Facilitator: Kitti Borissza, Adoption & Community, TZ Connect
Trainers: Kate Beecroft, Ecosystem Lead at Centrifuge, and Jose Andres, Artist and Community Builder at CleanNFTs.
📜 Course Description
Guest speakers: Kate Beecroft is the Ecosystem Lead at Centrifuge, the decentralised asset financing protocol. She has been involved in Decentralised Autonomous Organisations (DAOs) since 2018 and brings to them her very practical experience of self-managing organisations as the co-founder of freelancer collective Greaterthan and a long-time member of Enspiral. She is is a governance researcher and deeply interested in the politcal theory of Web3. She is co-author of the 2020 paper 'The Dissensus Protocol' and has contributed to research papers for the European Commission about blockchains for social and public good. This session will cover the opportunities for DAOs as well as some of the pitfalls to be avoided. Together we will focus on healthy practices and principles to experiment your way to thriving community. Jose Andres is an Artist and Community Builder in the NFT space. In early 2021, he helped cultivate the CleanNFTs community to address the ongoing discussions about NFTs and their environmental impact. This community of concerned artists & developers evolved into a grassroots movement towards Proof-of-Stake chains like Tezos. His past experience supporting non-profit arts organizations has led him to DoinGud where he leads a global team of leaders. DoinGud is an NFT platform that brings creators, curators, collectors and social impact organizations together to support one another and become self-owned, self-governed and self-sustained.
Curiosity. Excitement. Illuminating. Possibilities. Future. Imagination. Creativity. Discovery. Cool!
These were the words that came to mind when participants in the WAC Fellowship were asked to describe their journey so far. With a background in systems thinking and organizational design, community building, and political theory, Kate Beecroft delved into the social and political structures supporting DAOs, how we bridge blockchain technology with real-world communities, how we build without hierarchy, and best practices when setting about developing decentralized software to support communities. We tapped into how to innovate the audience experience in commonly traditional cultural institutions and how to communicate what Web3 is.
By now we understand that a DAO is an organizational form in which to own and govern a type of community being built, and it has quite far-reaching implications in its potential to change the way that social, cultural, and economic life is structured. Of course there are benefits and lots of buzz around DAOs, but equally, anyone who is interested in using this unique organizational format - to do good, to govern, to bring livelihood to a community, to start a new business, to introduce a new technology to the world - would do well to first consider the problems that spring up with DAOs, before setting about building one.
Consider the risks
Have you heard of whales? These are individuals that own the most tokens and therefore essentially control what the DAO does. While DAOs do have open forums (ie telegram, discord and other discourse forums) - to discuss what they do, what the vision is, and how funds are spent - tenants of plutocracy and fiefdoms caused by these whales in the system can effectively encourage back-channeling, where decisions are being made behind closed doors. We pretend the group is utopic, that there is no hierarchy, that equality is inherent and we are fully autonomous, but in actual fact a lack of hierarchy typical in decentralized formats can actually disguise an informal, unacknowledged, and unaccountable leadership that is directing things behind the scenes. It can be even more toxic if this hidden hierarchy’s existence is denied. This concept, coined The Tyranny of Structurelessness, can be traced back to the feminist movement in the 1970s. It is further compounded by a caring economy where the cost of mediating conflicts, onboarding members, and performing before and after-care, is typically almost always billed to the women in the DAO.
How to ensure your DAO is diverse?
Many DAOs have a clear lack of diversity and can often be perceived as inaccessible to the outsider, especially in regards to the artifacts that accompany Web3 technology, such as token asset and private key management. DAOs tend to form around current blockchain protocols. Due to this, barrier to entry can be high, as those willing to take on the learning journey required to hold tokens and finance blockchain technology tend to be a small homogenized groups of individuals. Of course, we want everyone to have access to the information. Onboarding then, needs to be a major focus. There is work to be done to help existing DAOs diversify, but community groups that already exist, which have a very strong tribe identity, can grow into DAOs and in effect, help to diversify the space.
The not so nice bits of sharing a DAO
Ideally, the governance model of a DAO follows that a well structured forum discussion moves on-chain (if scoped well), people are engaged, and tokens are distributed sufficiently to generate an actual democratic practice. However, often times people in DAOs tend to engage in a fight to the bottom with rational discussion. This can actually be a turn off for a lot of people who might not be willing to flesh out a protocol if the process means getting one’s ideas rationalized down to rubble during the formation process. In this culture, assertive people tend to have the power. If not enough relationship-building and community enhancement is baked into the functions of a DAO, the tone can become antagonistic, and often, whoever is the most rational will win the debate and sway the community to their point of view. Furthermore, the cycle of making a proposal, generating discussion and votes, and low voter turnout can lead to voter fatigue. There tends to be an inundation of messages from many discord groups (where the communication of a DAO commonly lives) which is always in direct competition with the few resources available in any attention economy. Aware of the lack of time and propensity for fatigue that voters face, Gitcoin tried to combat this when forming a DAO, by adding a delegation model into the system. In this model, ambassadors are empowered to vote for an even smaller community within a DAO, referred to as a squad. These squads tend to be time-zoned and form the smaller organic communities within a DAO.
