Newsletter: The Future of DAOs "Toolkit" ⚡️

Welcome to issue 124: World Economic Forum (WEF) and The Wharton Blockchain and Digital Asset Report on DAOs, Jesse Walden on Productive vs. Extractive Fees in Companies and Protocols, Samantha Marin w/ AI DAOs, Yuga Labs Blocking NFT Marketplace, mainstream latest and more...

By Forefront - Jan 23, 2023

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Welcome to issue 124:

▹ Week's Highlight
▹ WEF & WhartonBDAP Report on DAOs
▹ Jesse Walden on Companies <> Protocols Fees
▹ Samantha Maria w/ AI DAOs
▹ Nathan Schneider thoughts on DAOs Policy
▹ Yuga Labs Blacklisting NFT Marketplaces
▹ Mainstream Latest and more...

--- Let's get into it!

From the DAO…

This week, the Forefront team shipped some major upgrades to Terminal, the dashboard for tokenized communities.

Our goal with Terminal is to bring the necessary context to DAO members so that they can make great decisions. We're the first tool designed specifically for tokenized communities, emphasizing a focus on community projects and allocation decisions.

These new upgrades are built on top of Zora's Nouns Builder API, allowing us to support dozens of Nounish DAOs like Purple, Public Assembly, and more alongside OG tokenized communities like Krause House and Cabin.

Over the next few months, we'll be constantly improving Terminal, as well as working toward Terminal v2 which will include all-new features like auction notifications, activity feeds, and much more.

If you're interested in getting your community on Terminal or want to work with us, feel free to join our Discord or DM @viaterminal on Twitter.

What's Poppin'

WEF in-depth Report on DAOs. Last week, the World Economic Forum (WEF) and The Wharton Blockchain and Digital Asset Project released a "toolkit" for DAOs. Over 100 ecosystem contributors and analysts contributed to the document's attempt to provide "a starting point for DAOs to develop effective operational, governance and legal strategies." DAOs have "the potential to address many of the shortcomings of the traditional firm while also realizing more equitable governance and operations," according to the document. The discussion begins with a section titled "What are DAOs" and goes on to cover DAO operations, governance and legal structures. That was followed by recommendations for each of those areas, which were also provided in a discussion format and tended to be somewhat generalized. This is one of those documents you check out now, and bookmark for later -- it's extremely shareable.

Productive vs. Extractive Fees in Companies and Protocols. Jesse Walden, cofounder of Variant Fund, wrote this excellent summary of ideas around productive vs. extractive fees in companies and protocols. In Wilson Cusack's Fees for the Good of the DAO, he argues that protocol DAOs should seek to only take fees where it makes the protocol stronger. Walden argues that an optimal equilibrium may be 1) protocols sustain themselves through "productive fees" that make the the protocol better, faster, stronger such that products want to build on top, and 2) product teams charge "extractive fees" that capture the value they create for end-users. Wrapping our collective head around these ideas is critical for creating valuable businesses in the DAO ecosystem -- not everything can be (or should be) a public good. This is a great stream-of-consciousness if you're looking to get your wheels turning about fees and protocol business models.

Encouraging Informed Participation in Decentralized Governance. This piece from Ethan Bueno de Mesquita and Andrew Hall explores how we might best reward informed participation in decentralized governance, rather than participation for activity's sake. The first question, then, is whether we can incentivize informed voting by incentivizing voting with a majority. The authors believe this is unlikely due to this method's cost, context requirements, and potential for coordination failure. Instead, the duo explores a more complex model for rewarding informed participation that alleviates many of these drawbacks. For projects that think the basic rewards mechanism is too vulnerable to gaming or uninformed voting, a logical way to start, according to this piece, is by only offering rewards to addresses with some kind of track record of contributions to the project. This would be in line with recent experiments in retroactive rewards, such as Optimism's ongoing work. This is a fantastic analysis that is surely worth your time.

