amy i think something um you would have a really interesting vantage point on given your uh prior

work at maker is uh kind of chatting about that switch from um from going from a foundation organizational structure to more these kind of core units and it seems like um maker was one of the first large dows to do this and other dowser thinking about spinning up these either pods or subcommittees or subdials for themselves as well can you kind of talk about the motivation for that and how you think it's worked out so far yeah um it's interesting because i think a lot of teams have asked me very similar questions and um it's there's no cookie cutter solution right there's sort of the solution that works for your dow and what

and that kind of designing what that framework might look like was for example at maker there's a lot of people who have families and don't want to like work at a random dow and they want to you know be able to have a 401k or whatever they need um as at the same time we have someone like super globally and maker has even the foundation has always been global and remote first so we started with just like asking ourselves like what are the constraints and who are we designing for and what kind of responsibilities do do people have um and what's going to be the new responsibility in this new paradigm for them and how like what supporting resources is that going to be so a lot of it was just like searching for resources um for example we work with uh

we introduced like one team um accountable that is sort of this employer organization and so if you yourself you want to be employed by you want to get fiat no problem then you can actually like sign up through this employer um organization and then they would receive dye for example the the protocol funds would go straight to them so thinking about how we can collect some of these resources to share it with with people and say okay how do you mix and match that structure and so the the flat framework is super adaptable like i said it's only three things it's like what's your responsibility what is the budget you're asking for and who's the person responsible but then if you want to get more focused we have one team that was governance and

governance is like led by an anonymous person and they're not going to go ahead and start an entity right um so then they're like we're fine with keeping this like decentralized but we're going to be super transparent about how things are salary is set then we have teams that are more wanting to be entities and then they might be more structured and want to take on more of this like um accountable kind of team the accountable the company where people are getting fiat so that flexibility allowed us to just see like what people take and how people mix and match and then start to kind of i think the convergence right now what's happening is um what's working what are the kind of like points that are not working like we just had a discussion around mkr

compensation and that's always like a really hot topic right um but in the end it was like the community kind of came over people through their own ideas about it and then kind of collectively um are voting on whatever proposal works so that being said like we're i don't think maker i think everyone thinks that we solved it and everyone's fine but it's just like new challenges right you're constantly leveling up like okay we figured out this thing what's next and and so on so it's kind of incremental and scott maybe a question that could be fund for the listener is um is you know bitcoin just went from being in a kind of a centralized company right a startup to dell very recently

and uh and i'm very curious how has your your day-to-day change you know pre-dow and then sort of post out how are you doing things differently now it's a really good question like we kind of started with you know this idea of stewards and one of the really useful part of how we set up in my like in in you know when we did it we weren't sure how well it would go but what we did is required people to delegate when they started basically their token claim experience and through doing that we now have a list of about probably 50 really active students who are like kind of helping steer governance in the right direction um they've kind of it it's kind of just organically i've been very i think we've

been very lucky like it's kind of organically emerged in ways that we didn't necessarily expect um there was this whole original decision around the heda tokens the metallic gave us and that was the whole thing which led to a very interesting like tutorial island for the dow but that process kind of helped us really solidify like what is the governance process and we're actually like it's sort of getting close to ratifying those rules now um you know after kind of just putting forward a rough initial draft and it helps us ratify what the work stream should be what kind of things the dow should be focused on to start and i think we have a lot of room to grow like i wouldn't say we're there yet like there's a lot of communities for context gateway has i think probably in the range of 100 000 people there like

you know on whatever the email list is maybe probably closer like twenty thousand those are like active platforms so it's a large community overall to coordinate but having this group of about 50 or so people that are really actively stewards i think is being really just like extremely valuable um and so you know that's maybe one suggestion i would give to people who are starting um this sort of like process of decentralizing a larger protocol in terms of the data data we still maintain some of the like core team that core team works on some things that we can't decentralize quite yet um but you know things like when grants were ratified by the by the stewards they're sort of putting forward ideas around like how for example people who

are building on top of bitcoin grants get compensated um but we'll see what happens in the coming months actually like i would encourage like this is my like uh show but like gov.getcoin.com is the governance forum there's like a lot of proposals there that you can take a look at um but i think otherwise i don't want to censor anything else because wise because it might bias the stewards in one direction [Music] and uh julia question for you you know orca is obviously building tools that help people working for dallas more easily coordinate and manage resources and so you're not a dow yourself but you work with a lot of dows to provide services and products to them

