This article was originally posted on BanklessDAO State of the DAOs newsletter on March 23, 2022.
Power dynamics are an implicit part of every organization and they affect the way we work together. Since the beginning of time, organizations have formed to create new products and solve interesting problems, but coordination is hard. Early organizations often used power coercively to control and manipulate others. Often, a central figure or small central body was in charge of all decision-making and submission to the will of the central body was the name of the game.
Today, most traditional organizations have evolved to democratize power and ownership. It is still common for planning and decision-making to happen at the top in most organizations, while much of the actual work happens at the bottom. We still call these types of organizations centralized, because they centralize decision-making, authority, and power behind closed doors.
The unstated belief of centralized organizations is that the lower levels of the organization need direction—they need to be told what to do, how to do it, and they are not able to manage themselves. The need to supervise your employees means that you do not trust them to deliver on their work. You do not trust their autonomy.
In many ways, the employee belongs to the organization: they hire you, dictate the terms of your employment, and have the power to terminate your job based on the outcomes of your work compared to their expectations.
Having relegated your power, you are left to work as a machine. You might have ideas about how to improve things, but your suggestions often go unheard. You are expected to act like a professional, to don the mask of conformity, and to leave your personal life and self-expression at home.
The result of handing over your power and conforming to the status quo of the traditional company is work for work’s sake. You exchange your time and energy for a paycheck. We try to reclaim our power and dignity in other things our culture values, but in a materialistic culture this often gives rise to endless consumption and a feeling that we are never enough, all of which serve to reinforce a feeling of scarcity and powerlessness. In the end, you end up chasing money, titles, and working your way up the corporate ladder because those are ways to assert your power and value in modern society.
For too long, humans have exchanged their power for security. With limited or no ownership in the organization, we have willingly submitted to the system and accepted the bargain: I will give you my time and energy, and you will provide me with a safe and secure future. For too long, members of society have abdicated their responsibility, which is to say their life, in favor of following directions and staying in line with the status quo.
It’s time to take off the corporate mask, reclaim power over your own life, find out what matters to you, and live the life you imagine.
Decentralized autonomous organizations are often described as community-owned organizations. Decentralization is understood to mean that there is no centralized authority or leadership that is in control, guiding all decisions, and the organizations tend to be flatter and less hierarchical. The aim to decentralize power is based on the basic principle that everyone has power. What is decentralized is decision-making, authority, and ownership.
By taking power out of centralized parties and distributing it across the community, DAOs give everyone the power to stand up, pitch new ideas, hold each other accountable, resolve challenges, and take ownership. In BanklessDAO, it is commonly stated that governance is everyone’s responsibility, meaning everyone is called to participate in the decision-making process.
In order for people to use their power most effectively, it also requires that DAOs are transparent and permissionless. Transparency is a prerequisite to decentralization; when people have the power to make decisions, they need access to information in order to make them. Transparency comes in many forms: public ledgers, open-source code, and distributed information systems, among others. With everything in public view and responsibilities clearly stated, it is easier to hold each other accountable for our actions.
DAOs are also permissionless, meaning that everyone has equal access. There are no gatekeepers who restrict access or grant permission. It is this permissionless characteristic of DAOs that gives people agency, meaning they have power and now they can use it.
DAOs offer one last principle, for the first time in history, that might be the final key to solve coordination failures: ownership. Leveraging the decentralized, transparent, and permissionless nature of DAOs, power is no longer exchanged, but acted on and captured.
When we enter an organization or a group of people, we often fail to appreciate the significance of our presence and the impact of our contribution. We often don’t understand how our choices and actions influence and shape our own and the collective experience. How you show up matters. The way that you communicate leaves an impression. The collective action of groups of individuals determines whether or not a movement becomes a revolution.
Working in a DAO is like entering a dance hall. There is a general vibe when you enter, and you are faced with a few choices:
Lurking is a valid choice. Take away the value judgments about what you should be doing, and lurking often makes the most sense. You need time to get oriented, to connect with the vibes, to learn how people dance here, to chat with some people to establish trust and rapport. Lurking allows you to watch and learn, and to take the time you need to feel comfortable enough to step out on the dance floor. But the presence of the lurker can also reinforce the feeling of fear, uncertainty, and doubt for those who have started dancing but aren’t fully assured. The lurker can validate the fears of the contributor. Should I be dancing? Am I a good dancer?
The contributor is one who joins the dance. They might jump right in, or start off with the two-step. Either way, they are dancing. The contributor connects with the vibe, they are committed to the work, and they show up even when they start to get tired. Those on the floor dancing are engaging in an endless play of leading and following, of joining and parting. The contributor has to sync with the music and the people around them, otherwise things can unravel quickly.
Every once in a while, in the course of dancing, the vibes might change or part of the floor drops out and a gap opens up, creating an empty space calling to be filled. In those situations, it takes a leader to step into the void and start something new or make something better. They are taking a chance that others will follow, that failure won’t wash over them and ruin their reputation, or even worse, that they will be banished from the dance floor. When the gap of a problem or opportunity opens up, who will step out on the floor and lead?
