Episode 427

Zodiac – The Expansion Pack for DAOs

  • Play

  • Play

  • Play

  • Play

  • Play

  • Play

  • Play

Zodiac is a collection of tools built according to an open standard which proposes a composable design philosophy for DAOs. Built by the Gnosis Guild team, this extension pack for DAOs enables connection between platforms, protocols, and chains, no longer confined to monolithic designs. It not only changes access, but bridges chains, organizations, and networks through DAO-to-DAO (D2D) collaboration mechanisms.

We were joined by Kei Kreuther and Auryn Macmillan, founders of Gnosis Guild, a core contributor to the Zodiac platform. Hear as we chat about the rise of Decentralized Autonomous Organizations, the Zodiac Toolset and how it works, and the future of DAOs in not only the blockchain space but also in the real economy.

Topics discussed in the episode

  • Kei and Auryn’s backgrounds and how they got into crypto
  • Where DAOs came from and the arc of their evolution
  • The overlap between DAOs and cooperatives
  • Unraveling the abundance of DAO tools
  • The components and modules of the Zodiac Toolset
  • The types of legacy organizations or governance structures that are most ripe to transition into DAOs
  • The future of DAOs and their place within the real economy

Sebastian: Let’s perhaps start a little bit with some introductions. How did you guys get into crypto and what’s your background? How did you come to be working on DAO tooling Gnosis? 

Kei: Thanks for having us on. I’m a writer, artist, and former front-end developer. I’ve been mainly interested in how cultural narratives of technology shape their use. So I had a long path through working on more open source projects, open-source mapping projects, and a lot of more Grassroots Tech initiatives, and I’ve been following the crypto space for a while and I was interested in the experimentation.

So was passing through Berlin in 2014 and I ended up at Wikimedia. A space where they’d often hold meetups, and it’s a fourth-year IAM launch and it was a bunch of people trying to set up an early type of client for Ethereum, I’m not sure if any of us managed to get it working, but there was particular energy to that event that I think was not present in most of the tech meetups that I would go to at the time.

It wasn’t clear that it would be successful and wouldn’t be clear that it would be speculated upon, it was just a renewed emphasis on decentralized terms of computation, that was private. Also, that could really kind of change how not only software finance operates but how organizations operate. 

So I followed Ethereum for quite some time and kept a tab on it after the launch. Projects were built on it and then I joined the space full-time in 2017 in Gnosis. So, I’ve been there over the last four years, and I’ve always focused on what organizational change it will bring. 

So I’ve been really lucky to work with Auryn and co-founders and learn skills that have been incubated by Gnosis to focus on governance.

Auryn: I guess I stumbled into the Block Chain space in 2013. I saw a news article on the deep web, the dark web, and started poking around a browser and found my way onto various kinds of marketplaces. Everything was denominated in this weird Bitcoin thing, and so that was the start of the rabbit hole, trying to figure out what that was, why it was, and why people were selling stuff on the deep web for Bitcoin.

I guess like shortly after that I found my way to a bunch of reasonably early writings, and the thing that immediately captivated me there were some of the early pieces on DAOs the concept of DAOs.

I was playing basketball professionally at the time and so that was eating most of my time but this seed just grew and slowly consumed more and more of my bandwidth over the subsequent few years. Then in 2016, the DAO project kind of sprung up and I immediately just immersed myself in that, founded the DAO Hub Forum, which kind of became the de-facto home for the DAO community and that snowballed into a full-time career in DAOs and all things DAO. 

So I went through this meteoric rise and catastrophic fall of the DAO.

Then from that, I did a whole bunch of work with various projects. The space early on Gnosis included, back in 2017. Then I spent some time with Colony for a couple of years as well and then back to Gnosis a few years back. 

Since being there I helped launch the GnosisDAO and now founded the Gnosis Guild with Kei to focus on Zodiac, this new kind of standard of tooling for composable, interoperable DAOs. 

Sebastian: I associate with what you’re saying in terms of feeling fully encapsulated by this new concept in this new technology. 

I remember early in the early days around 2014 and 2015 one of the things that I found the most interesting about Bitcoin and Ethereum was that we didn’t have the word DAO then. But there was this concept of those blockchains within themselves, being autonomous and being organizations of people that were maintaining the ledger. 

The first time that I ever encountered this concept of autonomous sort of agents was an early Mike Hearn talk from 2013 or 2014 where I think he’s at some Google event and he’s describing this world where we have autonomous vehicles that are sort of self-owning and they’re able to buy their energy and get on fast lanes and pay for things and receive payment, and even spawn off new cars by ordering new cars to sort of building their self-driving business. That just blew my mind and I think that’s what got me excited about this whole space and DAOs in general. 

What excites you the most about DAO and what would you say is sort of cutting edge of DAO technology today? What are the most innovative things that people are doing with DAOs?

Auryn: So I don’t know, maybe meshing the answer to both of those questions into one. The thing that excites me most, I think the real cutting edge of DAOs is the potential and reality. Systems that produce some desired outcome and emergent results of uncoordinated inputs. You talked about the Bitcoin network and Ethereum network being these early starters of DAOs but the word DAO was already in circulation.

These networks are most certainly DAOs and they’ve dealt with this kind of very, very tightly scoped roles are very tight types of outputs that are very carefully engineered to be the result. They can remote the result of a whole bunch of uncoordinated actors providing input to the system. 