and building these products and i'm kind of curious what um based on your experience working and kind of chatting with all these disparate dows what are some of the the biggest problems you see communities have in in kind of operationalizing and scaling the um the project yeah i think that amy and scott actually like identified a lot of that one being like what scott just mentioned of that you have these massive ecosystems of actors and basically expecting them to like follow this north star without any like rails for coordination or guidance is like a pretty impossible task um so like what scott just identified and like

introducing a steward system where you have sort of like these delegated powers to these people that are responsible for creating some of those rails and same with what amy outlined in core units is that you have these smaller working groups that are tasked with very specific like roles and responsibilities within an organization um and i think that's like a very needed step for downtown troopers like when they show up to do work for a dao it's like okay where am i supposed to be looking right now there's so much happening in the space um and i think that you know i mentioned this earlier there is just a need for more basic organizational infrastructure

and helping codify or quantify um specific like roles and responsibilities within an organization um and i also think like what amy mentioned too a big problem for dab contributors is um just like incentive alignment and compensation mechanisms i think that uh we haven't quite figured out like the right mechanisms on like how to properly capture and quantify contributions which like i think bitcoin is working on and it's an amazing thing um but for some of these like looser ecosystems that aren't structured in that way it's really hard to figure out

like what and how to like value someone's compensation um which is like one of the pain points that they may identify that they're struggling with in in their core units um and i think we've seen some tools like coordinate which is you know trying to attempt this compensation problem but i think that um the tools around that will like tremendously evolve um in the next year or so and all of you guys are um i imagine members of one dollar or multiple thousand kind of active members of the community and i'm curious um is there any sort of commonality uh between the really active

dials that have really active contributors and the vibes are good um is there any sort of common denominator across them that you've seen that you could say hey this is this is a necessary ingredient in creating an active community of participants one thing i mentioned is actually you know the creation of a manifesto of the north star you know why does this dao exist in the first place and i think um you know the the most active doubts that i've seen launch um usually launch with that you know as the center piece of like the entire strategy right so um i mean one one i want to point out specifically it's also like the bank list i remember like when they launched it was very very centered around like

why they existed right and they were like hey we don't know how this is going to evolve we don't know what structure this is going to take and how the contributions are going to evolve but as long as we know why we're here and like what we're actually working towards we can build up towards that right and i think it's the same with any online community right and you know a lot of different corporations as well um i think it's it's really important that at the very least especially for newer members that join afterwards after the initial creation they do have that you know north star um and that they really know why they're there in the first place one thing i'll quickly add is like it almost i think one analogy which a lot of people use which i i like because i grew up in that world it's like a lot of

mmorpg like raids or like guilds right like you have like these sorts of organizations that go off on these ministries together and like very clear guidelines about like what each role is doing and like what they're trying to do and that kind of goes back to this point about like structure as well but like i think that core intermission is the is the interesting part but the other aspect of those organizations that's i think really relevant is just like kind of you know gamification as a term i think it's like kind of overused i don't want to like but there's like something like that it's maybe some better term that someone else would come up with that i can't think of right now that like would kind of encapsulate that idea of trying to get people to really feel like they're they're sharing this like almost um

kind of just like um like magical experience together and like that experience kind of is like the core of what they're doing i like that's like the actual activity and then the activity is of course facilitating like completing this broader mission so just i i would actually like maybe just encourage people to think about that framework and think about like you know the runescapes like the like wow this is like examples of some of these these frameworks for taos down the road i think even i would um say for us like what i've seen in different dials as well as um like a working group it's something i think as julia said you kind of come into a dow and it's super

intimidating there's a lot going on you're not really sure how to do it but when you see smaller cohorts come together in the case of bitcoin there's work streams they have different names for it guilds etc it drives this like smaller community within your community that then people feel like oh there's a cadence for like coming to a meeting or there's a cadence or a purpose that is a smaller bite of like how to tackle this in a greater picture so just a super simple like a working group like multiple working groups and and then making sure they're communicating like what did they do how did they do it what's going on um i would say that that i've seen across like even index coupe and so on

kevin on your point about um you know the importance of this manifesto or it's kind of like a social contract that people all buy into you know i think in my experience people and and dow contributors are generally in favor of that uh but one um one thing people are unsure about is who actually writes it is it is it a top down sort of thing do you have a community kind of write it together and then sort of have a design by committee to buy into that social contract how do you see that document actually coming into into life yeah that's that's a really good question again i think you know dallas at the end of the day and all these discovered governance processes they're

just tools right i mean they're tools that coordinate like social like human relationships right today at the end of the day it's like just humans coordinating to achieve a certain goal and leveraging you know these set of rules these processes to actually do so in the first place um so when it comes to the actual creation of like you know what we actually want to achieve as a dow it doesn't differ too much from like why we create a subreddit right or like why we create any digital community it's honestly you know just human relationships humans coming together to establish like this goal that they have in mind right it could be based out of curiosity or need or honestly you know the you know we want to improve the world or whatever it is um and you know we should see dows as just like an

