Just DAO It: Governing and Building the Future Together

Transcript

can start. It's a great pleasure to be able to moderate and to have two experts in the field with me on stage. Um, and I'd like to sort of open up the panel with a personal question. And starting with you, Jessica, can you tell us a little bit about your journey that led you to discover Dows and actively contribute to them in your role at Aragon? Um, yes, very happy to. Hi everyone. I'm Jessica. Um, I work at Aragon. Um I lead uh the Aragon Foundation and um my journey to finding Dows was actually

um really bumping into a problem with largecale digital infrastructure. My career is in tech policy and I specifically worked uh at Facebook for a few years and I was working at Facebook at a time when a lot of the um kind of factchecking and censorship measures were put into place and it was an interesting time to be at the company and I work with so many incredible well well-intentioned people and there are so many kind of layers of processes to make these kinds of decisions of like what kind of speech you allow on digital platforms or not, etc. But there came a time where the censorship started

feeling very heavy-handed and it started feeling as though there were pressures coming from outside of the company that were influencing um basically the decisions that were made on the platform. And I just it dawned on me that these platforms, these large scale platforms because they're owned through like a centralized ownership structure um would always be fragile, would always be exposed to vulnerabilities and the possibility of of influence. And when you have infrastructure that connects billions of people literally around the world and you have these centralized points of failures, there's just a limit to that.

Um, and so I took some time off and I started researching what I would do next in my career. Crypto was interesting and I came across Aragon specifically. And when I learned about Aragon and I learned about Dows, I was like, "Oh, from like an infrastructure standpoint, if you slide, you know, blockchain governance under these kinds of platforms and under like in these kinds of systems that can help remove these centralized points of of pressure and these centralized points of failure and make these systems more resilient and more robust and give power back to the people." And so I joined Aragon. I I applied to be a social media manager. I

was like, I worked at Facebook, I can do social media and it went from there and we've been working on this challenge ever since and we're still working on on the challenge of, you know, building the technology to allow organizations um to decentralize the the control um over their protocols, their assets, their processes um and kind of mitigate risk and and give power back to their stakeholders and users in that way. Thank you very much. So basically from big tech uh to decentralized tech if I can summarize it that way. Now I mean um also to learn a bit more about Romedi, your background is the law and

specifically financial market law and then blockchain and I think I mean blockchain has a closeness to Dow financial market law not so sure. So I'm very interested in how you discovered Dow and what sort of drives you to discover more of it. Yeah. So first of all, my story is less inspiring than the one that we just heard. I'm just a lawyer in fintech. Uh we had a lot of blockchain projects and actually Dows, they came up maybe in 2016. But uh really the big part of the blockchain projects that had governance and Dows that was only after probably

the the collapse in 2018 of the markets um 2017 2018 or before 2017 when there was the ICO hype uh everyone sold tokens with no value governance right anything attached and then we had the crash and the investors realized well we actually want something for our money and that's why in 2018 we then had a lot of projects that tokenized real world assets. So where you have a claim to a certain asset and the other big chunk of projects was that we had uh governance tokens. So tokens that gave you governance in a specific project and that brought me to the Dow because that was very new that you had this token and you could vote with it. And we had to

ask ourselves hey what is this actually? And that's the first time that we realize hey could actually be a simple partnership um could it qualify as another kind of company whatever and we had to think it through and come up with different structures uh how we best structure these dows. Okay. So, uh basically giving token holders tangible rights. This is what drove you into the house and then being creative with with the law at that point. Now, I mean, it's interesting to see from which angles that that you entered this this

industry and um Paragon is uh providing services and tools for Dows and is itself also a DAO. Uh can you tell us a bit more about that and how crucial it is that if you sort sort of sell services and tools to Dows that yourself organized that way? Um yes absolutely. So Aragon builds uh DAO tooling. We build a full stack solution. So we have a smart contract like a a DAO protocol that allows organizations to deploy governance systems on chain um and then like an application layer so that anyone