I think there’s this huge design space for essentially engineering other outcomes as a merchant result from uncoordinated inputs, quadratic voting, quadratic funding in particular. I think it’s two great examples of this where you have in quadratic fundings case, the desired outcome is a well-allocated pool of capital to some sector of public goods. 

The way that you can have arrived at that allocation is from the uncoordinated inputs of people contributing to projects that they value and thinking of generalizing that idea of finding some desired outcome and then engineering a way to reach that outcome through uncoordinated inputs is going to be crucial for DAOs to continue to achieve the scale that I think a lot of people are hoping DAOs are going to be able to, as in push beyond the theoretical and practical limits of more traditional firms. 

Kei: Yeah, and likewise building on that. I think it’s interesting that you roached out in terms of its autonomous quality because I think that’s a quality that is much less emphasized today. We see it was kind of in distributed ledgers, but an inlet of the social DAOs, or even some of the protocols operating today, it’s much less at the forefront than it used to be.

I would give an early definition of what the idea of a DAO was as something like an organization with automation at its Center and humans at the edges. 

So the idea is that actions, like how Capital could be released or how critical functions happen autonomously. And I think it gave route to a lot of interesting imaginations, like, you know, Dax for natural systems or Diodends and the same way that we see legal personhood, given to rivers and coral beads Etc. A lot of that discourse has faded into the background, but it is wholly expected to re-emerge in the next couple of years as DAO tooling starts to mature. 

What I’m most excited about is the cultural ramifications of DAOs because I feel its kind of capturing the energy of activism as well as, maybe not autonomous and the technical sense, but autonomous in an approach to political organizing that groups can have a more grassroots approach but still have as much if not greater than the impact on traditional firms or sets to corporations operating at larger scales. 

So I’m excited about just the good-hearted energy going into the space and confident that people with more political science-minded or essentially more social science-minded can guide some of the DAOs towards these better outcomes, to more impactful outcomes. Of course, there are always lots along the way and hilarious missteps, but I think it’s promising much more so than other spaces that I see people working in today. 

Sebastian: That’s a really interesting way to look at it. I guess I still think of it as a decentralized autonomous organization, but you’re right, a lot of the DAOs that we see being summoned today are just organizations of humans working together towards a common goal than something fully automated. I think the early DAOs maybe had more of this philosophy of fully automating for instance like a fund and in a sense and it was less about this grassroots sort of effort. 

You know, when you think of something that’s grassroots and that brings together a lot of different people, you think of cooperatives. I wonder what are the parallels in your view, like what are parallels between cooperatives, as we know them? In most jurisdictions, you have a stat, a sort of legal status for Co-Op, or A Cooperative in France. It’s associative Cooperative or something like that in Germany. We have the same thing. 

So what are the overlaps between DAOs and cooperatives as you see them?

Kei: Sure. So in a recent essay, a pre-history of DAOs. I gave one definition of a DAO that doesn’t apply across the space but is potentially a voluntary association that prioritizes let’s say the operating principles of cooperativism.

 So when people are talking about coops, they usually mean a specific legal structure with Democratic member control and economic ownership. I say that DAOs prioritize them as operating principles basically to shift the space. They could emphasize the co-ownership of contributors to the DAO. It’s quite easy for those who are contributing to be able to have a greater economic stake and what they’re producing. This isn’t something that we always see with traditional firms. 

So, I think that does have the propensity to be kind of hyper-capitalism, but they also have a different propensity to be member-owned. And, by giving these definitions and patterns, we can encourage them to go more towards the space. And just maybe a more metal note on that level is I think we’re at a stage where we can put these patterns in place and say, you should look at how ownership is playing out in your DAO. Because right now, that’s critically what determines both ownerships within DAOs and also across DAOs, so ownership and crypto networks, and basically by prioritizing co-ownership right now we can make sure that it doesn’t become too lopsided in the future and that more DAOs take this to heart. 

And I think one last note on that is that there’s also been a criticism in the kind of overlap of DAOs and coops that the mistaken belief that cooperative or co-ownership or Democratic control. How can that touch the base layer of global capitalism that crypto kind of glides on top of? 

I think it’s about a deep understanding of how technology developed in the cultural norms and pushing cultural norms at the right time. And right now, thousands of coops are seen from like the reason FWP called on like thousands collapsing from each other as well. 

But as well as other pieces like Morshed Mannan’s earlier work on Thousand coops that I think is important but really has only come to visibility and it’s the right time now, so he wrote this 2018 paper called ‘Fostering Worker Cooperatives with Blockchain Technology’ and basically and he looked at the difference between a Capital management firm and Labor Management and also the Colony project.

So Colony’s a DAO platform, they’ve recently launched a new face, so back in 2018 wordship was writing about this and saw fundamental challenges that a lot of these labor-management firms had. One was that they had difficulty bootstrapping funding, sometimes for good reasons, because it limits the amount of private investing. They also had problems operating across different jurisdictions, and they also have problems operating at scale. Basically by looking closer at the Colony platform, maybe these tools that are cross-jurisdictional, but help with alignment or coherence would be able to aid cooperatives to be able to grow into a more global movement. 

Sebastian: Yeah, that makes a lot of sense. And when I think of cooperatives, the people who were in cooperatives, I think that there’s such a rejection of hyper-capitalism, or even just capitalism, and the images that blockchain and crypto conjure up. I think in those people’s minds it just totally goes in opposition with what I think a lot of cooperatives’ goals are.