In DAOs, these three scenarios are playing out simultaneously all the time. There are people watching and learning on the sidelines, there are the contributors on the floor dancing to the beat, and there are gaps opening up waiting to be filled by the next person to take the lead.
These three options, the lurker (learner), contributor, and leader are playing out within ourselves too. We browse the channels and forums, listen in on the conversations of others, and learn as we go. We unmute our mics, raise our hand, and contribute to projects. And sometimes, we see an opportunity or a problem and start to create a solution, in which case, we are faced with the decision to lead.
The power that is actualized and distributed in DAOs is the power of agency. You get to choose your adventure. You get to reclaim your power and vote with your actions. In DAOs, as in life, how you show up matters. With the freedom of self-expression, you are faced with a nebulous question, what are you going to do with it?
Everyone seeks freedom; it is one of the core values of modern society. But learning how to inhabit our freedom is not an easy task, and we haven’t really been trained in how to do it well or properly. DAOs give us the opportunity to explore our freedom and agency in a community where those values are recognized and we have the supporting principles to act on that freedom. The layers of control, manipulation, and bureaucracy have been stripped away in favor of the recognition that here, in this dance, we all have power.
If our presence in the group and how we show up matters, the question arises: how do we exercise our power in DAOs? Power is decentralized and distributed in DAOs, which means everyone on a project or team is involved in the decision-making process. This can seem overwhelming, because if everyone is involved, how are decisions actually made?
Every DAO follows their own guidelines for decision-making, but there is a lot of common ground. At the base layer of the organization are the rules for managing the treasury and executing decisions. While some DAOs operate using smart contracts, most DAOs are really self-managed organizations with the rules instantiated in governance documents and team structures. Even without a smart contract executing decisions, there is no single person or central authority in charge of making decisions and allocating funds.
As a member of a DAO, you can choose to exercise your power in the decision-making process. You can choose to read proposals, provide feedback to others, write a proposal based on an idea you have, or provide a solution to a problem. If you see something, say something. Your voice matters.
There are different models by which DAOs make decisions. Proposals for new ideas or changes can be put forward by any member. Proposals can be consent-based, advice-based, or approved by soft or hard consensus.
Generally, your proposal should include its purpose and rationale, lay out the financial implications, and be explicit about who needs to be involved and what is needed to execute it. The proposal process requires a “discussion and amendment” period, where relevant parties and members are invited to provide feedback, followed by a voting period to gather consensus.
In the discussion and amendment process, it is important that the proposer recognizes that while they must be open to feedback and seek advice from others, not all feedback needs to be included in the final proposal. Consensus doesn’t mean the initial proposal has to be watered down to include everyone’s ideas. It means you must be open and receptive to feedback and then commit to a way forward. If there are no principled objections to a proposal, you need to accept that this might not work, but things can always be revisited and revised later.
Consensus is a word that you will hear a lot in DAOs. Everyone has a voice and the freedom to partake in the proposal process and discussion, but there is no decision that can be made where everyone agrees. Consensus is a line in the sand that everyone agrees on. You need to establish the rules of engagement for what consensus is and then stick to it.
This proposal process gives ownership and responsibility to the proposer and team. It fosters initiative and motivates team members to be accountable for results. The proposal process can seem to take a lot of time, but it also creates community, engenders humility in leaders, fosters learning, and hopefully leads to better decisions. And it can be fun.
Even though power is decentralized and distributed in DAOs, natural hierarchies form based on skills, personal traits, social capital, and reputation. These are not the power dynamics of traditional companies, nor are they the centralizing of decision-making. Leaders in DAOs emerge based on opportunities that exist for designing better systems, building new products, or helping new members level up. Leaders must lead by example, inspire their teams, and work hard to understand the art of collaboration.
As DAOs evolve, various structures and practices will emerge and dissolve, but it is the culture that will shape its people and their behaviors, determining whether the movement will thrive and grow.
The promise of DAOs is that you can reclaim your agency and thus your power. You hold the keys to the life you imagine. The sovereign individual must learn to occupy their freedom with purpose and intent. This newfound freedom and power can create struggle in the beginning. There is so much you could do, so many places for your attention to go and your energy to follow. How do you prioritize your commitments? When do you say yes, and when should you say no?
Despite the values of freedom and power, it is still challenging for people to stand up, unmute their mics, and raise their hand. DAOs give you that power, but you are responsible for your own learning and personal development. You are responsible for your decisions and accountable for your actions. You might make mistakes along the way, but that’s okay. We all do.
We trust that you have something to learn and something to contribute. We trust that you will use your skills, develop your talent, level up, and grow. We also trust that when you see a gap, when the opportunity presents itself and you see a chance to lead, that you will step into that empty space and start dancing.