Learnings & Analysis

Top 3 Key Takeaways: Tldr;

1. The default Impact DAO design is distributed, remote, transparent, decentralized, and uses collective governance to achieve consensus on key decisions made.
2. Impact DAOs are primarily governed with a lot of high-touch human attention and action, rather than exclusively by code.
3. Impact DAOs are not leaderless. They have leaders, but not bosses.

Background

Our research goal was to understand mature Impact DAOs from the inside out; how Impact DAOs operate, their motivation, how work gets done within the Impact DAO, and more. We inquired about their member’s motivation for contributing, community building, operations structure, governance, operations logistics and workflow, tokenomics, funding, tooling, security, impact, and challenges for each Impact DAO interviewed.

https://twitter.com/deeparocks/status/1533866953864933376?s=20

We interviewed Impact DAO founders and contributors who represent the ultimate source of truth on Impact DAOs; building towards their goals everyday, these brave pioneers of impact are not afraid to experiment or use novel approaches to age-old problems of coordination using smart contracts. Throughout this research process, we made new connections as well as absorbing deep insights from Impact DAO explorations in asynchronous, collective coordination to do more good for all.

Research Methodology

We undertook intensive, qualitative research of 12 mature Impact DAOs in 2022. Mature Impact DAOs are those that have operated for more than 5 months and have traction as of June 1st, 2022. All of the Impact DAOs in our research are still in operation to the date of this publication.

Initially, we identified these 12 mature Impact DAOs for the study by spending a month researching Impact DAOs operating as of June 2022.

Our Impact DAO Selection Process

Throughout our research, key insights emerged.

1. There are three emerging categories of Impact DAOs: Enablers (enabling impact either through funding or training), Social Impact (direct impact with people), and Climate (direct involvement with climate solutions).
2. This space is very new. Most Impact DAOs started in 2022. The first Impact DAO can be traced back to 2020 and a few sprang up in mid and late 2021.
3. Many web3 impact projects are planning on launching a DAO. They have existed as a web3 project, but have plans to launch a DAO in order to decentralize the governance and power within the web3 project.
4. There are far more web3 climate projects as compared to social impact. However, very few web3 climate projects are actually governed by a DAO. Most are either transitioning into a DAO now, launching as DAO first, or aspire to become a DAO in the future.

To help our Impact DAO Media members select mature Impact DAOs for our study, we assembled a small team of 3 members and made a list of ImpactDAOs based on our own set criteria. The criteria evaluated were:

1. Is it a DAO or just a web3 project? For instance, if it’s a protocol not governed by a DAO, we did not include them as a potential ImpactDAO.
2. The DAO needs to be an ImpactDAO - a DAO whose core purpose is to help the people and the planet.
3. They need to be operating as a DAO for at least 5 months. This way we have plenty to learn from their trials and tribulations achieving their respective missions to enable impact, directly contributing to positive social change, or improving the environment.

We then engaged in open source intelligence gathering in search of Impact DAOs that fit these criteria. The Impact DAO Media team vetted the eligible Impact DAOs by researching their online presence, specifically their Twitter, homepage website, and/or Discord. During this research, we evaluated how active the Impact DAOs were, their origin story, values, theory of change, and their perceived and measured impact.

Our entire Impact DAO Media team was presented with a shortlist of the eligible mature Impact DAOs and given 4 days to pick 5 DAOs in each of our 3 categories: Enabler, Social and Climate. We opted for a ranked choice method of voting (first being the most preferred).

Impact DAOs that received the most votes from Impact DAO Media contributors were invited to participate in the Impact DAO study through qualitative interviews with our team. The result was a list of 12 mature Impact DAOs: GitcoinDAO, DreamDAO, Commons Stack, Impact Market DAO, HumanDAO, Proof of Humanity DAO, GoodDollarDAO, UkraineDAO, KlimaDAO, All For Climate DAO, Regen Network, and PactDAO - NYC City. For details on our selection process, refer to the article, How We Picked the 12 Impact DAOs to Study, 2022

Qualitative Research Methodology Details

After selecting the 12 mature Impact DAOs, we conducted a series of intensive 1:1 conversations with Impact DAO builders, founders, and contributors. On an average 3 interviews were conducted per Impact DAO. We used these interviews to uncover how Impact DAO contributors are motivated, their communities built, uncovering their operations structure, governance, operations logistics and workflow, tokenomics, funding, tooling, security, impact, challenges, as well as their future outlooks.