I think there may be a generational thing where what we see as cooperatives today, traditionally cooperatives may start forming into DAOs as the people that form those groups are more inclined to scale beyond the boundaries of going to national borders and jurisdictions and things like that and see fundings, and this sort of thing.

I’d like to ask you. Maybe just take a step back here first, in the sort of brief history of DAOs on Ethereum. Can you describe how DAOs have evolved from the initial DAO, which I think is the most emblematic that a lot of people sort of remember as being the first DAO to some more recent ones like MolochDAO which inspired a lot of subsequent DAOs and now, the sort of explosion of DAOs that are doing everything from buying NFT portfolios to, funding projects to funding development? 

What does the sort of like history of DAOs? Look like? 

Auryn: Just a quick overview of the history of say DAO Frameworks and Technologies on the other. I think the cryptocurrency networks Bitcoin, Ethereum, and a whole bunch of others. To me the first time I saw the widespread interest in DAO-like organizations in terms of, I guess the other broad category of DAOs, this kind of less tightly scoped more organizational DAOs as opposed to tightly scoped participation in terms of being a minor validator data in this protocol style DAO. 

Yeah, the DAO I think was probably the first at least one of the first instantiations of this type of DAO. It was essentially a mutual pool of capital that the intent was to allocate and I think intend to attempt to earn a return on it in some way. It was fairly loosely defined by design but I think it’s very much wanted that to be an emergent thing for the community to decide what they want to do with this pool of funding.

It was a reasonably complex system at least for the time, and that is part of the reason that it ended up having an undiscovered exploit that ultimately had it crash and burn. And so, Moloch was this direct reaction to that deliberately very simple contract with very simple mechanics that allowed participants to very easily recover their share of the capital and leave at any point in time, the key innovation for Moloch, was this rage quit mechanism.

So you as a member of a MolochDAO have shared and you can redeem those shares for a relative portion of the DAOs assets at any point in time. Then around that, mechanics that allow you to do that at critical moments. Whenever the DAO passes a decision you have a cool-down period where you can’t rage quit if you disagree with how the decision went, in parallel to that a whole bunch of other DAO frameworks sprung up and developed in parallel for several years. Aragon, DAOstack, and Colony are primary examples that spawned up around the same time. I think Colony actually started building slightly before the DAO but has been in development for a great many years and Aragon spun up shortly after the DAOstack, I think shortly after the DAO I think at the time it was called. 

These 3 kinds of separate approaches to creating DAOs. Aragon is very much designed as an operating system for DAOs. Kind of more opinionated on what the decision-making mechanism was introduced, a novel decision-making mechanism in holographic consensus. Which is essentially combined token weighted voting and prediction markets to modulate what the Quorum for those votes should be.

Then Colony introduced a really interesting reputation mechanism where you earn a reputation for contributing to the organization and the organization gets to define what reputation means within the context of that organization. Later on, Compound made the realization that most of the DAO frameworks were much more complex than what they needed to govern the compound protocol. So ended up deciding to roll their own in the Compound governance framework and the big innovation that they made was not an innovation at all, but the revival of a centuries-old security technique and just having a time lock.

Have a window of time, where things are queued up before they execute, and make sure that you have a way to respond to things in advance of them being executed. The compound being a relatively simple on-chain mechanism for governance, proved to be a winning combination for a whole bunch of protocols until gas prices started skyrocketing at which point we started to see projects take different approaches to mitigate that, and I think that largely the most popular approach was to essentially, push voting off-chain and delegate the actual control tool to a relatively smaller, group of multisigners. Or in Compounds’ case, to delegate votes to larger protocol politicians that were financially incentivized through enough stake to justify the gas cost of voting on-chain.

I have glossed over the whole can of Molochs’ ecosystem that evolved beyond the original MolochDAO. Well, the DAOhaus guys, spun up a MolochV2 interface for that on Textile, which is now GnosisChain, and became a home for a whole class of DAOs 

Then over the last maybe year or so there’s been a whole bunch of more tightly focused or just different styles of DAO frameworks starting to emerge. A lot of them are built around the Gnosis Safe as a core, and this is largely what we’ve been trying to standardize and accomplish with the Zodiac Framework. 

Sebastian: Yeah, there’s so much to unpack here. But I mean the Gnosis Safe has been instrumental to the success of and the ease of people’s ability to summon DAOs as well as all these different Frameworks that you mentioned.

One of the things that came up when researching this episode and talking to people who have been working a lot more closely than I have in DAOs is that tools are abundant and, in my research, I was able to find lots of different frameworks.

What is the overlap between some of these tools? And you know, are we arriving at some standards on how we construct DAOs, and is this abundance a good thing, or does it end up making things a bit more complicated in the end for people who are building DAOs?

Auryn: I think it’s a good thing. I mean choice and plurality of options is great because it’s a good forcing function for tools to develop in a way that serves users’ needs and serves people’s real-world requirements. 

It makes it more complex for someone new to the space to come in and try to figure out what to do. Figure out what framework works for them or how they should go about making decisions, but I think that an abundance of choices is a net positive.

It’s part of what inspired Zodiac as a framework, trying to find a way to I guess mesh all of those things together in a way, or at least have a common way for them to play nicely together. Probably worth giving a quick bit of backstory, to help illustrate. So in I guess late 2020, we started doing some research to figure out essentially how we should set up the GnosisDAO. We had this desire to move a huge chunk of the Gnosis treasury into something that was Community controlled and had a couple of really key requirements. 

