Launching a DAO, Decentralized Autonomous Organization: Recent Episodes
Andrew Warner
If you've been watching the blockchain/crypto space, you know that DAOs are the new way for people to work together.
But what is a DAO?
Why would you want to use a DAO to organize your company or investor group or game guild or other community?
What's the right way to organize a DAO?
This podcast explores those questions and more in conversations with Ben Huh, the founder of Origami, the premier DAO creation and management company.
A highly-edited interview:
Andrew: Why can’t I see your face in this interview?
We don’t want people to focus on who we are. We want them to focus on what we built. People can trust us through our actions.
Cult invested in an anonymous founder who claimed to have previously created a multi-million dollar business. He later disappeared with your investment. Wouldn’t knowing his name have prevented that theft?
One thing that’s so beautiful about the blockchain is that not having someone’s face doesn’t mean you can’t follow the breadcrumbs.
We were able to see what happened to the funds, and despite not knowing who the person was, we were able to reach out and effectively reverse what happened and get the funds back.
And you’ve improved from that experience?
It was almost a turning point. We were able to create something like a template of how we want proposals for funding to work. Although it’s not required, we want people to come to Discord to talk to the community. We open up a workshop on every investment now. People who want funding basically pitch the DAO.
We streamlined the process so members can make more informed investment decisions.
How many projects have you funded?
105 different projects. That’s in the span of 6 months. So we’re looking at one every 3 days, on average.
That has equated to just a touch over $2 million worth of investments.
We launched February 1, 2022. All we’ve ever seen is a downward-trending market. That meant the prices we got were way lower than actual value.
We’re not investing in projects at the peak of their popularity.
Your token is called CULT. I can buy and sell anything with it. Every time I spend CULT, 0.4% of the transaction goes to the DAO’s treasury, to be invested.
Absolutely right.
And to invest, CULT holders convert their CULT token to dCULT tokens, which allow them to vote on investment proposals.
Yes, and the 50 people who have the most dCULT get to submit investment proposals, but they cannot vote. That’s an attempt to fix the issue of the top holder having the largest sway, an issue faced by a number of other DAOs.
And what happens with investment profits?
The returns are used to buy CULT on the market. 50% of that is sent to a dead wallet, burned forever. The other 50% is sent to dCULT holders, stakers, as rewards that they can claim.
Why is 50% burned?
For the same reason that for every 15.5 ETH invested following a proposal, 2.5 ETH worth of CULT is burned.
We’re deflating the supply of CULT.
There’s less available, which makes buyers have to pay more for CULT.
What does Cult believe?
Many people read the Cult Manifesto and invested because it’s such a powerful piece of literature. One of the things I really like about the manifesto is that there are a number of different issues with society.
The whole point of Cult is that we can do better. We, as individuals, should be able to make decisions for ourselves. That’s the reason DAOs came about.
If individuals invested their hard-earned money into a project, they should be allowed to make their own decisions.
How did Cult start?
Up to the point of launch, it was funded by an unknown person who goes by the name Mr. O’Modulus.
He messaged me on Twitter and said, “Read this Manifesto.” I read it and wanted to be a part of it. That was the beginning of January 2022.
We launched a presale on February 1st. We raised 178 ETH out of 250 ETH goal. It was a very, very slow start for us.
We were under $1 million market capitalization for a full 6 weeks before word got around about us. Then it took off.
What about the guardians?
Mr. O’Modulus reached out to public decentralization advocates. The idea was that these 15 figures would be some of the initial guardians of Cult.
People like David Hoffman of BanklessDAO and Kris Jones of Gitcoin.
How did you get more people involved?
It was a struggle. One reason is that with web3, there are regulations that stop you from using mainstream advertising venues.
So the number 1 rule of Cult was to talk about Cult.
We had a loyal community that would go out on Twitter. There were people making YouTube videos.
Plus there’s a bit of a shock factor with our name and logo. It’s quite strong branding.
There were also rumors flying around about the identity of Mr. O’Modulus That kind of mystery seemed to catch poeple’s imaginations.
Origami's highly-edited transcript:
Interviewer: Why did you suggest that Bankless launch a DAO?
Lucas: I was the first employee at BanklessHQ, in June 2020. I took over the newsletter to help it scale, so founders Ryan Sean Adams and David Hoffman could focus on the podcast.
We built a passionate community. Hundreds of thousands of people were passively consuming our content. I said, “Can we turn these passive people into active contributors?”
Interviewer: What does BanklessDAO do to BanklessHQ’s mission?
Lucas: It gives us scale.
Interviewer: It also gives you a token, BANK. It’s given to DAO members in return for their contributions and it comes with governance power. What’s an idea the community came up with using that power?
Lucas: BanklessDAO launched 4 or 5 media publications.
Maybe 2 to 4 podcasts.
It’s hard to keep track of everything. But they create lots more content.
