Analysts often talk about strong fundamentals. By this, they often mean the financial aspects like earnings and profits. Sometimes, they are referring to the strength of the technical stack. Or maybe they focus on tokenomics and token distribution. Yet, very rarely do they account for one very important fundamental that can decide the fate of the DAO: the passion of the founders and the community. DAOs built on passion are poised to succeed in both bull and bear markets, keeping cohesiveness and effectiveness to achieve common goals. Let’s dive a bit deeper into them.
Deepa, the guest of our recent DAO TALK, talked about impact DAOs — ”whose core purpose is to do good to people and the planet.” They can be for-profit or non-profit, large and small, local or global, and anything else. But their focus should be on some positive impact on the world.
Inspired by Vitalik Buterin turning a billion dollar’s worth of shitcoins into real, tangible aid to India, Deepa saw the benefit of using DAOs and the entire power of blockchain technology/community to address pressing social needs around the world quicker, better, and without censorship.
Some of the leading DAOs have social purposes at their core: Gitcoin, Giveth, Optimism Collective, and so on. In various ways and following various paths, these and other DAOs built on the passion to do good are challenging the notion that “wen moon” is all that matters.
One of the cases profiled on Deepa’s website is of Ukraine DAO — an organization close to the hearts of many DeXe contributors as its passion is to help Ukraine fight off the invasion from Russia.
It’s fascinating to read how Alona Schevchenko pulled together a DAO a few days before the Russian invasion having previously been a virtual nobody in terms of crypto or other celebrity status and social weight. Yet, she used her genuine passion for the survival and wellbeing of the people of Ukraine to not only put together an effective DAO but to raise $7 in donations to fund Ukraine’s resistance within days of the invasion, all of it getting to where the money was most needed within Ukraine, without censorship or any bureaucratic delays you’ve come to expect with international money transfers and allocations.
Amazingly, Alona keeps her DAO organized and motivated well over a year into the war without any governance tokens or other financial incentives. With the governance and operational structure divided into pods based on skillset and tasks, Ukraine DAO has grown massive without losing steam. Of course, no one knows what will happen to the DAO once the war ends, but that’s a welcomed problem to face.
Buying art collectively has exploded recently both within crypto and outside of it. NFT collectives representing artists and/or investors are popping up quite a bit. What makes PleasrDAO different is focusing on art with cultural significance and finding ways to add value to it along the way, rather than simply hoarding cool NFTs to resell at a profit.
PleasrDAO’s members include some Who’s Whos of crypto and some established NFT artists too. They don’t need to accumulate NFT wealth with this DAO. So they choose art that they think is important. They listen to each other and respect each other’s opinions. Per DeepDAO, PleasrDAO has only 153 governance token holders and 54 proposals to date. Slightly more than half of their proposals are successful, indicating a potentially healthy level of disagreement.
The anti-case: ConstitutionDAO
Passion is something that people truly believe in and are willing to work for. Igniting passion is easy but maintaining it is very hard. We all remember how the Wall Street Bets movement tried to fight against corrupt centralized finance elites by pumping GameStop shares. They almost succeeded but… where are they now? In DAOs, ConstitutionDAO made a valiant attempt to own one of the original manuscripts of the US Constitution only to be brought down by own hubris and outbid by a billionaire. It tried to rebrand as People DAO and got hacked badly. PeopleDAO has the potential to be a great passion DAO but is currently more of a fad one.
Quick profit is not passion. “Stick it to the man” is not passion. Not sustained passion at least. Ukraine DAO succeeded in part because of having extremely high stakes and nothing to lose. PleasrDAO has relatively low stakes but a passion for socially important art that can withstand a bear market that erases 90% of the AUM value. If your DAO’s members give up after a failure — you have a cool idea DAO. If your members persevere failure after failure and keep building better — welcome to building with passion!
Of course, passion alone will run out at some point, so DAO creators and governors should put in the structures and incentives that help their DAO members stay motivated and effectively grow the DAO for years to come, even in those times when passion may run a bit dry.
Understandably, DAOs are still in their infancy and cannot be expected to have everything figured out. Many different approaches to member motivations are being trial-and-errored. That’s beautiful! This is how better DAOs and a better world will emerge. Best of all, well-structured DAOs that incentivize useful activity will help keep the passion burning hot because those members will be clear on what is needed from them and what they can expect from the DAO.
Most importantly, DAO creation should be accessible to everyone, regardless of their technical expertise. Imagine DAOs built with zero coding, but rather with passion and the spirit of collaboration. Because the technical execution should not get in the way of passionate creation.