Note of Thanks

We are thankful to the interviewees. They shared their insights openly and generously, in addition to performing their own duties within their respective Impact DAOs parallel to our active research.

Top Learnings Impact DAOs Research

1. Impact DAOs are online, decentralized, autonomous communities that seek to do good with a “triple bottom line”: human impact, environmental impact, and community impact. They use Discord and sometimes Telegram to coordinate towards their mission accomplishments.
2. The default Impact DAO design is distributed, remote, transparent, decentralized, and uses collective governance to achieve consensus on key decisions made.
3. DAOs are primarily governed with a lot of high-touch human attention and action, rather than exclusively by code. This was an important discovery, as there is a popular notion that “code is law” within crypto. DAOs can be constrained by poor token engineering design or by the dApps they utilize, but there is not a single case of a DAO run without human intervention on auto-pilot. There is, of course, variation on the required tooling by Impact DAO. For example, coordination can be facilitated by off-chain and on-chain voting through Snapshot and other tools, but there is still a lot of high-touch interaction that happens between asynchronously organized teams which makes sole reliance on “code as law” infeasible in practice.

The Tally vote is the autonomous part of the Gitcoin DAO, where if the vote on tally passes then funds will flow from the Gitcoin DAO multisig to the work streams multisig autonomously - Saf, Multi DAO Contributor

4. Multisig wallet (i.e. a shared, permissioned bank account on the blockchain) is the most common smart contract use case for Impact DAOs.

5. Impact DAOs are not leaderless. They have leaders, but not bosses. Impact DAOs can have multiple leaders, and, in fact, everyone in a DAO is a leader at one point or another, depending on their skillset.

6. Mature Impact DAOs are not just a “group chat”. They are often subdivided into workstreams (departments) and these are further divided into smaller groups (called pods). Although different DAOs use different terminology to refer to these smaller groups, DAOs will organize and reorganize as needed to adapt to changing circumstances and to clarify new goals.

7. Mature Impact DAOs are often flexible on how to reach their goals logistically, but uncompromising on long-term vision.

8. Not all Impact DAOs launch with a token. Since tokenomics is core to their model, DeFi DAOs have popularized this approach. However, our study discovered that not all DAOs launch a token, atleast at the outset. Besides Gitcoin, Human DAO, GoodDollar, and Proof of Humanity, none of the DAOs we surveyed have a token yet, and some have explicitly ruled out the option of financial tokens.

9. Some Impact DAOs have a single token that fulfills both trading and governance functions. Others have issued two distinct tokens, one for trading and the other for governance. For instance, GoodDollar DAO has two tokens: one for trading, one for governance.

10. Impact DAOs have widely differing governance mechanisms. For example, Gitcoin uses delegation voting, and votes are only sought on the most pressing budgetary and governance matters, whereas Dream DAO votes on practically every decision. A few other Impact DAOs have a more casual voting style based on discussion, polls, and emojis.

11. Impact DAO contributors prefer to be paid in cryptocurrency. Stablecoins (DAI & USDC) are the most popular currencies. Sometimes payments are made in the ImpactDAO’s native tokens (if they have a financialized token).

12. The tech stack for Impact DAOs consists mostly of tools needed to facilitate human coordination. These can be web2 or web3 tools. The web3 tools tend to facilitate on-chain or off-chain operations more easily. Commonly-used web3 tools are Safe (formerly known as Gnosis Safe), a multisig blockchain wallet, Snapshot (for voting), and Dework or Wonderverse (for shared task management). Common web2 collaboration tools implemented in ImpactDAO toolkits are Discord, Twitter, Telegram, Google Drive, Notion, and Zoom.

13. Our research discussions with Impact DAO operators revealed that excessive voting typically leads to toxicity and polarization. Impact DAOs should try to limit voting to critical decisions only. Wherever possible, decisions based on casual discussions are preferable to formal voting. Furthermore, the common system of “buying the token to vote with it” is not a desirable approach for deciding on ImpactDAO matters. Simply holding the token does not mean that you have context to make an informed vote. Builders are currently working on creating solutions to this issue.

