DAO is the next big thing, but the world isn’t ready for it

There’s no doubt that DAO is one of the most innovative and potentially game-changing blockchain applications. Depending on your perspective, DAO could completely upend traditional hierarchies and ways of doing things, which could be a good thing or a bad thing.

Much has been written about DAOs, so I won’t retread old ground here.

But for those who haven’t yet dived in, the recent DAO landscape by Cooper Turley offers both an excellent description and an in-depth look at the landscape.

“DAOs are internet communities with a shared cap table and bank account.

Members work together to create, distribute and capture value relative to a shared mission. Ownership shares economic, social and political components, creating best practices for digital coordination.”

I spoke with Olga Vorobyeva, founder at Vox Consulting, international keynote speaker, tech entrepreneur and investor. Her expertise to grow a business has established Vox Consulting as a leader in the blockchain consulting industry for more than seven years, with a deep focus on marketing and business strategies for blockchain, DeFi, and NFT and DAO startups. 

What is impressive about Olga is her dedication to helping tech companies reach the supreme level through PR, Communication, Business Development, Product design, and more. Hackernoon has recognized her as one of the top 16 Most Influential Women in the NFT Movement of 2021. Along with her firm, Olga helped achieve success in dozens of companies and blockchain unicorns, including SwissBorg, Bitfury, Algorand, and multiple Silicon Valley startups. 

Olga shares her expertise with many blockchain startups and has helped launch over ten companies utilizing the DAO governance model. She has genuinely put herself forward in the communications industry, and in our conversation, Olga gave me her insights on why DAOs are here to stay, despite some significant challenges.

A promising start

“While the DAO has been around since 2016, it has started to trend with some impressive success stories in the last two years,” Vorobyeva said. “For example, DeFi’s largest central bank – MakerDAO – has also become vital for decentralized finance. Its DAI stablecoin market cap has skyrocketed from barely $1 billion in January 2021 to almost $9 billion by the end of last year.”

Along with the likes of Decentraland, BitDAO, MolochDAO , Metacartel, and PleasrDAO, there’s a fundamental shift in the way we build and run products, services, and organizations.

However, there are enough warning signs that DAO may not be ready for prime time.

Someone call security, and a cat herder

For one thing, DAO is still very new and untested. There have been a few high-profile hacks of DAO-based projects, which have raised serious questions about security.

In December 2021, the Bitcoin-to-DeFi bridge Badger DAO suffered a $120 million loss after scammers conned Badger DAO members into approving malicious transactions, letting them control users’ vault funds and move funds.

Additionally, since DAO is inherently decentralized, there is no central authority to make decisions or provide oversight. This could lead to DAO-based projects becoming chaotic and unmanageable.

“Projects being run under traditional hierarchical systems, with or without agile methodologies, are chaotic enough,” Vorobyeva said. “Now imagine adding a leaderless structure into that mix. If things are structured properly, it’s not just going to be like herding cats – as project managers like to say – but herding cats on a fleet of speedboats across 24 time zones.”

The cultural conundrum

But while those are valid concerns, comparing how DAOs work with how people interact with both systems and each other highlights issues that may be significantly harder to resolve.

“The biggest issue with DAO projects is that people are not ready for them without a seismic shift in how we interact with systems online,” Vorobyeva said. “Communities tend to progress into coalitions where a few people control the action while most are content to delegate responsibility. You see this on every social media platform. The 90-9-1 rule states that 90% of community members are lurkers who read or observe, but don’t contribute, 9% of community members edit or respond to content but don’t create content of their own, and 1% of community members create new content. If DAO-based projects follow the same rule, they will fail to remain decentralized – the 1% will decide the system’s fate.”

That doesn’t sound very decentralized. When you think of security concerns, chaotic organizational structures, and a culture of delegation rather than production and cooperation, DAOs sound positively archaic.

“If you think back to the early days of YouTube, people could upload absolutely anything,” Vorobyeva said. “YouTube realized that it needed to start governing, regulating, and moderating videos to ensure that minors and adults wouldn’t see things they shouldn’t. And other regulatory bodies put the platform under intense pressure almost from the moment it was created. In 2006 soon after Google acquired it, that pressure expanded to international bodies. For example, the Japanese Society for Rights of Authors, Composers, and Publishers successfully issued DMCA takedown requests for more than 30,000 pieces of content. The current state of DAO projects is similar to those early YouTube days – while shared governance sounds exciting, we have a long way to go before we understand how those in current positions of power, regulation, and influence will react to their growth. Showing DAOs how to listen to their members and utilize mechanics that will make every voice and vote heard, analyzed, and then structured accordingly is essential because it’s the only way to deal with governance, delegation, and consensus. 

The way of the DAO

So what can be done to solve these issues quickly?

“Security issues are the least of my concerns,” Vorobyeva said. “The industry is working tirelessly to improve the situation, and I believe they’ll succeed. We need to focus now on how we build communities and the level and quality of interaction we have with every participant. DAO communities need much more in updates, news, idea inspiration, interaction, and facilitation than I see currently. And while news of DAO projects is common in our industry, it is not regularly discussed in mainstream media. If we’re going to change the way people do things currently, we have to see news of the benefits of DAOs in newspapers, on broadcast media, and non-tech news portals.”

While DAO is undoubtedly an exciting development, it’s not clear if the world is ready for it just yet. And with some significant cultural hurdles in the way of rapid success, it could be decades before they change the way we do things. 

But, if Vorobyeva is correct, there’s a chance to accelerate adoption with a concerted effort and a focus on drastically improving community management and mainstream news coverage.