Blockchain Enables Companies and Creators to Activate Their 1,000 True Fans
Article by NF Thinker Edited by Kornekt Cover Art by Tonytad
What Is a DAO?
By now you’ve probably heard of a DAO, but in case you haven’t, here’s a quick primer: DAO — decentralized autonomous organization. OK, fancy words, now what do they mean? That’s what I was asking myself in early 2021. I had heard the term and thought, “Sure I understand the concept” but I didn’t really get it until I was properly green pilled… more on that later.
DAOs are collectives of likeminded people working together to achieve a mission. They are enabled through blockchain technology, allowing people to vote on initiatives as long as they hold the required tokens. It’s not too dissimilar from being allowed to vote in a local election if you have proof of residency, except you don’t need to prove who you are, you just need the tokens.
So let’s break it down…
(of an activity or organization) controlled by several local offices or authorities rather than one single one
- By distributing governance and workload, organizations can adopt a bottom-up approach. Spread your work to people around the world, leverage the collective knowledge of every corner of the globe, allow “the many” to submit and vote on proposals.
Autonomous: adjective (this one gets tricky)
a) (of a country or region) having the freedom to govern itself or control its own affairs
b) having the freedom to act independently
c) denoting or performed by a device capable of operating without direct human control
- In theory, DAOs should embody all of these definitions. In practice, it’s only the first two (freedom to govern and act). The third (operating without direct human control) is where we’re headed, and that is why the blockchain is important. DAOs strive to enshrine their governance to the chain, creating immutable, code-based law. But we’re a long way from that. Rules and laws depend on circumstances, and we need to enact rules before encoding them.
an organized group of people with a particular purpose
- Easy, right? Well, the “particular purpose” is usually known as a “mission” and that part is simple. Organizing people, especially a decentralized group of people, is not so simple. Luckily there are countless tools that are making distributed collaboration efforts far easier. Just search for “DAO tooling” online and you’ll see what I mean.
So now we know what a DAO is and how difficult they can be to run, why the hell would you want to form one, or even participate?
Connecting With Your 1,000 True Fans
Back to being green pilled… In early 2021, I was sent 35,000 BANK tokens and, as a result, given full Level 1 membership to BanklessDAO. Why me? Why was I chosen to be a member? This is where things get interesting. I was chosen because I had shown support for the Bankless mission — to help the world go Bankless by creating user-friendly onramps for people to discover decentralized financial technologies through education, media, and culture.
As a premium subscriber to the Bankless newsletter, they knew I was a supporter. I had skin in the game. The founders had decided the best way to push their mission forward was to put it in the hands of people who were passionate about the cause. And who would be more passionate than a group of people literally paying you to hear your message?
If you have a mission and you have a fanbase, why shouldn’t you let them work together to take that mission to the next level?
In this way, DAOs are a fantastic way to find brand alignment and to let your fans do the talking for you.
There are a few ways to go about it, depending on what stage you’re in.
Got a mission and just starting off?
Step 1: Write down your mission.
Step 2: Get out there and find some aligned friends — people who are passionate about your mission — and send them a membership NFT.
Step 3: Write your initial governance docs together.
Step 4: Choose your DAO operating system (there are many options out there, I highly recommend Origami or DAOhaus).
Step 5: Distribute tokens to said friends. These will be used to vote.
Step 6: Codify your governance by publishing it and voting for it on chain.
Already an established brand or company?
Skip Step 2 because you already know who your friends are. Now, convert your user base or customers into your biggest fans, just like Bankless did when they made me a member.
Here are some other great examples of organizations who have created DAOs:
This is where a project can really fall off the rails. Remember, the point of a DAO is to give “the many” a say in how things work. Removing the top-down power structure is key. Therefore, if the founders of the DAO keep a huge portion of the token allocation, they’re really just keeping the power for themselves. If it’s profits you’re worried about, there are ways of directing profits towards the people making a difference. But with voting, people want to know their voice matters.
After your initial token allocation you’ll need to incentivize participation through rewards. Increase participants’ governance power by allocating more tokens over time. At BanklessDAO we’re working on a way to signal your affinity towards a DAO. It’s called Bankless Card, and it will reward people for making everyday purchases. It’s like a Cashback Card, but users will earn equity and support their favorite missions along the way!
Why Ownership Matters
Giving true fans equity means your mission will live on. Ownership gives them a chance to take more pride in delivering your message to the rest of the world. Members get to guide the organization by submitting and voting on proposals. They make conscious decisions on things like how funds should be spent, who you should partner with, and what initiatives you should take on as a group.
Now, remember when I said the “autonomous” part is tricky? This is where it’s important to set standards on things that make a difference. Things that seem small could have a lasting effect on your success and your public image.
Be diligent around things like brand usage, partnerships, community guidelines, proposal submissions, and voting guidelines.
Once it’s all in place, a founder should be able to step aside and let the organization run itself, but they need to hold the reigns until the right moment comes.
Distributing Ownership Without Diluting the Decision-Making Process
One of the questions I’m asked all the time is why a company would want to give away decision-making power. I mean, Red Hot Chili Peppers don’t let fans write their songs, do they? Ford doesn’t let their most faithful customers run their supply chain, right?
Of course they don’t, but there are some decisions that are guided by fans. For example, Red Hot Chili Peppers will tour in places with the highest album sales and streaming revenues. Ford is phasing out cars because SUVs and trucks are more popular. These are decisions based on historical data of people voting with their wallets.
I posed this question to Kori and Pablo, the founders of MoonDAO, who are decentralizing access to space. They responded by saying the DAO should be able to vote on IF they should put a rocket into space, not how many engines that rocket should have.
Specific knowledge is required for certain decisions, and that should not be taken lightly. Leverage the knowledge of specialists to determine the specifics, leverage the will of the collective to keep the mission moving forward.
NOTE: I mentioned Origami and DAOhaus in this article. I just wanted to give two shout outs here:
Andrew Warner from Origami, who has been extremely supportive in my endeavours.
Spencer Graham from DAOhaus, who was kind enough to grant us an interview in the BanklessDAO AMA series.
This article was published in collaboration with the BanklessDAO Writers Cohort.
NF Thinker is DAO contributor, multimedia producer, and tech lover. He was bitten by the Web3 bug in early 2021, and has been contributing wherever he thinks he can make a difference.
Kornekt is a writer and editor with strong conviction in the world web3 creates.
Tonytad is a graphic designer who has worked locally and internationally with organisations and firms on over 200 projects, which includes branding, logo, flyers, cards, and covers.
BanklessDAO is an education and media engine dedicated to helping individuals achieve financial independence.
This post does not contain financial advice, only educational information. By reading this article, you agree and affirm the above, as well as that you are not being solicited to make a financial decision, and that you in no way are receiving any fiduciary projection, promise, or tacit inference of your ability to achieve financial gains.
Bankless Publishing is always accepting submissions for publication. We’d love to read your work, so please submit your article here!
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