14. A first-principles approach to designing DAOs is better than forking an existing model without much thought. DAOs are human organizations. Every DAO needs to be designed differently to suit its own purposes. Most minimum viable DAOs simply replicated the models of other DAOs, for instance investment (collective buying) DAOs such as Constitution DAO, Spice DAO, Redemption DAO. This replication is changing though. Most successful mature ImpactDAOs that we studied have been designed from the ground up for their specific purposes.

15. Trusted, high-touch human relationships are core to a DAO’s success. Unlike the popular notion that a DAO is codified trustware at the core and social ware (human interaction) on the edges, 11 out of our 12 Impact DAOs believe in putting humans at the core and limiting technology to enabling this coordination between humans (e.g. work flows and protocol-based execution of the mission).

16. DAOs have a concentric structure unlike the hierarchical structure of traditional organizations. All the Impact DAOs in our study had a similar organization structure.

17. The mindset needed to thrive in a DAO work environment is the same as that of an adventurous explorer, brave and ready for the unknown: proactive in defining their own adventure and collaborating generously with other DAO members to achieve the common goals of the ImpactDAO. A successful DAO member will be able to be savvy enough to navigate Discord, Telegram, and have the humility to not always be the leader, and to step back and step up as appropriate.

18. Tokenomics enables impact and financial Independence. As seen in the case of GitcoinDAO and HumanDAO, the tokenomics helped generate funds that powers their operations and expansion, enabling them to transfer maximum value to program participants.

We take zero percent or nothing on any transaction. We fund ourselves through our treasury, which is basically GTC tokens Kris, Operations Co-lead of Gitcoin DAO

19. ImpactDAOs are mostly powered by part-time contributors with a mix of volunteers and bounty-based contributors. Very few DAOs have a team of full time payroll based contributors. There are however a couple of full time contributors across all DAOs moving the organization forward.

20. All mature Impact DAOs we studied except one are legally incorporated, either directly or participating within the current legal structure of a parent organization.

21. All of the 30 DAO builders interviewed for our study reported a high sense of purpose and meaning in their work.

Something that money cannot give you is the sense of purpose Alona, Founder Ukraine DAO

I feel like the work is its own reward. In the sense that the work you’re doing has a pretty big impact on these DAOs. And these DAOs have an impact on the world. So to me the work itself feels very rewarding Saf, Gitcoin and Dream DAO Contributor

22. Recruiting in Impact DAOs often takes place from the general DAO community. All the Impact DAOs part of our study recruit for bounty-based work from their Discord or Telegram community. For specialized roles, some DAOs use traditional channels for sourcing talent such as web3 job boards like marswork.xyz or cryptocurrencyjobs.co.

23. Impact DAOs are on a decentralization journey and are learning everyday to become better at it. The intent is strong and actions are taken to achieve a state of decentralization that sets the community for success. Gitcoin, Pact, GoodDollar, Dream DAO transitioned from a traditional organization structure to a decentralized organization. Apart from Gitcoin and Pact DAO that have fully decentralized from their original form, others are still in the process of figuring the best way forward. Some of the DAOs have taken decentralization to the far end of the spectrum by founders stepping down from leadership and functional roles such as Gitcoin DAO and Dream DAO.

Synthesis of Findings Impact DAOs Research

1. Goals of Impact DAOs

Improving the quality of life is the overarching mission of Impact DAOs.They achieve this through actions targeted at improving the health of the planet or the people.

Overall, Impact DAOs serve to fix the brokenness of the world. Many focus on macro-environmental goals such as buying and selling carbon credits such as KlimaDAO, Regen Network or enabling globally coordinated local climate solutions such as All For Climate DAO, etc. Others focus on social impact for the underserved communities such as HumanDAO, Impact Market, GoodDollar, Proof Of Humanity while others strengthening and enabling impact to take place through fund distribution such as PactDAO. They identify a key problem and develop a theory of change based on their solution. What does it look like to solve climate change? What does it look like to have more hyper-local communities that are well-funded? What does the world look like with sustainably-funded open source software? These are some of the questions that Impact DAOs answer. They heed the call to their own mission statements and actively organize towards solutions.