can participate and vote etc. Um so we build those solutions end to end. Um and Aragon has had started in 2017 and has had quite a journey as a project and has always been important to the project to run its own kind of governance experiments and there have been ups and downs with those experiments some of which I've experienced firsthand but that commitment has always come with actually using the tooling and by going through that experience and having different kinds of um iterations of that governance of those governance experiments, we were able to really live um direct pain points and also empathize with projects

that were implementing decentralized governance systems, especially to run the operations of their of their companies. Um and so, you know, Aragon doesn't necessarily run entirely um as as a DAO, but we have always used our our tooling in different ways, and we still use our tooling in different ways. right now it's used more so kind of operationally um and not like as a full-fledged governance systems like it it has in other instances um but we've really discovered that it's hard and I think a lot of projects in crypto have discovered that it's hard to operate a successful tech company that that builds products effectively

um when you expect a broad range of of of stakeholders of token holders to proactively vote on every decision decision the company needs to make. So, we've experimented with a lot more types of decision-m processes and have actually built that into our tech stack in a way that organizations can now set up a lot of different types of processes with a lot of different types of decision-m kind of mechanisms. Some of them being proactive or reactive. So, either you vote on things proactively or you veto proposals. Um, some of which include kind of tokenbased voting.

others that is more kind of signaturebased like a multi-IG um and basically the sky's is the limit. What what organizations on chain really needed was a wide variety of tools so that we get out of this kind of one-sizefits-all situation and we learned that through direct experience through you know growing with the technology and using it. So experimenting as as one of the leading principles at at Aragon um something that I find very interesting. I have a background in biochemistry and also experimented a lot. Now uh as a lawyer I think you try to avoid experiments right and when possible of course and you you uh advise various organizations on their

legal matters. uh can you explain a little bit in the life cycle of a DAO what kind of services that you at MME and and you specifically can offer a DAO? Yeah, I mean we are usually advising the companies that want to set up the DAO. So we're kind of the birth helper for Dows. So what we do is companies come to us, they say they want to do something DAO related and we help them to structure it in a way that it makes sense in that uh in that exact case because Dows can be set up in very different ways and it really depends on a case by case what you want to achieve with your DAO. So I don't know how familiar you are with the different

concepts but you can either just have the DAO in a loose con or uh technically organized community or you can have wrappers around Dows with entities like associations or foundations and so you can play around with a lot of things and that's actually the first thing that we do is advise how to set up the DAO. So how should it be structured? what rights should the participants have and then once the DAO is set up of course there are always agreements between the existing entities the new DAO maybe that DAO is even incorporated into the entities but we are there the whole time um and then there are also cases where actually already existing Dows that were either set up fully decentralized where

we don't really know who the counterpart is um or that were also set up but by other people that then the DAO came to us and there that was that's actually also interesting to advise them. The first question for us lawyers that is already interesting with them is who is actually your client because if you don't have an entity who should you respond to who should you have in Yeah. So uh many uh interesting questions that come up with these doubts. So have you interacted also in forums as lawyers with uh anonymous counterparties? Uh no we have not in forums. I mean me personally like I was part of clean DA once but not in my capacity at MME that's always also a bit tricky if

you're in these forums and there can be storms about your company you don't want to see that but uh okay so still something that you uh can experience in the future so uh if anybody has a forum where MME can participate you can find Romedi and some of his colleagues as well at the conference. Um I' I'd like to follow up a little bit that basically um if if we look at Dows as organizations they can go uh normal organizations can go bankrupt they can be bought. Do you have any references of Dows going through similar processes and can you share a bit of the experiences?

