DAOnload: A Signaling Process for DAOs

In this series, we’ve explored the potential of DAOs to reinvent how communities organize around a set of common goals. If traditional hierarchies aren’t the answer, how does a group of random people come together and make decisions? Ants touch antennae and bees dance, so how can a group of humans act more like nature?

Nature & Governance Structures

One of the primary focal points of the DAO community is governance structure, which seems to be part game theory and part political science. The key is to have a signaling process rather than a strict hierarchy. Nature uses signals to communicate like when trees send nutrients to other trees through mycelium. These natural signals seem more fluid, while our traditional organizational methods tend to be more rigid.

Alan Watts lectured about our need to harness and organize fluid things into rigid structures for perceived efficiency. Right angles, rectangle buildings and square blocks are all examples of the rigidity in traditional patterns of organization. To the contrary, starlings are known for their innate ability to coordinate movement within their large flocks.

Taking this a step further, in 1986, Craig Reynolds paired nature and technology in his computer simulation of flocking called Boids. Reynolds’ algorithm directed each triangle to fly toward the center of mass, avoid other triangles and try to match their vector. These three simple rules merged technology with a starling’s natural tendencies to organize digital triangles in coordinated motion.

Couldn’t DAOs offer a similar intersection between nature and technology? While not commonplace, humans have demonstrated an affinity for participating in loosely defined organizations. In the 17th and 18th centuries, the intellectuals of the Enlightenment fed and learned from an unstructured affiliation now called The Republic of Letters. From John Locke to Voltaire, this network came together without formal structure or any expectation of the results. Holding space is a concept that leaves organizations less defined in order for them to collectively emerge, which is an important first principle of DAOs.

Nature & Human Organization

There are plenty of examples showing aspects of nature applied to human organization. Just as Neal Stephenson coined the term Metaverse in Snow Crash, consider Arthur Koestler’s term Holon from The Ghost In The Machine.

In Koestler’s context, a holon is something that has an identity while also being part of another whole at the same time. A holarchy is an interconnected group of holons that operate autonomously while serving the connected whole. The human body is a holarchy composed of holons like organ systems, organs and cells.

Translated to traditional business organizations, holacracy incorporates distributed power across all members. Each member has the authority to make decisions as long as it doesn’t conflict with the established governance program. Members can vote to change the governance structure as the entity evolves. Zappos is a prime example of a holacratic organizational structure. All this to say, the DAO model has been tested and proven successful in examples found in nature, science, philosophy and business.

DAO Voting Systems

So, you’ve been building a community of like-minded people around a specific mission, and you are aware of the available tools to build a DAO. A likely next step is to create a process for community interaction and a governance model. Outside of on-boarding the right mix of people, keeping egos at bay, being flexible in policy-making and creating a way to sense and resolve tension in the community, how will your DAO make decisions?

Voting comes in many forms and is largely a global work in progress. In fact, according to Arrow’s Impossibility Theorem, a democratic voting approach can lead to inconsistent results and disgruntled communities. Voting is rooted in preference and preference ordering. Majority rule, majority run-off, plurality rule and Borda count are examples of voting systems, which determine how to vote and how to turn votes into results.

One type of voting system gaining popularity is quadratic voting. The appeal of quadratic voting is that it allows the expression of relative strength of preference, while safeguarding the community against the pitfalls of majority rule. In fact, the state of Colorado experimented with quadratic voting in 2019.

Let’s consider the following example:

Imagine a community is voting on twelve proposals.

Each community member is given twelve tokens with which to vote.

If a community member feels more strongly about a particular proposal, they can vote more than once.

The catch is that there is a diminishing margin of value for each additional vote.

1 vote will cost 1 token.

2 votes will cost 4 tokens.

3 votes will cost 9 tokens.

Looking at it another way, if one community member uses all twelve tokens to vote on one proposal, their decision only represents 3.46 votes rather than 12. The general idea is that people will participate strongly if the topic is important to them, while giving lower weight to topics that hold less meaning.

If you want to experiment with quadratic voting in real time, The Economist created an experiment in a recent piece called A Square Vote.

Metawood Studios, which is the DAO formed by Stoner Cat NFT holders, uses quadratic voting to make decisions. If you own a Stoner Cat NFT, you get 100 Influence Power ($I). As with the example above, one vote equals one Influence Power, two votes equals four Influence Power and so on.

There is a cost associated with the weight of the vote. Each time a new voting opportunity opens, all NFT holders receive 100 Influence Power ($I) for each Stoner Cat NFT. Metawood Studios takes it a step further by allowing voters to include an optional written justification that the DAO will review.

Community Appeal

While there are many options to organize and manage DAOs, it’s important to incorporate processes that appeal to your community. Perhaps the idea of starting a DAO is not altogether otherworldly, and maybe it’s an opportunity to align our dreams and goals with natural systems.

Keep in mind that most of the philosophical constructs of DAOs have permeated through time and culture with the likes of The Republic of Letters and companies like Zappos. One of the most important aspects of a DAO is a voting system. Quadratic voting is a particularly interesting system for DAOs, since many people join them because of a strong alignment with the DAO’s mission and their personal beliefs.

This type of sense-making and signaling would allow them to express individual sentiments according to the strength of their position on a particular subject. We are standing at a unique point in history where we can participate in the evolution of organization and participation. These ideas have been around for centuries, but the technology has finally caught up to allow innovators to start making some waves.

Want more? Connect with NFT Plazas

Join the Weekly Newsletter
Join our Discord
Follow us on Twitter
Like us on Facebook
Follow us on Instagram

*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.

Metaverse Methodologist, Connector and Creator