The Future of DAOs is Powered by Artificial Intelligence. With all of the hype around AI, it's understandable to try to better understand its impact on crypto, specifically the world of DAOs. According to Samantha Marin writing for Aragon, DAOs and AI could actually feed into each other to help each other grow. In the near future, Samantha envisions a world where AI bots and assistants are boosting our productivity in understanding governance proposals and surfacing relevant information. In the long run, she imagines an AI owning a treasury onchain and being a DAO in and of itself. Obviously, there will be many steps in between, but the potential here is super interesting. One of those intermediate developments could be AI agents/tokenholders in a DAO who are voting alongside humans in a kind of "swarm intelligence." Whatever the future holds, more exploration at this intersection is certainly necessary.

Crypto's Section 230: A Policy Platform for DAOs. US crypto policy proposals all share a common assumption: that crypto is all about financial assets. Protecting investors is well and good, but crypto is about more than finance. DAOs represent an opportunity to reimagine how human beings play and work together---and, potentially, to share power and wealth more equitably. Nathan Schneider argues that we might need a "Section 230 for crypto." He says that DAOs need boundaries that establish how these new virtual jurisdictions can live in harmony with the jurisdictions that govern our geographic territories. Organizational innovations in crypto need protections, too, so their better angels can win out over the fraudsters. This is a great reminder of the breadth of work being done throughout the crypto ecosystem and why "crypto regulation," taken at face, still isn't nuanced enough to do meaningful good for any parties involved.

How to Start a Headless Brand. Public Assembly was created to explore what happens when you take concepts like hyperstructures and headless brands literally. According to tranqui.eth, the author of this piece, "Brand = narrative. Brand management = narrative control. Centralized brands can implement various strategies to foster a narrative they think is beneficial (for who?), but in a world with permissionless, cross-platform content sharing + and increasingly sound arguments in favor of cc0/less-restrictive IP models, a brands' ability to control its own narrative using traditional methods is rapidly diminishing." He weaves together ideas from headless brand theory, tokenized communities, metalabels, and more to try to make sense of the organizations that we're seeing today, how they interact, and what they mean for the future of brands.

Latest on Mainstream...

First, Genesis Global Holdco LLC, the holding company of troubled cryptocurrency lender Genesis Global Capital, filed for Chapter 11 bankruptcy protection in New York after being pummeled by two of 2022's biggest industry collapses.

One of those collapses was FTX, whose founder Sam Bankman-Friedman saw $700M of his assets seized this week by the US government. This comes after accusations that over $90M in FTX US assets were moved via "unauthorized transfers" after the company filed for bankruptcy, with virtually everyone pointing fingers at SBF.

Finally, China has enabled smart-contract functionality for its central bank digital currency (CBDC), the digital yuan, through the e-commerce app Meituan, one of China's largest food delivery and lifestyle apps. Meanwhile, Bank of America and JPMorgan are teaming up on a digital wallet to rival Apple Pay, although it's unclear whether the wallet will support crypto.

Signal Bites

▹ FF Library - Design Decisions for Internet Organizations
▹ Opinion - The Internet Feels Small Here
▹ Read - Digital Governance <> Liberalism
▹ NFT - Yuga Labs Blacklisting Marketplaces
▹ DeFi - Circle's Cross-Chain Transfer Protocol
▹ Report - Electric Capital Developer Report
▹ Updates - Gitcoin Alpha Round is LIVE
▹ Listen - Jihad Esmail on Tokenized Communities
▹ Interesting - Taking Back Ownership
▹ Discussion - On Web3 Consumer Tokens
▹ Techy - Complete Knowledge

Check out Signal  for daily top web3 social headlines

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The information in this newsletter is not intended to constitute legal, financial or investment advice and should not be construed or relied upon as such. Any opinions reflected are the opinion of the author(s) of the newsletter only and not necessarily of Forefront. Please DYOR.

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