They also created novel products, like Bankless Academy, which offers lessons about crypto. It’s absolutely gorgeous.
Another idea worth highlighting is Bankless Consulting. They have tons of clients, including BanklessHQ.
Interviewer: How did you distribute ownership of the DAO?
Lucas: We rewarded two groups:
Premium subscribers. When someone subscribed, we gave them a POAP (Proof of Attendance Protocol). So there was a 2020 badge and a 2021 badge. We gave tokens to those badge holders
Gitcoin Grant contributors. In the early days, BanklessHQ was completely funded by Gitcoin Grants. Anyone who contributed there was airdropped our tokens.
Interviewer: What was BanklessHQ’s revenue before the DAO was created?
Lucas: I’m not sure I could speak to it.
We had 50,000 free subscribers, and maybe 5,000 paid subscribers.
Interviewer: I think you charged $22 per month, so I calculate about $110,000 per month in revenue. Plus advertising.
Where are the numbers now?
Lucas: We saw a massive spike in free signups, paid signups, everything.
Free signups jumped 5X. Paid grew 3X - 5X.
Interviewer: Will BanklessDAO be more valuable than BanklessHQ?
Lucas: That’s the goal. I think at some point the goal is for BanklessDAO to eat HQ. HQ should be a subsidiary of the DAO
The full interview also has:
- Why BanklessDAO did well when other media DAOs didn’t.
- What happened to the community when BanklessDAO’s token, BANK, dropped in value.
- How BanklessHQ is thinking about its next move: software for web3.
SuperRare, the digital art platform, is one of the few mainstream success stories of web3. It’s known for selling premium NFTs, has well-known customers like Snoop Dog, scored partnerships with luxury brands like Gucci, and generated over $250 million in marketplace revenue.
All that came from a curation model that exclusively allowed the company’s hand-picked artists to list their work on the platform. Now, as it transitions to a DAO, its community is taking on the role of curator and keeping ALL of the marketplace’s revenue.
Why did it turn itself over to its community? That’s what I asked John Crain, SuperRare’s cofounder.
We love ambitious creators at Origami. That’s why we invited Jonathan Hillis, the cofounder of Cabin to talk about how his community started with one cabin and is using a DAO to help it build cities around the world.
We cover:
- Cabin’s vision for the cities it’s building.
- How a DAO helps them achieve their vision.
- How Cabin brought together its first members.
What happened to your daughter that set you on this path? (Timestamp 2:02)
What did you think was missing from the biotech industry? (3:17)
Why did you set up a DAO? (3:17)
How much money have you raised? (5:43)
How does the DAO identify and help scientists? (6:30)
The scientists working on the medications also get a share of the corporation you create, right? (10:00)
Do scientists and patients also get governance tokens? (13:54)
Individual corporations you set up could earn profits. Some of those profits would flow to the DAO. Would the DAO make the equivalent of dividend payments to its token holders? (15:59)
Beyond voting on what to support, what’s the value of the token? (14:58)
Many people I talk with are skeptical that communities can outperform a few smart, focused people. (21:32)
How did you get your DAO’s first members? (25:45)
What did you do to help the community work well together? (28:30)
Can you think of other industries that your approach can help? (36:54)
Adam Miller of MIDAO talks about why he's helping set DAOs up with Marshall Islands LLCs
Boys Club doesn’t have a DAO yet. That’s why I invited Parker Jay-Pachirat, one of its founding members, to do this interview. I wanted to hear how she’s building the community’s infrastructure to enable them to transition to a DAO.
Boys Club is a community of women, non-binary individuals, and anyone excited to drive inclusivity and a new kind of culture in web3.
Here are a few edited excerpts from this interview.
Andrew: Why do you need a DAO? (Timestamp 2:51)
Parker: I don’t believe that everything should be a DAO. A community should always come first. But we started making our way towards a DAO because our members were eager to get involved. They wanted to be more than just members of our community.
They had ideas for ways to build our movement. A DAO will allow us to have mutual upside and shared incentives.
Andrew: Boys Club has such a cool vibe. How can a community build that vibe better than a few tastemakers? (4:21)
Parker: Our core contributors all started by being community members. They had great ideas. They now own those ideas and execute them.
Andrew: For example? (5:34)
Parker: Two community members with strong product backgrounds created a product guild, which incubates and accelerates projects other members are building in the space.
Andrew: Tell me about Boys Club Consulting. (43:18)
Parker: Two of our members, Hilary Brown and Riyanka Ganguly, got together and created a consulting company that helps brands unlock the power of Web3.
Andrew: So this isn’t a big, chaotic chat group building things together. Your community picks projects and leaders it wants to support and those teams, or “guilds” as you call them, execute.
Parker: You nailed it.
Andrew: You went through the DAO accelerator, Seed Club. What did you learn from it? (9:23)
Parker: Top of mind for me is that the slow approach is better than a fast one. Also, to experiment and iterate instead of taking a one-size-fits-all approach.
