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- DAO Tooling: Contribution Management and Growth
DAO Tooling: Contribution Management and Growth
Deep Dive into DAO tooling with an overview of impactful governance headlines.
In the latest installment of Premia’s Governance Series, we focus on the evolving landscape of DAO tooling, specifically in the category of Contribution Management and Growth.
As DAOs aim to become a decentralized alternative to traditional coordination, the tooling stack will act as coordination mechanisms.
But first, a digest of impactful governance headlines: there’s hidden alpha in the forums, Anon.
Arbitrum Proposal: Establish the ‘Arbitrum Research & Development Collective’
This proposal aims to fund the Arbitrum Research & Development Collective to aid in turning Arbitrum DAO members’ ideas into reality for a term of 6 months.
d20 Governance by Metagov
Metagov's d20 Governance introduces a Discord bot for communities to experiment with gamified governance through questing.
This tool enables exploration of decision-making processes in a simulated environment, encouraging groups to understand and design governance structures creatively. Developed by “The Metagovernance Project”, d20 is hands-on governance education and experimentation.
Llama unlocks access control and governance
Llama’s access control and governance platform for smart contracts has recently raised $6M from Founders Fund & Electric Capital.
It's designed to simplify protocol management by allowing teams to focus on core product development. Llama provides a full-stack platform for access control and governance, enabling protocols to define granular roles and permissions. This includes managing actions like upgrading protocols, changing parameters, fund transfers, and implementing emergency pauses. Its role-based governance approach offers tailored power distribution for efficient function performance.
Progressive Ownership: A Model for Application Tokens
Li Jin and Jesse Walden have dropped a new model "Progressive Ownership" that addresses the limitations of existing token distribution models in crypto applications.
The idea is to evolve beyond traditional models like PoW, ICOs, and airdrops, focusing on a user-centric strategy that aligns users more closely with the network’s success. Progressive Ownership emphasizes building loyalty among users through economic incentives and offers a pathway from simple income sharing to acquiring governance and economic rights in the platform's native token. This new model signifies a strategic shift in token distribution, advocating for an opt-in system that deepens user engagement and investment in the long-term prosperity of crypto platforms.
Without further ado, let’s dive in – welcome to Premia’s piece on DAO Tooling: Contribution Management and Growth.
DAO Tooling for Contribution Management and Growth
DAOs, since their inception, have been routed as coordination mechanisms, championing ideals like decentralization, transparency, and a grassroots approach to contribution management.
Initially envisioned for complete decentralization, the journey of DAOs has been a learning curve, revealing that absolute decentralization often grapples with efficiency challenges. This realization has steered the DAO community towards a more balanced approach, favoring progressive decentralization.
While there have been clear instances of low voter turnout and a lack of expertise, there has been a surge in governance activities and excellent capital allocation practices in DAO giants like Arbitrum and Optimism. What we’ve seen thus far is confirmation that decentralized governance practices in DAOs can be a success, as long as we iron out the rough edges.
The diversity of DAO applications — from Vita DAO funding a Biotech company, marking a first DAO-lead initiative, to Radwork's significant investment in open-source software for open internet, and Gitcoin's transition to a broader funding mechanism — showcases the breadth of impact DAOs can have. These examples validate the potential of DAOs to have meaningful impact.
Over the past few years, the DAO landscape has evolved remarkably, diversifying into service, curation, investment, and protocol-focused entities. Each type brings unique structures and requirements, driving the growth of a varied tooling ecosystem. This tooling not only addresses the expanding needs but also fuels the evolution from rigid decentralization to more dynamic and effective coordination models, enabling DAOs to adapt and flourish in a rapidly changing digital environment.
Breadth for the DAO Tooling Stack
Spencer Graham classifies DAO tooling into two main categories, with a distinction that highlights the intricate balance between collective governance and individual contribution in the DAO ecosystem:
Tools for governing shared resources, including DAO launchers, voting systems, and treasury management, which convert private contributions into collective actions
Tools for coordinating private resources, such as peer-to-peer rewards and contribution records, fostering individual autonomy within the DAO's collective framework.
Nichanan Kesonpat’s "Organization Legos: The State of DAO Tooling," comprehensively covers the tooling landscape, emphasizing projects that lower the barrier of participation in DAOs.
