Deep Dive: State of DAO Tooling on Solana
Deep Dive: State of DAO Tooling on Solana
Critical infrastructure to build the future of work
If you’ve been exploring the crypto space and thought that all there was is pretty jpegs, musk tweets and laser eyes - then you better sit down before reading this. At some point in this post there will be a legit reference to “DAO supreme courts”. Read on to find out more...
Disclaimer: The DAO tooling eco-system is super early. A lot of these tools are in early Beta and I have not been able to personally try most of them. This post is based on publicly available information about them at the time of publishing. Please do your own research before using/investing in any of them.
Here’s how this post is structured
Introduction
DAOs & the Future of Work
I wrote about this in a previous post, here’s the essence:
From the dawn of time people have collaborated on projects such that the net output is greater than each input if taken separately. In corporate speak, this is synergy (1+1=3). The reason this happens is because effective collaboration creates leverage. Each person can focus on doing what they are the best at and trust that everyone is doing the same.
Take an example of people building a house - you need to design, dig, build, beautify, electrify, secure etc - each function alone is not consumable (whatcha gonna do with 5 litres of paint? ) But when combined in the right way you get potentially a multi-million dollar family heirloom. Now, the catch is - how’s that price tag split up? In most cases people lower down the food-chain get hourly wages and the bosses keep the upside. This is changing.
Over the last century or so, the nature of leverage has changed. It started off as access to capital & permission (licenses, contracts) then with the internet it evolved into the ability to code and design. With web3 & DAOs - leverage is now the net output of your community, i.e. people who are actually doing the work.
Here’s a great thread on it by SuperTeam contributor Akshay,
How does crypto + tokens + communities change the future of work?
Permissionless: Anybody can join or leave, you can also be part of & contribute to multiple communities
Ownership & financial incentives baked in: Tokens represent ownership, communities can give tokens to people who are taking positive actions
Transparent: To gain trust and traction, the early founders need to over-communicate key decisions and publish them to a blockchain. All changes are public and recorded. Eventually community governance kicks in.
Types of DAOs
So, your next question would be - “Ok, but what exactly does a DAO do? Apart from being a fun tongue twister, this is a great question. This is kind of like asking - “what does a company do” Basically - anything.
Given that the three major booms in crypto are around DeFi, NFTs and gaming - a lot of the DAOs are coming up around that. Here’s a great snapshot from DiscoverDAOs setup by SuperTeam Sherpa Kash.
What is DAO tooling?
The best analogy I can think of here is that of the B2B Software world, i.e. companies that make products which are used by other companies. Some internet specific examples of these types of products are AWS, Slack, Mixpanel, JIRA, Figma, Notion etc.
The same way, there are projects in Web3 where the key focus is to build products and services which enable other groups / DAOs to specialise (focus on the thing they care about most) and get super convenient (time and cost effective) tools that take care of the other things. So, for example - if you’re a group of artists making amazing NFTs - you can keep focusing on creating and marketing your art. Instead of spending lots of time on managing paperwork, taxes, payouts etc.
With that context there are three broad categories of DAO tools
Launching a DAO: Core infra needed to get the DAO started
Getting stuff done: Enable distributed decision making with speed at scale
Reward & compound: Manage funds, compensate & recognise contributors who add value to the DAO and create a virtuous loop.
Today, this happens across a variety of different products. And DAO tooling is currently light years behind B2B software. Expect this to change quickly.
For e.g. Grape is potentially one of the most active DAOs on Solana & when you look at how they coordinate - you realise just how early this is. That’s right, the grape DAO is currently a token gated discord channel with proposals as text messages + docs/google sheets! (They do plan to adopt Squads soon)
Here’s a great visual of the different types of tools from a beautiful post on the state of DAO tooling on Ethereum.
A lot of the off-chain products are similar for Solana DAOs too, e.g. Discord, Twitter, Medium etc. We’ll deep-dive into some of the categories but broadly it is safe to say that the Solana DAO tooling ecosystem is still significantly nascent compared to ethereum (rightly so, given ethereum has had higher adoption for much longer).
What will be interesting to see is if and when these tools add support for cross-chain governance, preparing for what seems like to be an inevitable multi-chain world. Some examples of this:
Networks like wormhole have enabled liquidity staking protocols like Parrot on Solana to accept BTC & ETH deposits.