additional tool an additional process that helps us get there um but honestly um you know i i think from in terms of stakeholder mapping like who actually creates this manifesto in the first place um i honestly see that you know anyone can create it pretty much like as long as you can coordinate a community and establish you know um some sort of global like interest um from anywhere in the world in you know your core mission pretty much there's absolutely no no reason why anyone you know any type of stakeholder should be able to create a manifesto for a specific use case um you know demand and supply are pretty much going to demand like um you know determine the interest in that specific goal um and you know i by proxy the size of your dow and the actual you know the

scale and growth of it as well um i know we're running a little bit low on time so last few questions but i've spoken in private with some of you about just the term dao right and a lot of you hate that term and the community seems to hate it too what do you think is this the term we'll end up with or 20 30 years from now we'll come up with a new term that's actually sticky we're gonna go back to uh decentralized autonomous uh companies uh in the 2014 ethereum foundation post we're just gonna like jump all the way back to that original uh conception um but no i really don't have a good answer to the graph go ahead i saw you

going off yeah um i think these things are really hard to change uh even if um a lot of people don't like it or if people want to change it it's really hard to uh to coordinate a lot of people as we know and i think we've seen it i've heard i've seen this a few times when some uh idea gets tagged with the name like i remember when d5 was tagged with the name a couple years ago there were a few other attempts like oh we should call it open finance instead but i think there were a few other uh names and i think the problem is once the name gets away from us it's sort of too late so uh maybe there's also some latent virality like maybe the name is better than people think like everyone who is okay with the name is not

complaining about it they're just building not to jump in too much again but like i would just note everyone also originally was like nfts is a dumb term like no one liked the term nfts like i think a lot of people still don't but like it stuck and like i think half the people who like use the term nft don't really have any conception of like stands for but it doesn't really matter once it's assigned like a wraps point once it has that value assigned yeah i was gonna say it's like sort of taking on like a meaning of its own i feel like already and we're already seeing like the definition of what a dao is stretched so much so i feel like it's less about like what we call it but more of like what that thing actually is like the

definition and like the characteristics of what a tao are or is yes it's your mission i think the uh sorry i think the reason why we hate it so much is because we're like nitpicking right like is this community autonomous is this like you know how how much is this decentralized right at the end of the day i think if it helps spread the narrative easily by the same way that we've seen with define nfts we should honestly push for it even though we're we're being nitpicky as as builders in this space right um totally totally agree and then a final question for each of you but if you could ma you know you have a magic wand you could wave it and

solve any problem in the dow space but it has to be in the dow space what would that one problem be that you could automatically remove i can go um in information flow so i've been thinking a lot about how information flows within networks and in a dow particularly or anything of scale you have a problem of like too much information too little information not the right information etc um i think there's an infrastructure somewhere or a multitude of frameworks that can improve this um i just don't know what yet because i think we're

still stuck in like how do we um you know like do this in in with tools that we have today so i think if we did that the way information flows would be super interesting to see um just to kind of like lift how we would grow yeah if i could pick one thing i would pick what amy said uh information flows but if i was picking a second thing with my my wand over i would say it's legal uncertainty i think there are a lot of especially us-based especially finance focused dows that want to like make some changes to the way the organization works but don't feel comfortable doing it like it seems like it would be better

technologically socially incentive wise but they don't feel comfortable doing it because they're not sure what the legal regime is and so if there were just answers to those questions then i think they would be able to experiment a lot more with how they structure their organizations i think i think like no just i mean i i think i would push for just um you know the social layer to be developed a bit more um so we can actually categorize different stakeholders and map them properly to the dial types um i think if yeah if i were to wear something tomorrow we'd essentially move up five years right and have the social tools on top of dao's

already have evolved to a point where we can actually um you know build like down-to-down interactions and proper stakeholder mapping uh sorry go ahead scott one thing that comes to mind for me is just like how do we ensure like sort of accountability across like we have a stewards program like stewards are going to be like a really important component and so far it's been good because people have sort of like just actively jumped in on parts but like how do you ensure like long-term accountability for people that like start to hold positions of power within these structures like we talked a lot about like protocol politicians across like different ecosystems like how do we make sure that you know we can sort of like track and manage those protocol politicians and like kind of keep them uh not in check like but like make sure