One was that we can secure vast amounts of funding, through that we don’t get unreasonably restricted participation, we don’t price people out of participation, and three that we don’t restrict our future choices. We don’t lock ourselves into one particular roadmap because of a choice that we make early on.

We realized that none of the existing frameworks checked all three of those boxes and the third one, is relevant to what we’re talking about here in terms of unreasonably restricting our future choices.

Imagine a scenario, say I’m brand new to the space and I come in and discover Aragon. Well, this is this amazing DAO tool. I’m going to go and create a DAO and then after six months of operating the database and having built up a community, using the Aragon tool, the community decides. Hey, we love MolochDAO more, what is much more suitable for our style of organization,  we want to migrate.

So the migration process now is essential, they’ve got to spin up this new MollochDAO, populate it with all of the users and then go through this arduous process of making proposals to transfer all the tokens and all of the systems that this DAO controls, if it’s the owner of any other external systems to update any external references to that DAO, probably on a bunch of websites, they don’t control. 

So there’s this monumental coordination challenge of moving from one framework to another. So the key insight that we had with Zodiac was, that if we decouple your account and the mechanism that controls it, we can make that migration process much less painful. 

Where if you imagine as a new organization, you come in and you spin up a Gnosis Safe and then you say, hey, we love Aragon. We want Aragon to be the mechanism for our DAO, then we plug AragonDAO into a Gnosis Safe and have the AragonDAO control the safe. But then that same thing, if six months down the road, the community now decides, we’d like to be a MolochDAO. 

Then simply with one proposal can plug in this new MolochDAO as a module to a safe. Unplug the AragonDAO and now, all of a sudden, we are a MolochDAO rather than an AragonDAO.

None of our assets had to move. None of our owner settings on any systems we control had to be updated. None of the external references to our DAO had to be updated, it all happens in one step so we can be much less restricted in our future decisions by our current decisions. Just through that simple decoupling of your account and control mechanisms. 

Sebastian: Right So essentially the accounts are in the governance tools and all of the other tools where people interact with the DAO are sort of decoupled in this stack. Can you describe what is Zodiac? And then perhaps we can talk about the different layers in the stack and how you guys are looking to modulize those aspects. 

Auryn: Yeah, so zodiac is the materialization of this key insight, right? That by decoupling these things, we enable a whole world of possibilities on how you design and build DAOs. So Zodiac is this standard for and could have a set of tools built to the standard, for essentially, how to build these composable and interruptible pieces of DAO tooling.

And so when I say DAO tooling, this could be the existing DAO Frameworks that are relatively large, monolithic DAO-like structures, or it could be much more granular pieces of tooling for enabling specific functionality.

The nice thing with this particular way of building DAOs, the two aren’t mutually exclusive. You can have multiple mechanisms running in parallel being used for different types of decision-making within the context of one organization, so Zodiac is just this standard for composable DAO tooling. It’s a specific sort of contract interface that if you expose them, then you can play nicely with all of the other toolings.

Kei: It’s a kind of library that has a programmable account at the center. We built a lot of the interfaces around the Gnosis safe because we know it’s a trusted account and it’s extendable open source, but fundamentally framework agnostic and our tools mainly can be used through the Zodiac app on Gnosis Safe, and what I like about being able to combine, plug and play and stuff, and also connect them to other DAO platforms. So, now a Safe that can be a Moloch can be anything you dream of.

We saw with the recent criticisms of web three that there’s platform centralization, even if there’s essentially protocol decentralization. We don’t want to mimic the platforms that we build the same type of user centralization that we’ve seen with web2 or other platforms. So by having participants in DAOs get used to plug and play their framework where you can add a module that allows you to connect say a MolochDAO on Gnosis chains. As we know it’s safe, but also to maybe add a delay modifier. So that you have a time before transactions can be executed.

But being able to set these up and add qualifiers to all the mods variants, I think both on a protocol level but also on a platform participant or user-level the relation to the tools that we use for DAOs. So, the idea that we can put small components together to make custom setups, we’re not locked into one monolithic platform, and we’re not stuck there because everyone’s using the same platform.

So Zodiac is really about building bridges and the same way that protocols were about decentralization. The Zodiac approach is an almost platform decentralization approach to how we do governance in the future. It is an antithesis to a lot of the platform governance or Democratic governance tools that we saw that overly anticipated use cases in the past. We want to let use cases emerge and then build the bridges with them. 

Sebastian: That’s cool. So Gnosis Safe sits in the middle of this and then this is integrated as a UI. So it’s like UI to Safe interface. Can you talk about the different modules that you’ve built? And what people can put into their Zodiac DAO. 

Auryn: Yeah, I think one key thing that’s worth reiterating is that we use the safe as our prototype for what we call the Avatar is the thing that represents the DAO on-chain, but it is fundamentally agnostic to what that Avatar is. So if someone else wanted to write some different contract to function as an avatar to function that programmable account at the center, they absolutely could. 

We think that this is a really important thing to just be explicit about because we want this to be an open standard. We want it to be something that other people feel free to come and build on top of that. We don’t want it again to unreasonably lock people into any one specific solution. We think that the Safe is the best solution and that’s why we use it as a prototype. But it’s a wide-open standard there and anyone can implement whatever they liked in terms of the pieces that we’ve built, we have a handful of additional modules and modifiers that we’ve built on top of this to try to extend what the DAO ecosystem can do in some cases, and other cases to just provide what we think is some fundamental building blocks. 