What is the liability of each person in the DAO?
Artists and cultural institutions who want to form a DAO within Germany must comply with a legal system that requires them to be a legal person rather than a legal entity. Some governmental bodies are simply not flexible enough to fully accept a DAO. Still others, for example Delaware and Wyoming within the States and foundations based in Switzerland, have passed legislation to allow DAOs to operate as a legal entity, as an LLC - meaning that not everyone is personally liable if something goes sideways. In many jurisdictions DAOs are treated as a partnership, so that all parties involved assume legal responsibility. However, if this was ever brought to practice, a DAO consisting of 1,000 people would certainly make it difficult to pursue legal action, especially as many of DAO members are anonymous 🙂
What is a multi-sig wallet? The wallet in which funds of a DAO, whatever your treasury or currency the tokens are in, are stored, and crucially require multiple people to sign before a transaction can take place on-chain (Gnosis safe is an example of a popular user-friendly multi-sig wallet).
Simple tips when forming a DAO
Define the mission. The key building block needed when forming a DAO is being able to confidently answer the question ‘what is our goal?’
Onboarding is still everything. The learning curve of understanding the tech and protocols necessary for engaging in this space is still quite high. Effort should be made to lower that barrier to entry. When being onboarded, members should feel confident in understanding what is this thing they are joining or building, why are they personally here, what is incentivizing them to join? Setting up repeating rhythms can be very important in providing people a predictable way in - during the onboarding phase use the Think, Feel, Do framework: what do you want members to think about when considering the DAO? What emotional response do you expect from members and how do you want them to feel about the organization?
Maintain culture before structure. DAOs should flesh out what types of votes they want to see, what type of communication they want to have, which type of person is important to prioritize in accessing the DAO, etc. Start from the cultural questions and map the tech to match that, rather than going the other way around.
Are there caps on a DAO? No. Some say the bigger the better, but there are drawbacks to this philosophy. People tend to join DAOs for the sense of belonging and connection they gain from joining, and this is why squads pop up.
Can you start with other forms of community building and move into a DAO? It is advisable to start with a community where the culture and the purpose is there first, then move into considerations of whether or not forming a DAO is the next move. Artists are some of the best community builders out there, so they should really get access to the tools they need to build their strong community culture into a DAO.
How would you design for accessibility/diversity? Successful DAOs are places for belonging where people’s identity is clearly reflected in the DAO. Making introductions the norm when people enter a chat forum can create a culture of openness and diversity of members and opinions by default.
What is the great risk/drawback encountered in forays into DAOs?
A recent fellow at Blockchain for Social Impact and an early instigator for CleanNFTs, Jose Andres is predominantly focused on supporting the adoption of impact NFTs and prototyping for the future. The conversation around sustainability was really heating up and came to a head in April 2021, and it was around this time that Jose took an interest in giving more of a full spectrum education about the possibilities for artists and institutions before their entering into the space. CleanNFTs and Green NFTs initially began as spaces where artists and institutions could start having more nuanced conversations around blockchain and the arts, but it wasn’t long before the media picked up on the topic and the discussion took on a more polarizing tone. Sensationalism and emotional appeal raged on in the topic of blockchains; Proof of Work was criticized while alternative transaction-approval models such as Proof of Stake were barely given more than a passing line.
The discourse has changed as mainstream projects are hardly ever launched without giving a disclaimer about what they are doing in terms of combating the footprint, be it through offsetting and removal, or using chains like Solana and Tezos. Conversation has even evolved further, beyond the environmental side of blockchain use and more into impact NFTs. This topic takes much more forefront in the discussion than it has historically. Similar to the way we now understand Web2 and the provisions of security around our data, we can cumulatively engage in more nuanced discussions around social impact of projects launched on-chain.
How do we tract and trace the positive impact of NFTs?
In a few words, discover through a hashtag.. let’s take a look at some examples below.
#CarbonDrop by Nifty Gateway- NFT art auction fundraising for climate change in which high profile art pieces were hosted and auctioned in efforts to raise funds specifically for carbon off-setting. While they had a host of artists happy to participate in the endeavor, they needed to invite experts already engaged in climate change. The more you can partner with external entities around a theme to help tell the story, the more reach you have, the more your patrons will see that change, the more that impact is made visible.