The Impact DAOs focus areas identified as per our research is as follows. We believe many more Impact DAOs will emerge in these categories.

In order to synthesize our learnings, we will briefly go over the operations structure, workflows, tooling, and successful DAO mindset commonalities that we found in the research conducted.

2. Operations / Core Team Structure

In regard to operation and core team structure, most Impact DAOs have a team of core contributors and vary with respect to how they define their outer-layers of contributors who are flex-time and/or part-time. Coordinating across time zones poses difficulties unique to distributed, remote collectives which can factor into who participates and who does not and for how long. For example, GitcoinDAO has 4 layers of coordination, from least involved to most involved. GitcoinDAO attracts DAO Citizens, trusted stewards, part-time contributors, and full-time contributors. PactDAO, meanwhile, only has 2 layers of contributors: 5 core team members and 70+ contributors. The operations and core team structure depends on the unique design of the Impact DAO as well as its goals.

Major variables contributing to this structure include the stage of the Impact DAO (minimum viable DAO or mature DAO), collective governance structures chosen, and values. GitcoinDAO is more mature and significantly larger than PactDAO, so their delegated voting structure makes more sense for them to implement, as do the 4 layers of contributors. For PactDAO, this would prove an unnecessary and arduous process, distancing those represented from their communities and their intent of hyper-local impact. All Impact DAOs seek consensus for key decisions in ways that make sense for their structure. A casual group DM (Direct Message) may be sufficient for a minimum viable DAO, whereas for a mature DAO with thousands of members, a vote on a Tally proposal executed on-chain with a Safe would be more efficient and effective. Impact DAOs primarily care about the efficiency and expediency of solutions for coordination, rather than being bogged down in arduous tasks and processes, they seldom document internal practices until they are more mature. Early stage structures of minimum viable DAOs are based on ‘vibes’ only and are mostly non-hierarchical with more than one founding contributor.

3. Operations Workflow

Operations workflow is the strategic framework in which things get done in ImpactDAOs. We will not go over the exhaustive list of processes that each ImpactDAO engages in. Instead, we will go through one: the lifecycle of a proposal. This will illustrate the operational workflow for consensus on decisions made by the ImpactDAO.

For a minimum viable DAO, a group DM might be voted on using emojis with the majority of one emoji winning over another. Alternatively, one might achieve general consensus with one member one vote, taking a vote with a poll in Discord for thumbs-up or thumbs-down. For more mature DAOs, the delegated voting process makes more sense for sustainable engagement with thousands of members.

In the more mature DAOs, in a delegated voting process, there are individual representatives that provide votes based on their own opinions on each proposal within the time set by the DAO, usually 5 days. The proposal collects votes and is then passed and executed on-chain (if any financial or token incentives are being voted on) or rejected and not executed. At any time, a proposal may be resubmitted for a vote based on feedback from rejected past proposals. These two workflows provide different perspectives into the wide range of more informal and formal voting solutions that are often utilized in ImpactDAOs at any given time or maturity stage, depending on the infrastructure of the individual DAO.

4. Tooling

Impact DAOs use a mixture of web2 and web3 tools at their current stage of development. Web2 tools remain prominent out of necessity to get work done, while web3 tools are necessary for any governance and decentralized payments needs.

The tactical ‘how’ is revealed in a DAO’s tooling choices. Most Impact DAOs researched use Discord for getting work by setting up various Discord channels as workstreams and for general communication. Commonly used tools are as follows

5. Successful DAO Mindset Commonalities

Regardless of the mission, the successful DAO mindset relies heavily on vision: seeing both the nitty-gritty to-do’s on Kanban boards in Notion and the macro-, life-changing implementation of their collectively-born solutions in the near-future is integral to success.

Conclusion

Impact DAOs heed the call to their own mission statements and actively organize towards solutions. Overall, Impact DAOs aim to fix the brokenness of the world. Many focus on macro-environmental goals such as buying and selling carbon credits such as KlimaDAO, Regen Network etc., while a minority focus on social impact such as HumanDAO and enabling impact to take place through fund distribution such as PactDAO.

What does the future look like for Impact DAOs? What does the future look like with Impact DAOs in it? The answers are being lived out right now within these twelve exemplary initiatives.