Um Romedi it's again I mean we have advocacy secrecy so I will keep this on a on an abstract level. So when you talk about uh going bankrupt I mean traditional companies they can go bankrupt and then they're dregistered as a as at the end from the commercial registry. If you are no legal entity then you cannot really be dregistered. Um so you have like these two different ways the DAO can go bankrupt if it's really wrapped into an entity. But if there is no entity what usually happens it's a silent death. I would call it. So I mean these Dows they operate and they they there is a lot of

conversation going on on Discord. Um but as soon as either the funds aren't there anymore or if the people lose faith in the project you will see less and less discourse on discord um no proposals happening and that's actually what happened to many Dows. So that's how Dows die. I just want to make an introduction quickly because I've just heard kind of like the forum participation, the Discord participation and I think that's like a a misconception that's come up around Dows or like a point of confusion where people conflate the kind of social layer aspects of of Dows and Dent in and

decentralized decision-m where different stakeholders discuss different issues on on open forums which is a an interesting and like valid you know decision making mechanism let's say like consultation mechanism but for our intents and purposes at least at Aragon um we're very specific about design defining a dowo through the the onchain deployments like these are are actions that happen on the blockchain you're you're managing assets or a protocol or something on the blockchain and then you have different agents on the blockchain token holders um wallets you know that are interacting with an onchain governance system to make decisions and to facilitate you know decisions and transactions

autonomously and in a trust minimized way and in a trans transparent way because it's happening on the blockchain. So I just want to make the kind of distinction about what happens at the social layer and what happens on chain because a lot of that gets conflated and so a lot of the problems with the social layer which is the chaos of allowing anyone to discuss any issue on a public forum gets projected onto the technology that we're building which to me is problematic. Can you elaborate a bit more? So the I see the chaos that is happening in the discussions. At the same time um usually the decision making processes are also permissionless.

Everybody can there are protocols of course uh but everybody can start proposals and the discussions that then happen on the social layer are from my perspective a mere reflection of the onchain governance or do you see that differently it can be a part of the governance system as a whole I'm just like making the distinction you know that what the coordination that happens on the social layer often is defined as a DAO And depending on how you define it, that can be captured, you know, in in the realm of a Dow. Um, but often, you know, what what happens at that layer gets kind of mixed up with what happens on the blockchain and on the kind of like value

of you you you can miss or lose the value of giving stakeholders concrete onchain control over protocols and assets like with giving them a voice in a forum, which are two very very different things. And that's also there's been a lot of offis offiscation offiscation. So like hiding you know um different processes where you're saying oh yeah people can make decisions you know on this forum or they can vote with using like an off-chain tool like signaling tool that actually has no consequence or no connection to what happens on the blockchain and they call it a DAO but truly those stakeholders don't have any hard power over the protocols or the assets being

governed. So you have a lot of that out there in the industry and that's actually quite destructive to misunderstand because you're missing the entire kind of point or value of governing onchain assets by giving onchain stakeholders direct control over those assets. Does that make sense? Makes a lot of sense. I I'd like to follow up on that. Um maybe for you Romy the this onchain ultimate decision making uh can be the final goal. Do you see ways where there's roads basically from off-chain decision making to a full-on onchain

um governance mechanism that makes sense from your perspective? If I see a road from one to another. Yeah, I mean we have it with our clients. Usually they come to us and they tell us well everything will will be completely decentralized as of day one. Um then after a few meetings we realize well you will not be completely decentralized as of day one. There will be a progressive decentralization. So over time you will decentralize and that's actually how it usually happens. There hasn't been or we haven't had many projects where already as if they want to deploy everything in a state that they could really say um if we have a new proposal as Jessica just mentioned that proposal will by the vote

automatically be implemented that's extremely tricky and that's uh up for you to develop these tools that that that allow that uh but most of the Dows I would say that work in a different way where you really have a DAO that the token holders they take they take a vote on something and that's like a signal to the entity or to the people that control the technology and can then implement that. Um, I'd like to dig a little bit deeper here and this something you touched before, uh, Jessica. Um, having productive and effective organizations, making most decisions on chain. I think

we've seen lots of organizations trying that failing. what kind of on effective onchain governance do you see and what kind of attributes would you attend to these sort of um effective onchain governance systems? Yeah, that's exactly why we rearchitected Aragon's full kind of tech stack from the protocol to the application to address this very issue. And we would define this kind of off-chain signaling that has no connection to an onchain transaction.