Neon Labs is enabling Ethereum apps to expand to Solana
Lido supports SOL staking now
Payments platform 8Pay is extending solana support and plans to add many chains
Currently both these ecosystems are growing at warp speed but it seems inevitable that interoperability will be key in the near future, especially as communities start to form across these chains (BAYC + Degen Apes collab anyone? )
Journey of a DAO & Wen Tooling
Genesis
Small high trust group gets things started: Currently projects typically start among groups of people who already know and trust each other. They’ve either worked together or come with a strong warm intro. At this point the team size would be 5-20 folks and the need for proper governance or other processes is low. The group operates on trust built outside of web3. Soon we’ll see groups be formed based on web3 interactions & reputation etc.
Build WoM through twitter, hackathons, blogs, PoCs, grants: At this point the group will focus on building their key product and testing/marketing it to their intended audience via twitter, hackathons, get grants etc.
Land on discord / telegram → Critical mass: Discord and telegram are the top of funnel for a DAO. Basically anybody who discovers an interesting project via twitter/blogs/features will end up wanting to get a feel of the community. How active are members, what do they talk about, would I want to spend time with them?
Once they have sufficient interest in your project, represented as activity on your discord/telegram, projects need to think about building the right processes to enable anyone to contribute and make sure that the core team isn’t in their way. This happens along a spectrum & mistakes will be made before a DAO becomes truly autonomous.
Build a community : Incentives, Contribution, Reputation
Articulate: What kind of behaviour helps your project. Any new discord group will be filled with spammers, folks who are there for a quick pump or just not interested anymore. It should be crystal clear to anyone what they need to do to contribute and grow within the DAO. Typically for most projects this would be one of three areas: Code, Design or Drive Growth via videos, memes, deep-dives etc.
Enable: Permissionless work via bounties and tasks. Once you’ve defined how you’d like members to contribute, get out of their way. Some options are:
Bounties via apps like quest book (similar to rabbit hole on ethereum) where payouts can be automated & linked to completing a task.
For non-coding tasks you can broadcast work via discord channels or notion pages (e.g. Super Team bounties) and make payments after someone judges & picks the winning entry.
Platforms like Kurobi enable monetising interactive video based tasks (e.g. potentially get paid in project tokens for taking yoga classes - today they support KURO, SOL & USDC). Grape plans to support ticketing soon as well.
Example of #work-requests from the Grape Protocol Discord
Reward & Recognise: Build a flywheel that compounds your DAO.This is the most critical and tricky aspect of community building. People who contribute need to be rewarded both monetarily (project tokens) and intangibly (reputation in community)
Tokens: Most projects will have their own token. Paying contributors with this token ensures that over time their incentives are aligned with that of the project. Some of the apps that support this are stream flow finance , sollpay. Alternatively this can be done via tipping bots like Moonlana (discord) or Solanatip (twitter). This space will grow, Grape has tipping bots on their roadmap too.
Roles / Reputation: To quote from Organisational legos, “A member’s progress through the contributor journey could manifest itself as Discord Roles, which when leveraged well, serve as proxies for trust. If there is a shared understanding within the community that a “Gold” member has contributed 500+ hours of work to the DAO, for example, you know to put more weight on what they say than someone without any badges”. Grape Access is a product that communities can use to set this up. Apps like quadratic trust enable social following based reputation building. Equivalents for this in the DAO world will enable communities to award these.
Transferability: Given that members can be part of multiple communities/DAOs we want to ensure that reputation is transferable. Just like in the real world you’d trust an introduction from a trusted friend/colleague, web3 can make trust permissionless. Again, Grape’s discord is a great example of this - because multiple communities are present you can see the badges someone has across multiple projects. Of-course this only works within the grape discord server right now, but this will soon become platform agnostic. The underlying feature to enable this is seamless identity management. Openlogin by Torus could enable this, another product is Civic, but they seem more focused on DeFi use cases at the moment.
Grape channel discord badges - cross project signalling.
Operate @ Scale
Once a project has achieved sufficient velocity and critical mass of contributors and work/output - it becomes increasingly important to move further down the spectrum in becoming more permissionless and autonomous.
