Brain Dump #5 - Bankless DAO: An Ecosystem of Nodes

Governance
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Brain Dump #5 - Bankless DAO: An Ecosystem of Nodes

Introduction / TL;DR

In recent weeks, I’ve noticed an uptick in conversations around how projects should categorize themselves in relation to the larger Bankless DAO. In other words, what type of relationship should projects have with the DAO? This post is an attempt to formalize some of my personal thoughts on the matter and hopefully provide a framework for others to think about this.

In short:

  1. Bankless DAO is a growing ecosystem of nodes that all tie back to Bankless DAO
  2. This ecosystem is made up of two organizational sub-units: core nodes and ecosystem nodes
  3. Core nodes service the Bankless DAO community and support the broader ecosystem.
  4. Ecosystem nodes extend into the broader world and have looser ties to Bankless DAO
  5. Successful projects will eventually spin out into ecosystem nodes
  6. Ecosystem nodes should pay some form of tribute to DAO treasury.
  7. Ideally, each node (core & ecosystem) operates as a DAO, but not necessarily.

Bankless DAO as an Ecosystem

When I envision Bankless DAO at scale, I see a large ecosystem of discrete groups (nodes) all operating in harmony with a shared set of values and processes. I see the image below, where each line could be some form of capital flow, human interaction, transaction, or some other type of connection. What’s beautiful about this framing is the autonomy and resiliency that hierarchical organizations cannot hope to achieve. (Some unrelated musings on this topic: DAOs as Economic Engines)

E86knimWYAIHwpa
E86knimWYAIHwpa1200×1181 311 KB

Core Node vs Ecosystem Node

As we continue to organize and coordinate into working groups, I’m seeing Bankless DAO separate into two different types of nodes:

Core Nodes

Core nodes are organizational units that service the Bankless DAO community directly. Their primary purpose is to support the ecosystem and act as a core for the broader ecosystem to build on. Example include:

  • Guilds
  • Projects like DevOps, Website, and First Quest
  • Eventually membership benefits (like NFT-Club or Gaming-Club)

Ecosystem Nodes

Ecosystem nodes are organizational units that benefit Bankless DAO, but ultimately have a strong external-facing component to them. They are projects that have incubated within Bankless DAO and have “spun out” into their own evolving entity (the concept of “spun out” is a great heuristic for what qualifies as core vs ecosystem). Examples include:

  • DEGEN
  • DAOpunks
  • Bankless Academy
  • Newsletter

(When I think of DAOs as the “Future of Work,” I think of ecosystem nodes where people can plug into or create their own project!)

Relationship Between Core and Ecosystem Nodes

As implied, core nodes build the foundation for other ecosystem nodes to build off of. When mapping the relationship between them, ecosystem nodes will:

  • Access talent from guilds (Example: Fight Club Education Grant) :warning:
    • :warning: NOTE! Access is not the same as labor! Projects are entitled to preferential access to guild talent, but must still pay for their labor.
  • Promotion on media channels (twitter, website, newsletter, community calls, discord)
  • Piping opportunities that come to the DAO to relevant ecosystem nodes
  • Rely on infrastructure maintained by DevOps
  • Early stage funding via Grants Committee or Treasury
  • Late stage funding via venture DAOs or VCs

Project Workflow (5)
Project Workflow (5)1870×1322 150 KB

Ecosystem Nodes and Treasury

Ecosystem nodes derive a lot of value from core nodes, especially during the beginning. As such, ecosystem nodes should pay some form of “tribute” (to borrow a term from MolochDAO) to Bankless DAO’s treasury.

(In this model, core nodes would not pay tribute to the treasury for the services they provide to the broader ecosystem. However, something like client services, where external clients source talent from guilds to complete tasks should pay tribute to the DAO. For example, of revenue earned from paid written content from the likes of Argent or BanklessHQ, 10% goes to the Writers Guild treasury and 10% goes to the DAO treasury.)

Here’s where things get tricky – How exactly do we create a fair and simple way that ecosystem nodes can operate without much friction. My (unrefined) takes:

  • Baseline 10% of revenue generated by an ecosystem node should go to the DAO treasury
  • For nodes that rely heavily on the DAO’s media channels and members to generate revenue, this number should be 25%. Projects like DAOpunks and NFT showcase fall into this category.

A Note on “subDAOs”

You may have heard the term “subDAO” thrown around. I think subDAO is a misnomer and can be easily misinterpreted to mean different things. My quick two gwei here is that a subDAO is just a DAO within a DAO. Any node (core or ecosystem) should strive to be a subDAO (in that they adopt the DAO model and infrastructure) but is not necessary.

For example, Fight Club will need to incorporate for legal reasons, meaning they cannot be a DAO by definition. They can certainly operate with the values of a DAO, but have off-chain structured hierarches in the form of an LLC.

On the other hands, Guilds can easily turn structure themselves as DAOs and go on-chain. It’s just a matter of what makes the most sense for that working group.