From a token point of view, we learned it’s never too late to launch a token, but it’s usually too early. In my mind, a token should come after a community’s product-market fit. A token should be something that adds value to a community, not something the community is holding itself up on.
Andrew: What did you change about your community after setting down the path of creating a DAO? (12:20)
Parker: We added lots more structure and process. We started asking questions like, how do we onboard new guild members? What do we do about guild leaders? How do we define the structure? How do contributors make proposals? How are proposals voted on? Etc.
Andrew: How do you think about turning members into leaders? (16:53)
Parker: Probably one of my favorite questions to answer.
It starts at the top of the funnel, by having a specific enough and nuanced enough vision and mission to attract intrinsically motivated participants.
Then it’s about activating, giving them context and resources to make them feel comfortable and prepared to participate. We need to help them understand how Boys Club works. We need to help them get introduced to other members.
One unique thing about our members is that they often come with a desire to be owners. They come with an idea of specific they’d like to experiment with or build or try for Boys Club.
Ownership is the stickiest aspect of a community, but it’s hard to get to. It’s about gradually increasing responsibility and giving people with a fleshed out idea the resources and time and attention they need to experiment.
Andrew: You’re practicing new governance and treasury techniques. You have your community members taking leadership roles. At what point do you become a DAO? (24:27)
Parker: That’s a hard question. When I envision what Boys Club looks like as a DAO, I envision members who feel comfortable making proposals, and members who understand the makeup of our treasury allocation. I want our community to have the tools, context and muscle memory necessary to come up with ideas, propose them, and lead.
There’s a quote about falling in love happening slowly and then all at once. That’s true in my experience. I think a DAO is similar.
Once the community acts like a decentralized autonomous organization, everything else will follow.
I also think that mistaking the birth or use of tokens for the DAO’s official inception is dangerous. We’ve seen the collapse of a lot of DAOs recently. Tokens often drove some of the things that are going wrong.
For example, in a system that gives a vote for each token, someone with more tokens, but less experience in a community can drive more the decisions in it than someone who contributed more the to community.
We don’t want to put immense power in the hands of a few based on financial privilege.
Andrew: What tools do you use to run your almost-DAO? (35:42)
Parker: Our tools are Discord, humans, Zoom, and Airtable. We are low code and I’m loving that. We’re also working in collaboration with Disco to issue verifiable credentials for our members. That opens a lot of doors for us, which I’m thrilled to share more about in the coming months.
Andrew: What are you using for voting? (26:22)
Parker: Emojis in a Discord group.
Andrew: And how do you decide what proposals get to come up for emoji voting? (36:31)
Parker: Pretty much any proposal.
We have a proposal template that isn’t required but helps our members organize their thoughts and present them. Members write up a proposal in the proposal channel and put it up for feedback and review.
Then we have a mandatory call, where it can be openly discussed to get people’s thoughts. The proposal’s author can use the feedback to revise the proposal.
When the proposal’s author is ready they can put it up in the proposal voting channel. That always happens on a Friday because Ben & Johnny, Origami’s co-founders, recommend setting a consistent day for voting so members know when to check.
We have a 7-day voting period, where members can vote Yes, No, or Abstain. To carry weight, the vote needs to have 60% of the members participating in it and the majority have to vote either Yes or No.
At that point, the governance committee passes it. They act as a final step to protect our group against having someone infiltrate it and pass a vote that doesn’t align with our values.
Andrew: Are you working with Origami? (39:11)
Parker: No. They’re just homies. I learned a lot from co-founders Ben and Johnny.
Andrew: More people should talk to them about DAOs, even if they don’t work with Origami. They set up an email to reach the cofounders. It’s Contact@joinOrigami.com
Learn more about creating a DAO at joinOrigami.com
This is the story of how VCs started investing together using a DAO. We go deep into the mechanics of the DAO here.
Curious about how to set up your own DAO? Go to joinOrigami.com
What's here:
00:00 Intro
01:46 Overview of VC3
04:31 Changing venture capital
08:21 How VC3 started
13:44 Legal and tax considerations
19:32 What Origami does
23:22 Value in the community
31:17 Closing notes
What's here:
00:00 Introduction
02:00 Guilds: I’m not your Donkey Kong
11:17 Present: DAOs are really here, like today
20:24 Future: Dream with me a little
Ben Huh created some of the most prestigeous DAOs, decentralized autonomous organizations. He's the founder of Origami, the platform for the most ambitious DAOs in the world. If that's what you're building, they'll work wit you to design your DAO, give you the best software for it and set you up with best practices.
See him at JoinOrigami.com
How did a few friends create their first DAO? Why did Y Combinator founders join together in a DAO? What's the benefit of DAOs over partnerships and other organization structures? What are some creative things that only DAOs can do?
To find out how to setup your own DAO, go to https://JoinOrigami.com