We’ve deliberately avoided for the most part replicating work in terms of voting and decision-making tools because for the most part they already exist. There’s a whole bunch of really great DAO tools out there and Aragon and Moloch, and Colony and Compound. So we didn’t necessarily feel the need to try to replicate those things. But we do have a handful of other tools that we’ve built, that again, feel like fundamental building blocks.

The first one was very much needs-driven, was the thing that kicked off this whole endeavor was a reality module. It’s what underlies the SafeSnap plugin for SnapShot, which lets you take an off-chain vote from SnapShot and bring it on-chain to trigger on-chain execution. 

So there’s a bit of a confusing layer of names here in terms of SnapShot the floating platform, SafeSnap that they cannot plug into SnapShot and then the reality module lives underneath it, then plugs into the Gnosis Safe. There is a very good justification for that the separation of all of these names, but it does, which does lead to a little confusion. 

So maybe we can dive into that quickly. But yeah, essentially at a high level, what this does is let you take off-chain votes and bring them on-chain. The reality module is the key to this thing working and it plugs in. The way that it brings off-chain voting on-chain is via an oracle called Reality.ETH. Hence the name the reality module because we’re plugging into this reality.ETH Oracle. 

Reality.ETH is this cool Oracle mechanism that is not very widely known about or understood. So it’s worth diving into quickly. Essentially it is an escalation game-based Oracle. So, what that means is anyone can ask it a question and anyone else can come along and try to answer the question by putting down a bond, you put down a bond, set the outcome to it if you like and then anyone else can come and double the bond to change the outcome each time. The bond is set at a time out, it resets and if at any point you get to the end of the time out, then the answer is locked in and you play this escalation game until someone gives up and loses their bonds.

The way that the game theory plays out is at the top of the escalation game the bond gets so large that people have to coordinate around setting the bonds and thus have to coordinate around which outcome is, correct. So the shelling point for the correct outcome is the true outcome. It’s much easier to coordinate around a true outcome than a false one. And so at the top of the escalation game, it should always resolve to the true outcome. 

That being the case. The bottom is very little incentive to set a false outcome because you’re essentially just giving money to whoever comes in correctly. So, in practice, we very rarely see it move beyond the first step where someone just comes along and sets the true outcome.

Sebastian: I remember we did an episode about this in 2014 because it used to be called reality keys. I remember first hearing about this thing and it got me super excited about the idea of Blockchains and the types of decentralized autonomous decision-making you could make. So yeah episode 33 of Epicenter is about this very thing. 

Auryn: Yeah, and it’s not like it’s been out in the wild for ages, and it’s been used for things like the Omen prediction Market, it’s the mechanism for resolving outcomes for their markets and was a mechanism that we were comfortable with. We’ve seen work in practice with large volumes of money at stake. So that was the reason for landing on this. Again, part of the reason for this confusing cacophony of names, is that it could be used to bring in decisions just about anywhere.

So we chose SnapShot because that pattern of SnapShot plus Gnosis Safe was already really common, but you could use it to bring outcomes from say a Discord Poll or Discourse poll, Twitter poll, or you could flip coins or roll dice and whatever you want and it can, as long as there’s some reasonably easy way to publicly verify the outcome, then you can use this as a way to bring that information on chain.

So yeah, this is our first module and has already gotten a pretty good bit of adoption and there’s a whole bunch of projects out in the wild using this as the way of enabling cheap or free voting for their participants, but still with autonomous control over their assets. 

The next more fundamental building block was essentially a piece that we took from the first version of the reality module and it’s just a delay module. So we talked about Compound reviving and reinventing this centuries-old concept of a time lock and that’s essentially what a delay module is. Just make a very small component that you can put between safe and other modules, just to delay the things that it tries to make happen. 

So I created a really good safety hatch if you want to give an individual or small group of people some ability to control the assets on behalf of the Safe maybe as a way of mitigating the overhead of voting, but you still want to have the security of being able to know that we can stop these things if it turns out that they do something malicious.

Sebastian: Then you have some mechanism by which you can decide what it takes to override such decisions?

Auryn: Yeah, so you have this delay period and there is the owner of that delay modifier and the owner can get any transaction cut. So, for whatever reason, the owner, which is probably the DAO might be some other mechanism. If the owner decides that it’s malicious, then you can just trigger a transaction to skip that malicious transaction. 

Then the next module that we worked on is this exit module which essentially adds Molochs’ rage quit functionality. You designate any ERC-20 token as your organization’s version of any share, and then users can redeem any amount of that ERC-20 token for a proportional share of the safes assets. So it allows the combination of a voting mechanism, a delay module, and an exit mechanism that allows you to create this very Moloch-like organization out of a bunch of fundamental pieces. 

Then beyond that, we have a handful of others that we’ve built and are currently working on. 

Sebastian: I’m curious about the bridge module, and the types of things you can do with the bridge module. 

Auryn: Yeah. Okay. That’s a very important mission on my part. The bridge module is essentially a way of importing, giving control of a safe to an address on the other side of a bridge. 

So essentially the use case that we’re imagining here is you have assets on the main net, but it’s too expensive to vote on. So you want to put your decision-making mechanism somewhere else and GnosisChain formally XY has established itself as a bit of a home for DAOs. There the DAOhaus community ecosystem lives, Colony and its DAOs have lived there and then there’s a whole bunch of Aragon DAOs that have been deployed, and the Garden still ecosystem is there. 