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It sounds a bit like the difference between Cost Centers and Profit Centers in traditional corporations.

I’m not sure what you mean here. You even mentioned Moloch earlier. Are you saying MetaCartel, the LAO, etc - LLCs operating on-chain through the Moloch smart contract aren’t DAOs?

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Thank you Frog. As usual, I find your writings very inpiring. I agree that the goal should be to create an ecosystem. I imagine Bankless DAO as a very large animal full of tentacles!

The only problem that I am experiencing in the Grant committee, is that there are autonomous projects which are starting to overlap a bit one on another. For instance, many non-coordinated educational projects, which could fall within Bankless Academy are growing within the DAO.

I see some risks in the near future:

  • We are going to have 4-5 sub-Bankless Academy and 3-4 Dev Guilds very soon. Often the people who work in the projects are the same. This creates also organizational problems. People have a limited amount of time. People usually collaborate with many different DAOs.

  • Coordination between Guilds and Projects will be problematic. And potentially the Guilds will lose their role as talent pools. In reality, everyone can present a project without any control by a Guild. Even people who have never collaborated for a Guild could present a project, get funded and do the same activity as another project or Guild.

  • In presence of a lack of coordination, people who get funds will usually not feel accountable for what happens. A common excuse could be: If a project does not work well it is due to a lack of coordination.

Perhaps the outlined situation could have some advantages. It could enhance the level of competition between members and augment the quality of the DAO’s output. Nevertheless, I think that Guilds should have an initial say with respect to the genesis of what you call “ecosystem nodes”. I make an example: If Dev X comes out with a well presented project, but nobody knows his or her skills, in my opinion, Dev Guild should have a say before he or she get funded. Otherwise, the role of the Guilds as talents pool will get lost very quickly. Other example: a group of people orgnanizes a series of workshop…why not Bankless Academy?

I think that we are really making incredible experiments here. A first assessment on the system that you framed will be possible by the end of Season 2, when it will become clear if the biggest project will have achieved their goals.

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Love that you’re thinking through this, as there does need to be a bit more collaboration and coordination as the DAO continues to grow.

I think it would be difficult to commit a general number, like 10% of revenue. When is that paid? What if the startup needs revenue to re-invest back into the ecosystem node. It would probably be much better and easier to simply utilize the talent pool of the DAO and pay as you go for things needed. If you are pulling any resources from the DAO, this shouldn’t be free, but it’s hard to set a blanket rule that might not make sense for a particular project, at least within a given time frame.

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In my opinion, this is an accurate description of Bankless DAO. All systems can have a different degree of complexity but all elements of that system serve a common purpose. Take for example the human body, it has lots of different organs and each has a function, all the organs in the body, all the systems and processes make the human body and make it the way it is. I always like getting inspired by the natural world because it has evolved and it continues to evolve to improve itself. You can take any other example, it will serve you well.

Bankless DAO like any other system is the sum of its components and some of them could function independently but all together are aligned with the mission of Bankless DAO and that makes it the DAO.

With regards of the contributions to the main treasury. I also agree with you that ecosystem nodes should contribute 10% to Bankless DAO treasury and 25% if they rely heavily on Bankless DAO to generate revenue. After all, these projects exist to generate revenue for the DAO so it wouldn’t make sense otherwise.

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This makes a lot of sense to me. When I first got here I assumed all projects would be overseen by a particular guild. For example when we started working on Top Signal Satire Site I assumed it had to happen under the Writers Guild. I was surprised it was just independent. Two concerns that come to mind are maintaining the spirit of independence and creativity that allows things like that to pop up, and projects that don’t neatly fit into one guild. Maybe Cross Guild Collab could be more formalized?

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Thanks for your reply.

In my view, cross guild collab is fundamental and projects should gain absolute independence over time. I only have the impression that at the beginning phase there would be the need of a kind of endorsement by the Guilds that reflect the talent requested for the fulfillment of the project. This would certainly ease coordination between projects that have very similar scopes. It is important to grant a libertarian approach and to be decentralized, but coordination and the assessment of talents requested for a certain project are also of great importance.

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Great to see this being discussed, and thanks for your work on the Project vs SubDAO vs Node definition, it’s been unclear for some time.

I can see some challenges ahead on how to negotiate tribute, what is considered fair etc. I have a few thoughts about how Fight Club can pay tribute and will discuss more with other FC members. One note for now is that paying a fixed % of revenue as tribute isn’t a fair approach if applied to multiple different revenue generating projects/nodes. Some may have large revenue but little profit, some the opposite. Paying a % of profit would be a better call but I still don’t think we can have a one size fits all solution.

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Do you think this should be specified as part of the initial proposal requesting funds / resources from the DAO, in order to start a project? Ie - specify the KPIs, resources needed, how you will compensate the DAO for these resources in terms of % rev share and otherwise. The proposal is then judged as a whole. So it could vary case-by-case, maybe with 10% min as a rough guideline.

