2021 was a year of change, challenging us to rethink our former credos, technologies and perceptions. IOTA’s Chrysalis network update in April 2021 introduced the most significant technological change since the inception of IOTA and steered us into a direction of a better, more functional and usable protocol.
While Chrysalis was mainly focused on delivering a production-ready IOTA technology stack, it also introduced a small detail that would have significant implications for the entire IOTA community. In a blog post about a community Treasury to oversee still unclaimed tokens originating from the earliest days of IOTA, the author briefly mentioned that the potential treasury could be governed by a “DAO”, or decentralized autonomous organization.
When the blog post was published, the term “DAO” was relatively unknown, or if known, only vaguely understood. Diligent followers of the cryptocurrency space may have heard about the first DAO on the Ethereum blockchain. Its dramatic failure in 2016 led to the network split (hard fork) of Ethereum to Ethereum Classic, following the Ethereum community’s inability to agree on how to continue after a hack of the DAO – a typical example of coordination failure.
Aside from this well-publicized event, most of the IOTA community were yet to be introduced to the concept of a DAO. A significant exception was the IOTA Foundation’s Co-Founder, Dominic Schiener, who has always taken an interest in new forms of organization and governance structures. In 2015 he wrote an early take on a concept often used in DAOs, liquid democracy.
After the idea of a DAO was introduced to the IOTA community with the Chrysalis network upgrade in May 2021, interest in these new forms of collaboration and organization steadily increased. Projects like the Soonaverse began to develop the technology required for operational DAOs. Hundreds of community members created their own “spaces”, experimenting with the concepts to eventually act as incubators for DAOs.
While the definition of a DAO can be ambiguous, a few key elements are fundamental. For a start, decentralized autonomous organizations are exactly that: networks of like-minded individuals sharing ideas and funds without a centralized leader or point of control, and in which they rely on smart contracts to autonomously execute tasks and other functionalities. DAOs can form for any variety of purposes, from fundraising to community voting. The functionalities of a DAO are usually defined in a DAO Constitution and the execution of those rules is partially or fully embedded into the smart contracts code of a DAO. Members of a DAO usually vote on important topics and the outcome of the vote triggers an action processed by the smart contracts. As open, free and collaborative communities, DAOs represent a direct challenge to the siloed nature of traditional organizational structures.
Beyond these essentials, many question marks hang over DAOs and how they work, with different interpretations of what a DAO is and what it can do. For a community like IOTA’s, knowledge about DAOs is vital, and so IOTA’s community managers, Holger / Phylo [IF]#2233 and Antonionardella [IF]#1010, initiated an IOTA DAO Pioneer Learning Circle, based on available open-source web3 learning material and tailored to the needs of the community. The learning cycle, consisting of open interactive discussions that were focused on a collective learning experience rather than fixed roles like teacher and student, was designed to empower the community to learn about DAOs and create their own.
The first DAO Pioneer Learning Circle took place in November 2021. Organized by Holger and Antonio as a five-week community learning experience, the event included daily calls with a group of 486 community members.
The DAO Pioneer Learning Circle was divided into two groups, covering several time zones around the world and making it accessible to everyone. Every week ended with a longer session where both groups came together to go through their weeks’ findings in discord voice calls. In total, 51 live chat sessions were held on the IOTA Discord, with a total of 258 hours and 11 minutes of collective meetings.
Some (but by no means all) of the topics covered during this exercise included:
- Voting theory/voting methods
- Known game-theory principles/coordination failures
- Smart contract knowledge
- Overview and structure of different DAOs
- DAO operating systems and DAO tooling
- Legal standing and setup of DAOs
The following resources were created for and during the course – we encourage anyone interested in learning about DAO and the IOTA community to dive in:
- A YouTube playlist containing recordings of the weekly Friday Sessions.
- Session documents covering the essential elements of DAOs, with extensive links to additional content.
The feedback received from the community and the continuous engagement by members of the DAO Pioneer group proves the success of the initiative. It opened the door to a new movement in the IOTA community towards new governance and organizational models.
One of the core strategies of the IOTA Foundation is to support members in leveraging IOTA technology in new forms of organizations. The decision to support a follow-up initiative to extend the Learning Circle into a DAO Pioneer Ideathon event was therefore an easy one.
DAO Ideathon: A grant to fund experiments with DAOs in the IOTA ecosystem
Members of the Learning Circle came up with great ideas to launch new projects on DAOs. Smart Contracts AG, the IOTA Foundation subsidiary taking care of developing the Assembly network, provided a research grant to support up to five teams in the IOTA community, helping them create the first DAOs in the IOTA ecosystem.
The goals of the Ideathon are to:
- Enable a DAO culture in the IOTA ecosystem.
- Acquire real-world experience in setting up and starting DAOs.
- Enable participants to try out different structures and tools for DAOs.
- Allow for failure to learn and improve.
- Gather valuable information to support other projects also aiming to become a DAO and help them make better decisions.
- Elevate the DAO expertise within the IOTA ecosystem.
- Publish results and potentially develop better governance systems in the future by using IOTA’s technology.
Early on in the initiative, the IOTA community management decided to use part of the funding to support the development of two DAOs deemed to be an essential public good and crucial for the further success of the IOTA community ecosystem. These two projects are:
1) The IOTA Ecosystem Interactions DAO:
This DAO will be a place where all IOTA community moderators from different platforms can organize themselves and align strategies in growing and enabling their respective communities of the following social media platforms:
2) The IOTA Content Creator DAO:
This DAO is a place where the creatives of the community can gather and organize themselves. The goal of the DAO is to create content that adds value to the IOTA ecosystem (IOTA/Shimmer/Assembly/community projects) by:
- Writing articles and blog posts.