The breadth of categories discussed above underscores the extensive scope of tooling within DAOs. In this article, we will specifically focus on the segments of Contribution Management and Growth, reserving a detailed exploration of other tooling categories for future discussions.
Contribution Management and Growth
Customer acquisition and retention in web3
The crypto industry, largely self-bootstrapped and operating with minimal regulatory support, has thrived through innovative customer acquisition strategies, primarily driven by reward mechanisms like airdrops and earlier ICOs.
Despite the relatively high costs associated with customer acquisition and retention in this sector, the unique dynamics of token utilities add a distinct dimension to these efforts. Airdrops in particular have significantly evolved, attracting a broad audience to the crypto world due to the allure of rewards, speculative gains, and the ethos of decentralized technologies.
This trend has coincided with an explosion in tooling infrastructure, focusing on managing, tracking, and rewarding contributors. The growth segment alone has attracted $600 million in funding, highlighting the critical role of these tools in the industry.
Airdrops have transitioned from being one-time, transaction-based events to more sophisticated models, including retrospective and recurring micro-airdrops. This evolution places rewards and customer retention at the forefront for protocols and dApps. While the incentive mechanisms predominantly revolve around token distribution via airdrops and loyalty programs, the space is increasingly open to innovative approaches like reputation-based non-transferable token rewards, progressive ownership models, and usage-based airdrop systems.
Given the diverse purposes and objectives of DAOs, it's vital to explore the tooling infrastructure in this realm more deeply. The categories of growth and contribution-based tools encompass loyalty programs, rewards, quests, identity management, analytics, reputation systems, graph-based analysis, and contributor tracking, each playing a pivotal role in this rapidly evolving landscape.
Quests and loyalty programs
As exemplified by platforms such as Layer3, Rabbithole, Galxe, Zealy, and TaskOn, quests and loyalty programs have emerged as essential tools for customer acquisition and retention in the Web3 space. The unique aspect of quests lies in their ability to onboard newcomers to the crypto ecosystem.
Quests serve various purposes, from rewarding community members on a micro level and testing dApps/protocols to increasing adoption and engaging the community. However, while on-chain transactions and off-chain engagements like Discord activity and X interactions can engage users, they often lack the necessary granularity and provenance. A more nuanced approach, which includes tracking and segmenting users followed by tailored incentivization, can lead to more sustainable user engagement strategies for protocols.
Furthermore, in a domain where many transactions are reward-based, developing loyalty programs that focus on value alignment rather than hyper-financialization is essential. Such programs are crucial for attracting new users and retaining existing ones, especially considering the high Customer Acquisition Cost (CAC) in crypto. The effectiveness of quests and loyalty programs hinges on selecting tools that offer more than just project hype, encouraging genuine user engagement and value contribution.
Questing is also set to transform the airdrop landscape. By incorporating strategies like micro-, recurring, and usage-based airdrops, these tools can significantly enrich the token ownership economy.
Tooling spotlight: Quest Protocol
The Quest Protocol is a full-stack quest toolkit that makes it easy for anyone to permissionlessly deploy quests and build their own quest platform, while tapping into the distribution of popular quest platforms like RabbitHole.
The platform functions as a permissionless quest enabler, offering key features such as incentive alignment, where protocol rewards are distributed among quest creators, users, and referrers. Additionally, it provides sybil resistance through masked on-chain conditions and delivers real-time performance insights.
Gamification of Governance
Permissionless contribution is a key feature that distinguishes DAOs from traditional organizations. However, governance participation often requires a significant investment of time and effort, which isn't always compensated. This leads to low voter turnout, but in larger protocols governance is maintained by experienced delegates. As a result, many DAOs suffer from low engagement in their governance processes.
In the governance arena, activities such as writing proposals and voting are frequently restricted to those holding tokens, effectively gating community participation. While opening up every decision to the entire community might dilute decision-making quality, the active participation of experts, as seen with Gauntlet and Llama involvement in DeFi protocol’s governance, shows the value of informed contributions over mass participation.
So, how do we engage grassroots contributors and lower the barriers to governance participation?