So giving those DAOs the ability to control assets on the Main net is a key piece to allowing them to function in this multi-layer, multi-chain ecosystem.

So yeah, the bridge module lets you set an owner and a chain ID, and say bridge module contracts, or bridge contract. It’s a message just passed from this chain by this address are allowed to pass through and control the safety, control the Avatar contract.

Sebastian: In that case. Let’s say in the case of a contract on the Ethereum net and a controlling address on XY, or is even polyline or some other layer to the chain. How did fees get paid on the main net At that point? Because I can see a use case here for DeFi where you might have some liquidity positions or you might have some DeFi positions on the main net, but you want to control those from a different chain. In that case, who pays the fees?

Auryn: Yeah. This very much depends on the bridge that you using. In our case we’re using the examples that we’ve built so far, we’re using the Gnosis chain arbitrary message bridge. In which case you are on the Gnosischain side. You’d have your DAO, your decision-making mechanism and it would pass a message to the A, and B contract. On the Gnosis chain side, there’s a bunch of bridge articles that are watching that would when they see your message get passed in, they would then race to add signatures to it. 

Once you have a threshold of signatures then you take that and you call an execute signatures function on the main net side and you pass in those signatures as a parameter. So someone needs to take that, but I’d say it’s a public function. So all you need to do is have the signatures and you can trigger execution on the other side. 

There’s for the route like Gnosis chain to the main net you have to pay for it or someone has to pay for it going the other way. It’s subsidized because it’s trivial the cost. But because the costs on the main net, are much less predictable than it’s harder to subsidize.

Longer-term what we’re hoping to develop and to see the use case being is DAOs that essentially choose a chain as they’re making of home chain, but then can spin up Gnosis Safe and every other EVM compatible chain and bridge decisions to them. So their influence can extend A Long Way Beyond their chosen home chain, a DAO on the Gnosis chain may control one on the Main net, one on Polygon and Optimism and Arbitrament, and anywhere else that the safe ecosystem is deployed. 

Sebastian:  Interesting. So with this recent, I guess in the last year or so, there’s just been a proliferation of EVM compatible chains, or layer twos. How do you foresee DAOs in the spirit of what you just had? How do you foresee DAOs spreading across those ecosystems and what’s that going to look like? 

I don’t know. Let’s say you have Flamingo DAO, right, it’s on the main net and it also wants to be on either of the ecosystems. 

What’s that going to look like for users and also, perhaps, technically, what control mechanisms would they want to implement? What if you centrally managed from one chain, then sort of managing those sub DAOs or thousand other chains, are they all operating horizontally at the same level? 

Kei: Sure. So I think as with all DAOs because it’s a wide-open organizational design space at the moment. There’s not necessarily one pattern or one design path. That I think all DAOs will assume other than the fact that I do strongly believe that most DAOs will be a multi-chain. So I could see some examples where a DAO an art collector and our social DAO maybe want to have a presence on multiple EVM chains because maybe an artist are collecting is primarily based on the polygon. They do governance layer on Gnosis chain, and then they secure their larger assets on the main net and I think it would be really good.

Also as a like Ambassador function for different jobs to have a presence on different chains and communicate between them because at each you’ll find different communities and different tool sets and also strengthen the resiliency of the bridges between them, both on a technical and also a community level.

So I’m on the board of Regen Foundation, which is Regen Network is a Cosmos sister chain for ecosystem services, and we’ve been talking with the Cosmos team about getting Zodiac tools deployed there.

I think this multi-chain presence will be hugely beneficial to the ecosystem and also basically allow different participants. And I prefer the term participant over the user, basically, different types of accessibility. So for say, the Regen Network and communities staking DAOs will have all different levels of access and familiarity with protocol evidence. But we can have the patterns and acclimate to them and meet people where they’re at. Especially if it’s changing specific applications or changing specific usability. 

Sebastian: So maybe some functions of a DAO that would exist on one chain and some of the functions with these assign another chain that you may have assets being managed on some different chain.

My next question is what do you foresee as the sort of role of the Gnosis chain as a place where lots of people are hosting DAOs? Do you think that DAOs are becoming or will be one of the predominant use cases for the Gnosis chain?

Kei: So I think we’ve already seen that the core of the ecosystem is with teams mentioned before like DAOhaus as well as the Garden style and one Hub communities. So it isn’t much of a DAO-oriented chain. We also have things like circles but use the safe contracts at their core. 

So there is very much, an idea of collective accounts being the identity standard on the Gnosis chain, so I can very much see it progressing in this manner, but also in the sense that I believe that DAO should be multichain, so, I wouldn’t want it to become a monopolistic chain specifically focused on DAOs, and I think in part of this can be shown in the ethos of Mrs. Chang trying to make it very easy for people, who wish to, to be able to post their node. So working with Death Node and others, the way we started the conversation about chains being their DAOs. I think the Gnosis chain would ideally like to operate in that manner as well, where there’s decentralized ownership of the chain itself and a very strong cross-chain Community as well. 

Sebastian: So taking a step back here and coming back to sort of DAOs paradigms in-unit Society. I wonder what types of existing structures you think are right for transformation or transition into DAO formed. 

Kei: So I think one way already tested on is coops, but I don’t know if it’s necessarily from the theory of change where it’s like coops themselves transform into DAOs, but more that these principles of existing organizations become more familiar among our ecosystem. I also think one thing that DAOs happen to be very good at the moment and often not always for the best ends is pulling capital or pulling some type of resources. So I laughed because I’m thinking of Spice DAO which recently bought some IP or thought they bought some.

