Thoughts on a new primitive (DAOs) through which humans can test models of social coordination

September 2022

Socialism? Capitalism? Democracy? Republic? Benevolent Dictatorship?

These themes are often used to determine the structure of a state. Which is the best? This can be debated and warred over for eternity. However, war and debate are not the only ways by which humans can better understand what social coordination systems lead to the most fruitful lives for all. The ideas of democracy vs republic, socialism vs capitalism, etc., are almost always discussed solely at the state level. Unfortunately, states are not the most receptive organizations to human change and often require bloodshed and mass suffering just to come full circle (e.g. Rome 100 BC, Brazil 1932, Cambodia 1997 to provide just a small sampling over time).

Blockchain-based organizations/DAOs offer a new primitive to experiment with and test various social coordination models in real-time without the need to interfere with the state level. In this essay, I will 1) provide two brief examples of coordination models so as to provide context without belaboring that idea and then 2) explore how these systems can be tested simultaneously at the organization level (hopefully eliminating, or at least mitigating, the need for bloodshed when testing systems of human coordination).

Coordination Model #1: The Co-op (direct ownership and profit share by employees)

DAO technology allows for a simple work co-op setup. A co-op allows the business and profits from the business to be owned by the employees. A Web3 co-op looks something like this: co-op revenue flows to a wallet, which, via a smart contract (an immutable piece of code that executes a certain task), distributes that revenue to the wallets of the contributors. In a less perfect version, the work of the contributors is judged by the token holders (analogous to shareholders) to determine what it is worth. Once a value is determined, this amount can be sent to each contributor. It is in the token holders best interest to fund contributors well or the project for which they are holding tokens will collapse, and thus their tokens will likely be worth significantly less. Because of this, builders of great projects (as opposed to previously wealthy “whales”) hold the upper hand from the onset. Obviously, there are many intricacies left out of this brief description, but hopefully this serves to outline the relative simplicity with which a co-op can be constructed via a DAO.

Coordination Model #2: The Meritocracy (best work is rewarded)

On-chain organizations can be structured in a way that is fully meritocratic. Unlike a model in which all DAO contributors might be compensated equally, a DAO can also be constructed that is fully meritocratic. Projects like this are typically open-source and allow anyone to contribute. In this way, all that matters is who can get the work done. Often, these projects will have bounty boards where contributors can grab bounties and be compensated once they are complete. Completion can be judged by either the greater community or a selected few–whichever the organization desires. In this way, meritocracy is made more feasible by DAOs than it was previously with any “non-chain” or state-run organization.

DAOs allow us to test these various social coordination types in real-time, often with the same people on each side.

Working in Web3 is the next frontier of work because it allows us not to ascend the debates between socialism and capitalism or marxism and Austrian economics, but to actualize them: to make them a reality. It allows for true testing of these systems in real-time in a way that is totally transparent, decentralized, and often global–three characteristics that previously were unseen in conjunction in any socialist or capitalist-run corporation or state. The decentralized nature of work in Web3 can accelerate this process of testing because contributors can contribute to multiple DAOs; as they find the system they like, they will shift more to that system yet understand the opposite side.

Web3 organizations have created a new mode by which humans can easily test unique forms of social coordination.

The ability to try and fail constantly is what matters; it is how we will eliminate the bad and narrow in on the good. Blockchain technology and the ability to have on-chain organizations allows humanity to accelerate this try and fail feedback loop, so we can more quickly reach our desired outcomes and gain more complete wisdom about good organizational structure.