Decision making
Informal & off-chain: Some of this can happen by collecting votes on discord, google sheets and organising town halls using typical video call or audio chat rooms on discord. Here’s a screenshot from one of the Grape DAO town-halls where they talk about accepting new members, treasury allocation decisions: proposals are submitted on discord ahead of time, debated here & then accepted or rejected.
Tools like switchboard and parsiq can serve as oracles and make it possible to capture off-chain votes and decisions and use them for on-chain execution. This is more relevant for Ethereum because gas fees make on-chain decision making expensive.
Structured Governance
Squads is a no-code open source solution which allows anyone to setup a DAO, it allows the following:
Tokens: Setting up a token for your project & a policy for allocating them to members
Proposals & voting: Define members who can initiate proposals. Enable submission & voting.
Vault: Storing and spending a shared resource pool. More on this in the next sections.
Tools like Aragon, Colony, DAOHaus enable this on Ethereum. One distinction is that creating a DAO on ethereum is expensive because of gas fees. A lot of these tools are exploring deployment on Ethereum L2 chains like Polygon. It is possible that Solana becomes the blockchain of choice as interoperability grows.
Other tools that enable voting specifically are chain vote wiki & solana sail (still in beta)
Operations
Sub-groups / sub-DAOs: My first impression of DAOs was - how on earth will they get anything done if everyone is voting on everything. Thankfully, that’s not the case anymore - DAOs are evolving rapidly. Sub-groups are a way that DAOs create focus groups within the community, members who meet some criteria (mostly proof of stake) can apply to lead or be part of these focus groups. Membership is time-bound and constantly subject to change to ensure optimal performance. Members within each sub-DAO share a reward for a given time period. Allocation can either be done permissiolessly via tools like Coordinape (on ethereum) or by publicly sharing and locking in rewards and having administrators allocate them. There isn’t an equivalent on Solana yet.
Analytics & Measurement:
Performance of DAO members: This is critical to ensure fair and transparent evaluation of contribution from DAO members - how many proposals did you contribute to, how much did you grow the community, and what was the quality of your output etc. A lot of these metrics are subjective and there are no tools that support this right now. As these are built they’ll need to figure out how to capture a flexible suite of metrics that make sense to each DAO
Cross DAO analytics: The organisational legos piece captures this really well - The same way block explorers allow you to access on-chain activity, an explorer which allows us to see DAO stats like: how many members, proposals, voting, treasury etc each DAO has will be super valuable. Think of this as the crunchbase of the web3 world.
Here’s an image from organisation legos which captures the evolution of DAOs
Managing Funds
This is the fund that the DAO uses to incentivise community members, grow the ecosystem by supporting early projects, pay contributors etc. This also holds the tokens of the project. There are two important things to consider
Access: Who has authority to spend on behalf of your DAO? If everyone votes - that is too slow. If just one person does it - that’s too risky. DAOs mostly use multi-sig wallets where multiple members of the community are required to authorise transactions. Goki is an example of a product which supports this - just coming out of beta. The Ethereum ecosystem is much more mature here with many different options including safes like the Gnosis safe.
Vesting: To ensure that team members are committed to the project for a sufficient period of time, similar to ESOPs, they can lock in their tokens using products like streamflow finance & sol lock
Dispute Resolution
Klerosis is a product which allows disputes around bounties and other matters to be resolved on-chain. Anonymous jurors after demonstrating proof of stake can review evidence and pass judgement on disputes. Currently supports Ethereum standards.
Ethereum & Solana DAO Tools
A quick comparison of tools across both ecosystems:
The Future
The core purpose & value of DAOs is enabling trustless and permissionless collaborations. This happens by building community, tokenising work and rewarding transparently, instantly and with increased ownership (tokens). The focus of tools enabling these things should be to unlock maximum creativity with least interference. Governance is essential to build a sense of belonging and ownership - the goal of these tools should be transparency & fairness with speed.
We are very early in the DAO ecosystem and three things are clear:
DAOs operate on a spectrum: First build a community that rallies around a common purpose, then think about tooling.
Rapidly evolving: There will be constant evolution & new tools will keep coming in. The ones that get most communities backing them will prevail. The end state will have multiple winners. This article may be irrelevant within 3 months, we’ll attempt to publish updates.
Multi-chain: Tools that become multi-chain will have a strong edge over others in gaining adoption and adding value to DAOs.