But they tend to be good vehicles, you see Constitution. Now, you also think about some things like climate and I think that there needs to be a lot more thoughtful consideration around what you would call DAO governance or corporate governance of these vehicles, but you see it already. I saw emerge yesterday like a hot all DAO which is aiming to be like a pack, so political action committee specifically to look at U.S regulatory landscape in crypto and specifically advise policy positions. 

So basically looking at these organizations that often need a certain amount of capital to be bootstrapped and to be effective, DAOs are very natural tools for these organizations, right? In terms of having the best possible outcomes. We also see this with things like the free AssangeDAO and other things that have been able to quickly boost up resources to a narrowly scoped cause. 

But I think and what I’m hoping for is that it becomes more varied where we aren’t necessarily looking at Financial capital of the resources and instantly pooled. But as different, this is a somewhat cringe sort of term but natural capital or other forms of capital become legible on-chain, but they can be really good ways to confirm mutual aid for different communities, predicting a large amount of access to different people. Not only gathering but also, distributing. I think next-gen DAOs will have to focus more on the distribution rather than the gathering.

Sebastian: Talking about distribution. I think one of the things here that comes to my mind is, how DAOs can sort of distributing capital in the real economy right? So the friction between the crypto economy and traditional banking remains. 

I think if there was less friction there, it would be easier for DAOs to perhaps finance a lot more things, sort of like outside of the crypto ecosystem, which is why I think a lot of DAOs are helping to contribute to and finance today. 

What are some ways that we can hope to see DAOs have improved interaction with the real economy? What are some of the barriers there that need to be broken down for a more generalized type of application? 

Auryn:  I think, in terms of barriers that need to be broken down, there’s just relatively few established pathways, for full essentially legal personhood, for a DAO or the ability for a DAO to tangibly own real-world assets, or interact with the real world that says there’s a handful of I guess TrailblazersDAOs that have gone out and established some real-world entity that’s wrapping or otherwise interacting with the DAO. 

Then also, a handful has explicitly gone the other direction and become legal entities in a very well-structured participation agreement between members for the fact that they are deliberately not seeking, have been incorporating, or seeing recognition by one jurisdiction, explicitly. I think there’s been some great efforts by a whole bunch of different actors.

One, in particular, has been cool as the Kala model law, which is seeking to create a model that different jurisdictions can adapt to any common ground on how to treat these A-legal DAOs, so probably some jurisdictions are starting to adopt that or something similar to that is a great first step to enabling really widespread legal personification or at least legal interaction or interaction between DAOs and a lot of the real world. 

But also in terms of fewer people losing or projects, trailblazing, there are projects like Opolis and SporkDAO that have gone the opposite direction and very explicitly said, let’s set up Colorado limited cooperatives. Only Cooperative associations actually can bake those clicking the mechanisms of the DAO structures that we create into the operating agreement and then bake the constraints of the DAO, the constraint of the legal rapper that was choosing into our DAO structures and try to marry the two. 

That one is necessarily the right or the wrong way to do it. It’s interesting to see, that cannot both roads are being pushed forward in parallel by different groups. I think there are probably pros and cons to both. The idea of spinning up a legal wrap-up early gives you more immediate access to real-world things than the alternative where you’re waiting on some jurisdiction to create some recognition. 

Sebastian: Yeah, I mean, I think the legal rapper that some people and law firms have been able to sort of come up with is perhaps as a stepping stone to something a lot more organic to the DAO structure and to the functioning of a DAO and that paradigm. 

So I think what is going on in Wyoming, is probably the most interesting. Are there other places that you’re aware of where jurisdiction, other jurisdictions that have started discussing or are looking into DAO personhood? 

Auryn: Yeah, I know the folks at Opolis are working pretty hard with legislators in Colorado to set up something pretty similar, I say similar and they’d probably be scowling at me now for saying something, because I think there’s a whole bunch of issues that they see with the Wyoming legislation, and a lot of what they’re doing in Colorado is a direct response to that.

But I guess the goal was to create an outcome where DAOs have a reasonable level of personification that I guess mirrors their value assumptions that a lot of web three organizations make, has a similar value online I meant.

I guess another example that I’m aware of is the Vermont legislation that proceeded with Wyoming. As well that Vermont wants a blockchain-based LLC is another legal rapper that you can spin up for similar purposes. Diego pioneered that and I think, maybe in both of those cases and Vermont’s case in the Wyoming case. They just show the flexibility of LRCs in general. You can make an LRC or you can construct, an LRC that does just about whatever you want. And so it’s more about how much you are willing to go and do the bespoke work to create an LLC that functions as you want it to. 

Sebastian: Yeah. I think in Europe, it’s probably a little bit more complex than that, I mean, I’ve been talking with people who are trying to find ways to create some form of wrapper that would allow DAOs to have legal personhood, but it’s not quite there yet. And I don’t think that Europe will be at the forefront of this innovation. 

Auryn: Typically the way that I’ve seen people approach it in Europe has been through a foundation model right, where you would have any people send to preferably a Swiss Foundation. There’s a handful of other jurisdictions where people just grab some foundation, and that foundation would have no direct tie to the DAO itself. That would be as part of its operating agreement bound to decisions made by the DAO bound to act in the best interest of the DAO would usually just going to act on behalf of the DAO as opposed to being directly tied to it in the way that the blockchain LRC blockchain. Although Wyoming DAO, a Colorado-based legal rapper would enter more directly to marry the two.