One approach is through gamification of governance. This method can simplify the onboarding process and keep individual contributors engaged. By utilizing concepts from Massively Multiplayer Online Games, especially through tools like Discord and Telegram bots, DAOs can involve the grassroots community more effectively. Gamifying user engagement on a micro-level, using various tools, can nurture a community that gradually ascends to higher levels of governance. This is achieved by rewarding them through gamified quests and activities, thus fostering a more vibrant and participatory governance culture.
Summons enables DAOs to reward their communities based on the consistency and quality of contributions. It gamifies DAO participation to enable rewards, non-monetary incentives such as power and influence, and ultimately a more effective form of governance.
Pairwise by General Magic works more like a Tinder UX for Community signalling. Pairwise assessment is where 2 options appear on the screen, and you choose the one you prefer; at the end you have an ordered list based on your preferences. It’s almost like a dating app with an easy UX voting methodology but for on-chain voting. While this tool is more of a voting tool, it gamifies the voting experience with the UX as a sole factor.
Tracking the contributions of community members is a complex task, especially as the number of members grows. In DAOs, where there's no such thing as a 'free lunch,' accurately tracking contributions is crucial for compensating members at every level. The inherent lack of structure and accountability in these spaces complicates the assessment of contributions. Therefore, tools designed to track contributions based on the size and needs of the DAO are essential for maintaining fair compensation and recognition.
Praise is a peer-to-peer reward mechanism suitable for both small and large DAOs. It uniquely addresses the challenge of quantifying qualitative attributes. Praise also features a leaderboard dashboard, enabling members to carry their reputation across different projects that utilize the tool, enhancing its interoperability.
Karma focuses on the delegation aspect prevalent in many protocols. With delegation being a primary method of voting, tracking it becomes vital for aligning with community guidelines and enhancing decision-making quality. Karma’s tracking system offers a holistic view, capturing contributions in detail. This granularity enables informed decision-making for members when delegating their votes.
Govrn further complements these tools by allowing DAO contributors to self-report their efforts. This fosters a community-driven approach to valuing and rewarding contributions and supports the development of a bottom-up governance culture. Here, the contributions and values of individual members significantly shape the DAO’s structure and contribution framework.
Sybil attacks remain a persistent and complex challenge in the crypto space, as exemplified by the recent Celestia airdrop, where an estimated 30% of the airdrop value was compromised by both small-scale and industrial-level Sybil attacks. Effectively identifying and quantifying contributors while preserving their privacy is a difficult task. In the context of crypto’s high customer acquisition costs, Sybil attacks further increases expenses and disrupt community dynamics, as they can lead to Sybil actors unfairly influencing governance processes.
To counter these issues, most protocols rely on network analysis and on-chain data to deter Sybil actors. Additionally, Digital Identity Protocols have emerged, focusing on proving the unique humanness of participants.
Clique serves as an identity oracle, bringing web2 data onto the blockchain in a trust-minimized manner. This includes integrating personal identity and behavioral data, such as Twitter activity. Clique employs Zero-Knowledge Proofs (ZKPs), Trusted Execution Environments (TEE), and Multi-Party Computation (MPC) for enhancing trust minimization. Intriguingly, the platform utilizes Twitter data for establishing provenance and algorithmically evaluates it to provide a soft proof of personhood. This approach not only aids in proving identity but also helps in driving growth and adoption for protocols participating in their campaigns.
Gitcoin Passport: As an identity aggregator, Gitcoin Passport stands out for its granularity and the flexibility it offers organizations in setting threshold scores tailored to their specific needs. The platform incorporates multiple 'stamps' based on on-chain conditions, web2 accounts and Proof of Personhood protocols. Unlike most identity protocols with limited reach, Gitcoin Passport aggregates these siloed efforts under one umbrella, offering a more comprehensive solution for identity verification in the DAO space.
The DAO tooling in Contribution management and Growth is pretty broad and nuanced. DAOs has varied needs and objectives. Choosing the right tools will help onboard and retain users with low barrier and less friction. While flashy partnerships and project parties looking for sybil to boost engagement are one way to do it. A sustainable model will understand contribution metrics, and build a growth strategy that’s a bottom-up method that helps in making resilient and sustainable DAO models. A toolstack that’s composable, decentralized, low barrier to entry and with a good UX is an ideal mix.
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