Nail Your DAO: The Importance of Team Structure In a Decentralized Environment

Written by
Lamis Abdeladhim
Posted on
Jul 28, 2022
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Why do you need a team structure and defined responsibilities in a decentralized workspace?

The strongest DAOs in the space have adopted a clear organizational model and implemented a working flow that increased its operational efficiency. First of all, order is even more crucial in self-managing organizations: DAO communities never sleep which made many contributors lose the sense of their boundaries and report experiencing burnout.

On the other hand, having clear areas of responsibility is a great way to Source experts from your community and have them work together in their areas of expertise.

How To Organize Your DAO?

Use subDAOs/ committees:

Apart from governance activities that all DAO members participate in, committees are groups of members who have more time to contribute to the DAO's efforts. The best way to go about this is sourcing experts to work together in their topics of expertise For example, sourcing and empowering DAO members who have expertise in treasury management or interest in market dynamics is the first step toward more effective treasury management. The committee can handle day-to-day treasury ops and will consult the community for important decisions.

Product — Have a Clear Shipping Flow

DAOs building a product — like Aragon, are incentivized to opt for a certain degree of centralization to optimize their product management. Let's take Aragon for example, the product Committee would have the following responsibilities:

  • Defining the problems that need to be solved: acquisition & activation/retention
  • Creating proposals to set the budget needed for a given period and submitting it for approval
  • Creating the bounties/grants for specific problems that need to be solved in Aragon products
  • Providing a roadmap of current and potential future initiatives

The product committee at Aragon has a clearly defined shipping flow that ensures that the same vision is maintained across all the levels of the DAO and is compliant with the goals and the vision of the main DAO:

Embrace Progressive Decentralization

Step 1: Start with a core team till you reach PMF

if your DAO is building a product, you might want to avoid "design by community" in your early days. This is a very critical first step, during which you are only required to focus on reaching PMF. Decentralization might slow you down because in order to build a product you will need to test Hypothesises and update assumptions quickly. which requires opinionated leadership. This process will require giving admin privileges on smart contracts in order to perform iterations like upgrades, shutdowns, and parameter settings. This is where you attract VC funding to find product/market fit and hold off on any token distribution.

Step 2: Leverage community at early signs of traction

During this step, you want to get closer to your community and embrace building an open source project best practices. This would mean providing good documentation, offering grants and bounties, and pushing for open development.

You may proceed to permission distribution in this phase but you must know that under the Howey Test those tokens are still considered securities due to "efforts of others".

Step 3: Get Decentralized

once you reached PMF, built a sustainable product, and you have a community that can operate without the core team. You can finally say you are ready for the big step of token distribution. This translates to having your teams "exit to the community" by airdropping tokens to users and contributors based on the plan mapped out in the prior steps and they are no longer considered securities. Your DAO should be sustainable at this point because the fees would be activated and distributed to active community members.

This table by a16z perfectly summarizes the progressive path towards decentralization and we recommend that you implement it thoroughly:

Aragon DAO is one of our favorite examples of DAOs to follow when it comes to team structure. If you are a product DAO these tips will most likely apply to you. However, variations may occur from one use case to another. The catch here is about mindset: Just because you are a DAO, you do not have to rush into Decentralization. Start small, define and iterate on your end goal, and define processes that match your growth stage.

                                                        Looking for more tips? reach out to us and we'll help with some intros 😉

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