Original author:Ryan HollowayOriginal author:
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core point of view
core point of view
As DAOs have grown, many DAOs have adopted working group structures to distribute internal labor.
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introduce
introduce
Messari Report: In-Depth Interpretation of the Funding Allocation Status of the DAO Working Group
(Disclaimer: This report is intended to provide a comprehensive overview of DAO compensation. In some cases, however, the lack of publicly available data may limit Messaris ability to provide this data.)
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DAO Working Group Definition
Messari Report: In-Depth Interpretation of the Funding Allocation Status of the DAO Working Group
Additionally, protocols are often created by small teams. DAOs use working groups, workflows, sub-DAOs, and other avenues to shift tasks from these initial core teams to the wider community. Working groups facilitate progressive decentralization while ensuring that contributors adhere to the same rigorous standards as the founding core team.
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Pros and Cons of Working Groups
Working groups were one of the first attempts to organize DAO labor in a decentralized manner and are still valid due to some of the advantages that working groups bring. These groups provide small teams that can quickly respond to the rapidly changing crypto space. By focusing resources on specific challenges or problems, DAOs can use working groups to refine their strategy to achieve their evolving vision. Another important advantage of working groups is that they are employed by the DAO rather than any centralized entity, ensuring censorship resistance and an open playing field for new contributors.
However, working groups can also be challenging for contributors. Contributors performance is often vetted by the DAO, and contributors must periodically update proposals with a budget, proving their worth to the DAO. However, this setup creates several disadvantages:
Naive DAO members may underestimate or not appreciate the work of contributors.
Market volatility can hinder a DAOs willingness to deploy more funds.
Contributors may become obsolete due to the changing needs of the DAO.
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Working Group Funding AnalysisDAOMessari collected 2022 payment data provided by DAOs to their respective working groups to analyze the funding situation. The DAOs selected by Messari are based on their respective structures, targeting those that operate through internal working groups. Despite these standards, some historical data is incomplete due to the new organizational structure and processes of the covered DAOs. For example, not all DAOs report or keep full-time employee histories when they issue compensation. Some
Lack of accounting transparency, with an amount agreed upon in an off-chain vote and then paid in an undisclosed amount of stablecoins and/or native tokens at an undisclosed time.However, its worth noting that some DAOs are completely transparent about their internal funding, such asGitcoin Workflow
. Gitcoin workflows propose amounts in their budget proposals, which must be voted on-chain and provide accurate historical payment data. Additionally, workflows provide extensive documentation in their concept pages specifying roles, accounting, scheduling, and more.
(For a complete breakdown of specific working groups within each category and source, seeMiro Board)
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Funding by Category
Messari Report: In-Depth Interpretation of the Funding Allocation Status of the DAO Working Group
product and development
Messari Report: In-Depth Interpretation of the Funding Allocation Status of the DAO Working Group
Product and development costs cover various product-centric areas within a DAO. Examples of these groups include Gitcoins Gitcoin Product Collective (GPC) workflow, MakerDAOs development and UX core unit, and ShapeShifts engineering workflow.
Messari Report: In-Depth Interpretation of the Funding Allocation Status of the DAO Working GroupMakerDAO has allocated $38 million for product and development initiatives in 2022. Product-related initiatives account for 75% of the $51M total MakerDAO allocates to core divisions in 2022 (note: some funds will be awarded over time and will not be disbursed immediately).Protocol Engineering (PE) Core Unit
Received the most funding in MakerDAOs product and development spend, with $11 million allocated for 2022.
source
The main responsibilities of the PE include:
Extend the functionality of the protocol with new smart contracts and other censorship-resistant mechanisms.
Assist in maintaining and operating existing smart contracts.
From bytecode to game theory, ensure the security and correctness of the protocol at the design and implementation levels.
growth plan
Messari Report: In-Depth Interpretation of the Funding Allocation Status of the DAO Working GroupFunding to develop innovative ideas is a necessary expense for many DAOs. While growth plans may have different strategies, they generally revolve around increasing use of integrations, partnerships, and deepening dApp-based dependencies. Many protocols also actively fundpublic productand to ecosystem core developersdonation
to foster broader ecosystem growth.
Balancers Funding ProgramBalancers Funding ProgramOrbis one of two programs that Balancer funds under the Growth category, the other being
. This grant program funds innovative projects and teams that contribute to the Balancer ecosystem. Designed to support projects in various fields, including development, research, education, and community building. The program operates through a decentralized and transparent process in which all proposals are evaluated by the Balancer community and the Balancer Grants Committee. Successful applicants will receive Balancers native token, BAL.
operate
Messari Report: In-Depth Interpretation of the Funding Allocation Status of the DAO Working Group
With 9 DAOs allocating funds to operations in 2022, it is the most commonly funded category.
Gitcoins DAO Ops WorkflowGitcoins DAO Ops Workflow
is a significant part of its operating expenses and is responsible for accounting, recruiting, new contributor onboarding, tooling, and community governance.