that like they're acting according to the will of like their delegates in this sort of democratic system yeah i would echo that as well um but i think that another big part is sort of what i mentioned earlier is just like how we value contributions um and i think jonathan kind of touched on this in his presentation like when we think about who's actually participating if 96 men um and then like how people are you know being valued and compensated um i think that's like a massive problem that needs to be solved and will really help with like the accessibility problem in the space awesome well that's all the time we have

for this panel i want to thank all of you for being on it awesome awesome answers and really great discussion um and i will now hand it off to the organizers for the final presentation at the end thanks all thanks larry um so final word i just want to take a second to thank everyone for joining today of course and i'd love to thank to all of our panelists and those who helped organize i'm gonna list a couple names in particular jonathan doughton who's appearing with me here connor mcnamee josh stark cena habibian larry sucker nick david hoffman dan monet and

treyas haraharan and many others a big thank you too to the organizations that made this possible so the ethereum foundation youth global the stanford center for blockchain research statler labs the starting labs and the bankless dow so we started the summit as we mentioned before to encourage folks in the dow community to collaborate and to help identify the biggest issues in the space and think through how do we resolve those issues as a community you know as and as i said earlier we want to operate um to really start operating and open sourcing the information that dow stakeholders so you folks who are listening uh learning and we want to provide to the group more broadly where we can one way to do this is of course by sparking conversations at events like these so please reach out

to panelists who you find particularly interesting i'm sure they would love to hear from you and be open to collaborating with you i mean we're at a stage in an innovation endows where people are generally speaking open to that sort of collaboration so let's take advantage of it another way of course to participate is potentially through the dow research cooperative which as i mentioned is an organization uh that is funded by currently compound unit swap and ave and we're leveraging pooled resources from from daos to help open source some of that information that's going to be critical for dow operation so if you're interested feel free to reach out to me on twitter and with that i'm going to hand it over to jonathan doughton uh for the final word thanks connor and thanks to everyone

that has been mentioned before this has been an incredible conference and surely just by looking at the comments on youtube live it's clear this has stirred some important discussions um i know everyone wants to get off so i'm going to be very quick with just a couple of really quick uh pieces to sum up what i think has emerged the first is if it hasn't been clear we're moving away definitively with dao's from an idea of zero-sum competition to positive some cooperation and that in and of itself is just such a powerful thing and now we're seeing the emergence of that interaction into something with the dao as a real alternative to the traditional corporate form today you've seen a number of different people speak from companies that provide

real world examples of how this can work they're providing real technical tools and legal tools and um contributing to those is going to be the way forward for how we're all going to be able to evolve doubts and then also what's been discussed is interesting is some iconic milestones like the legal education fund where there's no question that that's going to make a change in how people come to understand about the policy and with broader adoption of dao's how to treat them and in fact how to legitimize them in in the current economy um that will involve uh likely the acceleration of forking and i think one of the most fascinating things i heard today was um analysts talked about working not only technical code but also

forking social innovation i think that's a really great way of thinking about it that just like evolution works you want rapid change and evolution in order to get stronger and more resilient systems that will include things like the delegation of powers and things like autonomous proposals those are fantastic opportunities um to make daos more effective and more efficient to start to create differentiated roles means that we're going to end up having a lot more interactions and adoption at the same time it is also a surface for abuse and a surface for friction and i think specifically in the legal space we're going to see things emerge that are not just

examples of fraud or hacks but there will be defining lawsuits that take on governance and employer relations that are established through dows and i would just put out there that essentially that's a sign of progress that you want to be able to stress test the system and then understand exactly what the right way is for this type to emerge because ultimately this is a young space for innovation there's a very real possibility that the next summit that we have on this topic won't even be called the dow summit as larry has mentioned maybe it's called something else and there's no question that there's going to be new solutions potentially ones from the people in this very audience that will emerge as is the most innovative and the most dominant

it is just indeed that fast moving of space so i'll leave you with one final thought here which i think is really important if web 3.0 is a response to the problems of web 2.0 and the oligopoly of major players and platforms in the web 2.0 space let me urge everyone to not make the same mistake that we made in web 2.0 which is that as we see financial benefits accruing innovation happening technically and even socially remember that the number one problem with web 2.0 was blind trust blind trust that somehow if we trusted these companies that they would sort out the whole thing that they essentially

own the future and if decentralized me decentralization means one thing it's that it means you have to take responsibility to become a stakeholder and to do your part to contribute to these systems and that means you everyone here in this audience so look forward to seeing what you all create um being a part of that revolution as it emerges thanks again to connor and best of luck with launching this legal cooperative and this is in a sense one of the maiden voyage here with it and we're all hoping for many more exciting activities from it to come [Music] so

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