Sebastian: Yeah. No, I mean, like the Swiss Foundation model I think that has been great for a lot of organizations and lots of times when I’m speaking more specifically about like the Eurozone because yeah, there are some barriers I think still for DAOs that need to operate and so, be physically tied to the Eurozone, being in Switzerland. So I’m hopeful that things will come out of the Eurozone soon.

As we wrap up here, what kinds of things are you most excited about, sort of like, upcoming things that you see in the sort of DAO tooling space. And where do you think DAO cooperation in organizations will be in 4-5 years from now as we look back?

Kei: Sure, so I know one thing as a team we’re excited about is taking private voting to DAOs. We’ve seen that both in the bidding and voting process that privacy is of really fundamental importance in any voting or decision-making process. So we’re excited about using zero-knowledge groups, basically to bring private voting to DAOs.

 I think that that will exponentially explode the decision-making and realms that DAOs operate because you have a fun, immensely different dynamic and one that is fundamentally more aligned with our existing political and legislative systems. So, that’s super exciting.

I’m also very keen on token design space and token experimentation and whether that’s on a specific contract level or a token standards level. But we’ve seen a lot of emphases put on coin boating, right, for DAOs. And my feeling is that it has fallen into this pattern primarily because it was the easiest way to gather signals from a large number of people, or a large number of people that you believe are in some way invested in the outcome of this decision. And that it happened almost by default as a way to easily signal large groups.

And now we’ve seen that pitfalls and collusion as well as just general social norms that coin reading produces its fundamentally plutocratic governance. So I think as we think more about tokens as separate unbundling them from voting rights, we can look at them as one person, one vote, and other governance rights and also basically, plus coin voting is cheap civil resistance.

So there are questions of how we design civil resistance and other things into basic voting systems and whether it’s the token design of thinking through tokens as governance rights, but also thinking through tokens as something potentially very different, not even reputation, something else that doesn’t exist or doesn’t have a clear analog in our current political systems. I’m excited to see what could come from there. And yeah, the general forms of decision-making that produce between private voting and noncoin voting alternatives on cheaper chains will be amazing. 

Auryn: Yeah, I’m excited to see secret voting start to start to take off and be more accessible. Hopefully, we can help. We have a really strong desire to help fix that problem. Help to bring that into the world. I think the other thing that I’m excited about is what I talked about at the start, this design space of having desired, outcomes, be the emergent result of uncoordinated inputs, so mechanisms like quadratic funding enable that across a variety of different contexts. 

So really excited to see that design space take off. See what other problems people can solve without resorting to explicit coordination around those problems. We see a lot of discussion in their database about defeating Moloch and usually, people’s suggestions to defeating Moloch mean stacking more coordination, on top of situations, or solutions, which is kind of paradoxical because obviously, Moloch is the God of coordination failure, so the more layers of coordination, you have the more opportunity there is for the failure of that coordination. 

I think designing systems that explicitly require uncoordinated inputs or create the outcome that you want from uncoordinated inputs is the real key to us defeating Moloch. 

Kei: Yeah, I’d like to add, that I think it’s really interesting. 

I think also in a little bit less of the automated approach but still really relevant. If you look at earlier tools for online voting, Lumio per se was developed by a decentralized network of people. It was fun chatting with the Lumio co-founder Rob because he said basically, he considers voting, the last-ditch attempt at a group of people to come to a consensus. Like if you have to take something to a vote it means that there’s a descensus among the group. 

So I love the framing of like uncoordinated inputs in the kind of potential actions. Also, I think there’s too much emphasis potentially put on a coordination problem because coordination can be two equally ill ends. 

So basically how we need more tools to come to a coherent, cultural consensus, and then explicitly make those actions happen, and it doesn’t always need to be a vote or explicit formal recognition in between that. Except in my historical lens of how that decision came to be, I appreciate more fuzziness brought into decentralized autonomous systems. 

Sebastian:  That’s interesting and a great note to end on and but before we go where can people find out more about Gnosis Guild and Zodiac and all the tools that you’ve built and yeah, just get more involved with everything that you guys are doing.

Kei:  So you can find us on Twitter at Gnosisguild and we also have a Blog now, at XYZ where we publish about the products or updating as well as just general thoughts on DAOs and coordination. We’re also working on an Osa skills Wiki, which will house, basically, all of our product documentation and approach but also have a section of the wiki that aims to collate a lot of DAO best practices or add a pattern language.

How people find themselves in certain situations with DAOs and your DAO is at this site, you’re using these tools. What are good patterns and voting tools and decision-making mechanisms you can use we’d like to open up this Wiki to other community contributors and the ecosystem at large?

Sebastian: So if that sounds like a project that any listeners are interested in getting in touch about that, it would be great and we’ll link to all that and your fantastic writing in the show notes, Auryn and Kei. 

Thanks so much for joining me today and hope to have you on again at some point.


  • Chorus One

    Start earning rewards and contribute to network security by staking with @ChorusOne, a staking provider securing $5bn in assets on over 25 decentralized networks. Head over now to https://chorus.one to start your staking journey.
  • ParaSwap

    ParaSwap aggregates all major DEXs and makes sure you beat the market price at every single swap and with the lowest slippage - paraswap.io/epicenter

0:00:00 | -:--:--

Subcribe to the podcast

New episodes every Tuesday