Let’s be real– your “Decentralized Autonomous Organization” isn’t decentralized. It isn’t autonomous. It’s probably closer to a large group chat with a wallet. There are “DAOs” for golf courses, lawyers, media groups, and yes, even cults. But is the golf course going to take care of itself? Are you going to select a legal strategy on a 50% vote? Anyone who has joined a DAO recognizes that decentralization is a spectrum and that central coordination is frequently more effective. Becoming “autonomous” is an aspiration. “DAOs” currently refer to any organization that is web3-native and on-chain in some way.
The acronym enjoys the perfect type of buzzwordy intrigue that captures the imaginations of speculators and investors. I get it– I started ConstitutionDAO. With exactly one week from idea to auction, we raised over $40 million to bid on an original copy of the constitution at Sotheby’s. While we wholeheartedly embraced the ethos of DAOs, we were hardly decentralized or autonomous. If we had won the auction, we would have started a process to responsibly relinquish many governance rights to tokenholders, but even that would not have made us a DAO.
ConstitutionDAO was an On-Chain Organization (OCO). There are hundreds that exist today and in the years ahead, OCOs will become the most common organizational structure. All OCOs have two things in common:
On-chain where practical. The organization primarily holds assets on-chain. It may crowdfund with NFTs, have a multisig as the treasury, and/or have a token.
Web3 Ethos. The organization strives to receive community input and support self-sovereignty1
OCOs default to doing things on-chain whenever it’s sensible. Just having some assets on-chain is not sufficient. The “ethos” of web3 is evolving and difficult to summarize. Everyone who has spent substantial time with web3 organizations knows what it feels like. It’s quite inclusive, transparent, and community-oriented.
DAOs are a specific type of OCOs. In most cases, becoming a DAO is aspirational (and incredibly challenging). The process of decentralization and automation is incredibly difficult. The good news is that there are many promising On-Chain Organizations (OCOs) that are not DAOs.
Self-sovereignty is “the concept of property in one's own person, expressed as the moral or natural right of a person to have bodily integrity and be the exclusive controller of one's own body and life” - Wikipedia