DAO Ops workflows handle a large number of operational tasks. To align different contributing groups with Gitcoins mission, Gitcoins cross-stream operations work emphasizes collaboration between workflows. DAO Ops is also responsible for increasing Gitcoin Stewards participation in the DAO, handling staff operations, ensuring contributors can grow in their roles, providing support for Gitcoin Grantees, and taking care of all the DAOs tooling needs.
marketingThe Marketing category includes working groups dedicated to promoting the platform and increasing user engagement. For example, Gitcoinsaround[ 2 ], emoticons
Messari Report: In-Depth Interpretation of the Funding Allocation Status of the DAO Working Group
Gitcoin merch, memes, and marketing workflows received the highest allocation of DAO marketing dollars in 2022, totaling $1.9 million.
ShapeShifts Marketing WorkflowShapeShifts Marketing Workflow
Ranked second in the marketing category with $1.1 million. Workflow is responsible for promoting the platform and increasing user engagement. It employs various marketing initiatives, including:
Execute marketing campaigns to support product launches, partnership agreements, and program integrations.
Produce and distribute quality marketing content to the community.
Community
Messari Report: In-Depth Interpretation of the Funding Allocation Status of the DAO Working Group
A strong community is critical to the success of a DAO. Not only does it help attract new users and contributors, but it also encourages existing members to take on greater roles within the organization. Community-focused initiatives often include educational workshops, webinars, and meetups to empower and educate users about the intricacies of the protocol.
Bankless DAOs community-focused guildeducateandandtranslate
Associations received $69,000 and $73,000 in funding respectively, a great example of how DAOs are prioritizing inclusive communities and education.
The Education Association is responsible for: training new members, educating new members on the DAO and tools, and hosting information sessions for members.
The Translator Association is responsible for: Deepening the global understanding of crypto and the Bankless DAO mission through translation creation and dissemination.
Funding Allocation Comparison
Messari Report: In-Depth Interpretation of the Funding Allocation Status of the DAO Working Group
These data provide a general overview of funding plans and are intended to serve as a baseline for health funding allocations. However, these comparisons are limited, and DAOs optimize their payment methods over time according to their changing missions and values. Still, the data can help highlight the most funded categories and provide insight into the characteristics of successful strategies.
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As the blockchain ecosystem evolves, financing methods must also adapt over time. While many DAO tools are already available, new innovations and strategies can attract talent by improving the working atmosphere for contributors.
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Greater emphasis on performance measurement and accountability
To improve accountability, DAOs could seek to implement strict standardized performance metrics for working groups. While the lack of performance metrics has not caused any major problems, in an environment where funding is scarce, DAOs may need to become more disciplined.
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Focus on contributor retention and satisfaction
Full-time DAO contributors undoubtedly face considerable career risk as they become subject to the latest successful funding proposal. Many DAOs are struggling to attract professionals with clear career paths who already enjoy stable income and benefits. As the blockchain industry grows and competition for top talent intensifies, DAOs may need to put more emphasis on retaining and satisfying their contributors. These strategies may include:
Implement more attractive and competitive compensation packages, including hybrid token- and stablecoin-based payments as well as additional perks and benefits.
Provide more certainty to contributors by signing bonus and severance packages.
Develop a comprehensive onboarding and support plan for new contributors to ensure they feel valued and well integrated into the DAO.
Encourage and facilitate professional growth and development within the DAO, giving contributors greater roles and responsibilities.These changes will lead to a more structured compensation package, just like in traditional organizations, including fixed salaries, bonuses and. More competitive compensation packages may increase specialization among working groups and contributors, creating a more efficient marketplace.
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Experiment with new compensation models
DAOs could also benefit from exploring and experimenting with new compensation models for their contributors. Some examples include:Secondary financing mechanism:
Quadratic Funding and Grant Matching in Gitcoin
Element Council：Optimistic Funding
(source)
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Multi-DAO Collaboration and Remuneration
As more DAOs join and start collaborating in this space, they may one day become a central source of funding grants and ecosystem initiatives. Rather than working independently, DAOs can be capital efficient by co-sponsoring mutually beneficial grants, working groups, or development. For example, a DAO could create an ecosystem-wide public product group where the DAO can co-fund the initiative and provide contributors that reflect their specific mission and values.The practice of this idea can be found inProtocol Guild Pilot Program
(source)
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Balancing decentralization and contributor retentionAs DAOs continue to decentralize, they must balance decentralization and retentionhigh quality contributors
. As working groups increase contributor autonomy, DAOs must ensure their compensation models are fair, transparent, and competitive enough to retain talent.
To achieve this balance, DAOs should:
Regularly review and adjust their compensation models to ensure they remain competitive.
Foster a culture that recognizes and appreciates contributors, rewards their efforts, and encourages long-term commitment to the organization.
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in conclusion
in conclusion
Clearly, funding product and development initiatives is a focus throughout 2022. However, this focus may change as DAOs become more mature.Antonio JulianoRegardless of current trends, DAOs will continue to invest time and explore ways to attract and retain top talent because of the innovative tools available to them.
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