#OwnTheOcean is an example of a commercial company, called Moen who specialize in faucets and water fixtures, getting into the Web3 space. What could have been a very dry, very data driven endeavor of the brand’s sustainability commitment manifested into an NFT auction. The NFTs consist of satellite captured images of plastic and other debris, creating giant floating plastic land masses. Part of the campaign’s incentive was to collect optics while the other was to make an emotional appeal to the artwork or token, but ultimately the campaign made a full front and center call to action.
#conservatioNFT is funding endangered species conservation efforts through NFT minting. Members have a chance to own a token which represents an animal. Rather than invade the life cycle of the animal directly, they can trade tokens and essentially digitally adopt an animal. The outcomes of success should reduce poaching, nesting, and increase the chances of survival.
Rewilder, a crypto-native non-profit (consisting of a foundation and a DAO), endeavors to tokenize land for wildlife conservation. As a token holder you don’t own the land, rather you own a certificate which gives you the right to receive updates on how that land is being managed. They offset an estimated carbon footprint of all donations and NFT created transactions.
We’ve discussed PFP collections in previous sessions. You’ll recall that these Picture for Proof NFTs are a softer barrier to entry than other NFT projects, and allow members a chance to receive an avatar as an NFT. BAYC and Cool Cats have donation proceeds on-chain for high visibility. Artists engaging in impactNFTs would do well to help institutions understand that transparency is expected, embraced even in the crypto space, and by doing so more crypto native folks will lend support towards institutional projects. Token holders can donate funds to non-profits and charities and give to projects throughout its life, rather than via one-off proceeds.
Cardano is a bit of a unique frontrunner here, but we’ve included anyways because its certainly operating on the impact side, with folks on the validator level committing to more sustainable equipment. The blockchain takes the emphasis off of consumers and shifts responsibility to the chain, its consensus mechanisms, and the hardware itself. Throughout various levels, all actors in the Cardano blockchain are incentivized to be accountable. Signals like this indicate that paradigm shifts between sustainability and technology are possible and underway.
Impact in DAOs, Guilds and Community initiatives
#ReFi. With so much capital at play, regenerative finance transfers control of capital to communities most affected by racial, economic, and environmental issues. #ReFi seeks to take mechanisms of DeFi and point them to impacting climate issues instead. Projects can range from tokenizing carbon offset credits, such as KlimaDAO (who sell bonds and distribute rewards to KLIMA holders), to projects which inherently make it more expensive for companies to offset and therefore incentivize ceasing polluting in general, to finally, projects which raise funds to buy company board seats.
Reli3f, found in the crypto twitter space. NFT influencers and artists formed a coalition which raised over 620 ETH ($1.7million USD) in a day or two, with a bot that included collecting royalties, in support of Ukrainian relief. The project tapped into Ukrainian artists in the space and leveraged existing communities by building a solid and committed squad by way of a strong and reactive network effect. Artists in the NFT scene were actually early advocates for leveraging a royalties model in this space.
In addition to impact and social NFTs, environmental and/or social impact efforts of DAOs, guilds, and community initiatives, carbon offsetting and removal is an additional measure of care-in-action in this space. At Offsetra you can buy carbon credits as a way to reduce emissions caused by minting and trading. Artists looking to create carbon-negative NFTs can receive certification of carbon credits purchased through Nori. Carbon removal is a way to sequester carbon from the environment rather than buying carbon credit. The model supports types of farming which trap carbon back into the earth, or projects which are verifiably removing carbon from the atmosphere.
Risks and challenges
Of course, even in the process of exploring impact and social DAO use-cases, there are a number of risks and challenges that should be mentioned. Firstly, there may be a lot of biased fear of new technology from potential adopters. It is important to not accept any side blindly and do your due diligence, but unmitigated fears should be pushed back on. A challenge is also gauging the amount of oversight versus outsourcing any cultural institution may perform. Navigating IP, licenses, and rights can be daunting, but the question remains, what portions should be owned versus shared? For example, if a museum create their own IP, this could allow consumers or patrons to remix, ie. take the artwork further than the institution initially imagined which could ultimately skyrocket if it also allows people to include their creativity.
To that end, it is advisable to source trusted partners to build out an NFT offering. Bugs in the code or a poorly crafted marketing launch could tarnish the reputation of a project quite permanently - remember the Cryptopunk NFT scavenger hunt in MOMA? Ultimately, being able to confidently provide content to questions like the following will determine the success of any NFT life: What is the long term goal? How do we continue creating value for token holders? How do we retain people on the project? Will a one-off interaction suffice or is it part of a several year-long campaign? Educate the audience, verify the impact, and cut the noise by getting involved with twitter spaces, discords, and by courting the NFT sphere in addition to traditional channels available to institutions.