Like we don't define that as a DAO. Um because they don't, you know, stakeholders don't have direct control. And so you have a centralized point of failure. It does nothing to address that central point of failure, you know, and then you know you're left with like legal enforcement mechanisms in courts etc. you know, potentially, but you're not necessarily, you know, implementing the technology as it's intended to to be implemented. But that said, there have been a lot of challenges because and that's been part in part like a failure of the the tools and the tooling providers where most kind of DAO infrastructure prior to Aragon OSX was one sizefits-all. So, it's token holders vote on every decision proactively to

pass it. So somebody needs to make a proposal, all the token holders need to vote or the delegates need to vote and that's just been proven to be ineffective over and over again or dangerous and some projects just don't want to give that kind of control away and rightfully so because they're security implications etc. So what we've done is that we've allowed organizations to make to set up different kinds of processes on chain. So first of all, your protocol upgrades don't need to go through the same process as spending your treasury and and making decisions on that. Don't need to go through the same process as giving people, you know, permissions to do certain things on chain. So you can divide the different types of decisions you have in one organization and then you can add

multiple stages to that. So you can say first um this body needs to approve the proposal. Um so you say oh there's a protocol upgrade, the developers need to approve the proposal. Then you can have a period where the token holders can can veto and then you could even have you know like a a review period for a group of lawyers to review the proposal and make sure it passes and all those permissions are on chain. So adding that ability to divide the different processes, add different stages and then add different bodies that can weigh in. Some of them are token holders, others aren't and are more kind of like these councils or these boards. You're still decentralizing control by adding different stakeholder groups, but you're adding so much more flexibility in terms

of how organizations can make decisions and it's just much more realistic. And it also helps with this like progressive decentralization where you don't, you know, deploy a protocol and it's like, oh, anyone can buy this t this token on an open liquid market and, you know, decide to make some kind of critical upgrade. like that's just very high risk and probably um it's very dangerous in in some cases for sure. Um so more modular systems uh tooling that allows for different setups if I summarize uh your statement correctly. Um now at the beginning I I I made the remark that the room slowly uh

was emptied and I mean there was a time in our industry where a panel with the title just dow it would have filled this room and another room. Um today it's not the case. today probably memecoins or network space or whatever is is is is right now being the hot topic would fill up a room. Any any idea why this is the case? Uh Romedi maybe um well I mean some I think the expectations for the the expectation towards Dows they were simply too high. At some point people said well we will not have any companies

limited by shares anymore in the future. Everything will be run by Dows. That simply didn't make sense. Um and I think Dows really have their place where they are very good where they make sense to implement but there are also a lot of organizations as we heard I mean there there is a risk of a unfriendly takeover that can take place. So you have to think about that and also in Dows I mean uh we've had I've had a client he they were they had 120 core contributors and a month later they had 10 left because simply people were not interested in it anymore. And now imagine running a business where you lose n where you where it's possible that you lose 90% of the staff within a month. I mean you go bankrupt. Doesn't

really make sense. Um so I think that's a bit the problem that Dows have. Uh but still I see I see great potential. you just mentioned the network states and uh I think that is one place where I really see the value of Dow and I also think that it's a great opportunity especially in these times now where our nation states uh have more and more conflict with one another go to war with one another then it's nice to have these Dows formed as network states uh even if they have a lot of legal issues how they will ever be recognized Um, but I think that's a very nice idea.

Um, I I'll just build on the idea that you mentioned in terms of Dows just not really being what people thought they would be. There's so much idealism and ideology also behind Dows. And I think people a lot of like strong opinions about what how things should be um done and look and what that future would look like. and it just looked nothing like what people dreamed about. Um, and that's one heart like heartbreaking. You know, you do like get your rosecoled glasses. I always say that that I got my rosecolored glasses like really punched in or bashed in my face. Um, working working in Dows for three years in this this period of time. Um, so I think that's part of it is like the yeah the