- Creating media content (graphics, logos, animations, videos, websites, podcasts, and so on).
- Creating educational content (wiki, articles, tutorials).
- Supporting marketing efforts for the ecosystem by creating content.
- Distribute rewards and incentives amongst the active DAO members/contributors.
Alongside these two projects, three more spots for community projects were made available. To be selected for one of these slots, members of the IOTA DAO Pioneer group were invited to submit funding applications. Guidelines and requirements for applications were defined in the Ideathon outline.
Altogether, eight teams submitted proposals for a DAO project. The quality of all submissions was outstanding and far above expectations, which decided on which projects to support even more challenging.
The following community projects applied for the Ideathon grant:
As everyone in the DAO Pioneer circle tries to embody the spirit of DAOs, the IOTA Foundation felt it should not be upon itself alone to decide who should receive one of the three additional opportunities for funding. Therefore, following the open nomination phase, a jury of five was set up to vote amongst the DAO Pioneer group. In addition to community managers Holger and Antonio, the following members of the IOTA community were elected to be members of the jury:
- Linus Nauman, IOTA X-Team member and well known in the ecosystem as a writer of excellent articles about IOTA.
- Greg Martin, co-founder of the community DAO aggregator Soonlabs and its DAO platform Soonaverse.
- Chris Mueller, well-known producer and face of the IOTA Weekly YouTube series.
Together with Holger and Antonio, the three took on the challenge of deciding which applications would fit most with the initiative’s goals and requirements, offering the most potential for the IOTA ecosystem.
We are happy to announce that the following five projects have been selected to receive support and monthly funding in the next five months:
An organization to govern the management of the IOTA related community channels like Discord and Telegram groups.
A service DAO, organizing creatives, writers and designers in the IOTA community into a service agency that bundles talent and expertise of its members to deliver outstanding content to projects.
Aiming to use IOTA’s possibilities of decentralized governance and feeless voting to transfer the existing union of the worldwide pirate parties into a decentralized autonomous organization.
Transforming direct ownership and control over sports clubs into a DAO owned by fans and enabling the fans to directly participate in decisions and success of the clubs.
Aiming to create an IOTA community investment trust, bundling funds and enable everyone that is part of the DAO to collectively invest in upcoming community projects.
The subsequent Ideathon will continue to follow a process laid out in the Ideathon Path Forward document.
Setting up the DAOs
Based on their proposal, each of these DAOs will receive a monthly budget from the €100,000 grant. The DAOs can use the funding to achieve their goals and are free to distribute their funds internally as deemed most useful. Any decision on how to use the funds should be taken internally by the DAO members, using DAO governance methods, proposals, and voting mechanisms.
Funds will be handled inside the DAOs in a decentralized fashion. The DAOs will receive the monthly payout to their multi-signature wallet (a wallet that can only spend funds if a certain number of different DAO members co-sign and accept a transaction).
A grant committee will be formed, overseeing the project and its five DAOs consisting of the two IOTA community managers and one member of each selected DAO. The committee will review the usage of the funding in a monthly meeting. In this meeting, every project’s monthly financial status and general progress report will be discussed and in case a deeper review is deemed necessary, further funding to the project could be halted by the committee.
In addition to the €100,000 Ideathon grant, the Smart Contracts AG accepted a proposal by the Bankless Consulting group to support the five DAO projects with critical services and knowledge transfer into the IOTA ecosystem. Bankless Consulting is a service DAO and part of the highly active and successful Bankless DAO, a collective of experienced web3 professionals in the Ethereum ecosystem.
Some members of Bankless took part in the DAO Pioneer Learning Circle and were impressed with the learning experience as well as the development process for DAOs in the IOTA ecosystem. This is one reason why they applied to offer their expertise and knowledge to projects in our community, helping them with workshops and learning sessions and project-specific consulting over the next five months.
Following the Ideathon Roadmap, the grant committee will gather for a kick-off meeting and approve the first batch of budget spending for the five selected projects.
Moving forward, every project is required to deliver periodical, written reports to the grants committee, informing about the current status and progress of the project and how the received funds have been spent or distributed. The IOTA Community Management team will stay in close contact with each project to support them in their mission. In addition, the Bankless Consulting team will hold sessions and workshops with the projects and the IOTA community.
But it’s a two-way street. We also expect that knowledge and experience from the supported teams will be fed back into the IOTA community. For example, blog posts that summarize the DAO’s experiences will make their insights available to other projects and community members. We plan to publish a summary of the progress and learning experiences after three months and a detailed final report after the end of the five months funding period, in which we will summarize the learnings and achievements of this initiative. We envision that this initiative will lead to further development of DAO tools in the IOTA ecosystem, which we see as a perfect solution for future DAO projects.
Anyone interested in getting involved with any of the DAOs is very welcome to get in touch with them through the links provided in the list above. We are excited about the interest and engagement and are looking forward to learning which insights will be gained through these first steps into decentralized governance in the IOTA ecosystem.
The DAO Pioneer learning circle of November 2021 won’t be our last. Further events and learning experiences are planned for the IOTA community throughout 2022. If you want to become part of the IOTA DAO movement, get your “DAO Pioneer” role in the IOTA Discord #get-your-badges-Channel, join the weekly meetings and take part in the discussions.