idealism, the ideology and like the reality of Dows and of onchain governance mechanisms is probably going to be a lot more dry and infrastructural than people are interested in because the way that I see it evolve is really um a way to to look at mitigating different kinds of risk and it's a new risk mitigation kind of method um in terms of giving stakeholders direct controls over centralized risk factors and looking at it more from like a systems perspective and especially as like regulations get more and more defined. How can these kind of onchain decentralized mechanisms serve to

mitigate the risks that regulators kind of try to me regulate with you know bureaucracy and these kinds of like legacy processes. I was a lawyer. So I I I include myself also in the whole legal system um partially but we are you know trying to create alternative mechanisms that can that can work in that way. So I I feel like it'll be more, you know, in terms of like infrastructure design, organization design, and may not be as like rosecolored glasses, pie in the sky, like we're going to change the world, everything's going to become a doubt. Can one come join the community to like oh this like granular protocol

you know upgrade can be done through this mechanisms and these stakeholders veto and propose and just not very many people are going to be interested in like you know talking about that at length. Uh really great answer. So, Romedes, I understand the hype cycle. Basically, we had the inflated expectation and now probably we're at the at the bottom or if I listen to Jessica, it seems like uh we see more and more where Dows make a lot of sense. And from from your answer, this this uh um rosecoled glasses, I I see that a lot. Um now, I I think I mean we started five minutes late. I would just run It's late as

well. Maybe there is some questions from the audience to the panel. Otherwise, I would have still plenty of questions, but uh just want to give you the word as well. Raise the hand or just ask. Yes. Hi. By the way, [Laughter] what existing organizations to what extent dowike organizations maybe you want to yeah I mean

traditional companies are often quite hesitant to issue tokens and uh to issue tokens that give you governance rights and they're anyways afraid of doing it um we have seen a lot in what comes to mind now is retail retail, luxury, fashion. These companies, they issue tokens to their best customers and with these tokens, they could participate and co-design the next shoe or handbag, design colors. And uh so in a traditional company it wasn't that they used it to restructure their company but that they used it as a tool marketing or to uh to condemn them to bind their clients to

the to the company loyality programs. Yeah. Yeah. And maybe that's interesting. Um we have seen some of that like these kinds of use cases come to us. They're they're rare, but yeah, these kinds of like community loyalty based type things. Um, I would say the first step is to get assets on chain. So, if you don't have any assets on chain, there's no use in governing on chain. Like you can't, you know, using a governance method on chain doesn't make sense if you don't trigger any actions to control something that is on the blockchain. So I would say when that starts happening and it's probably going to start happening slowly and in more kind of targeted areas I rather than

like an entire business or institution moving over then the appropriate governance mechanisms can be put in place but you need onchain assets and you need onchain stakeholders. So those are the two elements to to move and then you connect the dots with governance mechanisms that are pragmatic and that achieve the goals that you're trying to achieve. Thank you very much. Is your question answered? Yes. Any other questions? So I would like to to pose a final question to the both of you. I mean looking ahead, what excites you most most um in the DAO industry? Uh Jessica, you can

start. Um, what excites me most? I think um, becoming pragmatic. It's funny, but on the other side of like a crushed idealism, you kind of rise from the ashes in a in a more pragmatic way. And we were really working with a wide variety of projects, mostly crypto projects right now, but also as more institutions on board. It'll be really interesting to work with institutions as well in terms of finding pragmatic use cases that are really high value in terms of giving different groups of stakeholders more direct control over the digital kind of services and infrastructure that they rely on and they use. So I think it just looks

different and to me that's more exciting um personally maybe not as as we mentioned pie in the sky and like um ideological but it's nice to have like a very concrete meaningful impact even if that's more step by step. Thanks. I will keep mine very short because I see the right red lighting here in the front. So for me it's really all about network states and seeing how they evolve over time. Especially what I mentioned before, our nations, they go to war with each other and these network states, they're a way to realize, hey, that we in here, maybe people that are in here that are not from Switzerland, but that I have more in common with you than with a lot of Swiss people that maybe live in BL or wherever. So, uh that's my statement. The network states will be

very interesting in the future. Thank you very much both of you. Thank you for participating and thanks for the stage.