I feel there are still many projects being specified without a clear indication of future returns for the DAO (monetary or otherwise), so perhaps this could address two birds with one stone.

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This is a good start for a complex topic. I agree with other members in that a fixed % of revenue may be difficult since not all projects (i.e. business units) have the same profitability models. I can also foresee projects that provide social outreach or collaboration projects that aren’t really income-generating. Are they expected to provide BanklessDAO with a percentage of revenue if they are barely breaking even?

Perhaps a possible model to consider is something more like DAOhaus, MetaCartel, or Syndicate where Bankless is the umbrella DAO that acts as a service provider. There is more value in growing an ecosystem than charging a licensing fee. The network effects of a large community are way more valuable than small cash flows.

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I agree with the model.

It would be interesting to see some sort of “Tax Code” created to make it simple for projects to understand their role in this system. You mentioned 10% for some and 25% for others - this makes sense and right now we’re doing some experimentation with taxation (Ex DaoPunks) but there’s nothing to guide new projects (or existing) into lanes beyond educated guesses and precedent. A hard problem, as @Reginald_Grarbs mentions above (but I do think tithe needs to exist somewhere).

I can potentially envision some formal enDAOment flow where you physically registered the subDAO as a “core node” or “non-core node” in the same way that “LLC” and “501c3” exist. Happy to leave that to Legal and Treasury to chew on :slight_smile:

With regard to Core Node oversight of projects (as @Eagle and @brianl discuss), I’ve also been chewing on the idea of some sort of “Guild Senate”. It’s my opinion that any project that does not only serve a single guild should be organized in the open “Cross Guild” space. At present, there is no real oversight or accountability and the Grants Committee does not really have much power beyond distribution of funds (and a rework is probably required, but that’s for some other post).

Though most of the current projects are championed and built by guild members, we have nothing formalized to secure that that’s the case (and get guild buy-in). A Guild Senate or general elected body can sign-off on these things and provide oversight in the “Cross Guild” no-mans-land / international waters.

Excellent post, good to add some visual clarity to what’s being formed!

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Thank you @frogmonkee as always for your deep thoughts on these very important matters. Bankless DAO is one of the premiere DAOs because we have people like you providing these brain dumps :pray:

I’d like to offer some thoughts for further dialogue and consideration:

This post emphasizes organizational structure, which is helpful to think about how projects categorize themselves in relation to Bankless DAO, but I wonder if it might also be helpful to consider, structure in relation to strategy.

Our north star is to help a billion people go Bankless (my current assumption).

That’s our mission, but how do we get there? On our path to helping onboard a billion people into DeFi/Bankless - what are we, as an ecosystem, willing to do or, more importantly, not do?

Arguably, strategy could accompany structural considerations. Clarifying our strategy might provide additional perspectives to consider the features of an ecosystem of nodes.

Conversely, what if we don’t pick a strategy and just let things play out? That, in itself, is a strategy albeit more hands-off and perhaps organic.

On Core Node vs Ecosystem Node: What determines whether a project is a “core node” vs “ecosystem node”?

At the moment, a heuristic appears to be whether there’s a market for a project’s products and service. If there is a market, the implicit, perhaps prescriptive (?) thought is that “successful projects spin off” (i.e., pursue external market opportunities). But projects that remain within the fold and continue to serve core nodes could also be just as successful. If there’s no external demand for products/services, yet the project helps Bankless DAO onboard a billion in to DeFi (assuming that’s the vision) - arguably that is just as a successful, if not more.

The section Relationship Between Core and Ecosystem Nodes implies some strategic intent. It positions the Core Node as somewhat of a “incubator” or “venture fund” with reference to early / late stage funding. Even here, strategic intent is worth clarifying. Do we (Core Nodes) want to be an incubator of talent? An angel investor in new projects? A venture fund to fully help projects scale?

Hopefully these questions provide a context to consider the features of Ecosystem of Nodes and, in answering, help us further refine what kind of ecosystem we want to be.

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Thanks for sharing, @frogmonkee. These objects/distinctions remind me a lot of E3O pattern which aims to generalize some of the common organizing concepts behind organizations like Buurtzorg, Haier and Zappos.
“Core nodes” map to “shared services platforms”
“Ecosystem nodes” map to “micro enterprises”.
I wonder if there are more ideas that we can borrow from that model.
Can we use a VAM-like template to spin up and fund new projects?
Can we evolve Bounty Board to facilitate more complex “EMC contracts”?

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I wanted to point out a couple of issues:

  1. Education guild made a strategic mistake of spinning off bankless academy
    that is an educational platform and these platforms exist better when they are held in conjunction with synchronous sessions used by teachers. The materials should also be incorporated as part of a larger curriculum held by a “faculty” like a group of teachers.

  2. the academy is different from workshops, because workshops give a more intimate experience. Drop out rates for workshops are lower. online massive open online course (MOOC) completion rates norms are less than 1%, worldwide.

  3. Also strategic mistakes were made to spend too much without realising educational outcomes first.

Educational outcomes should be FIRST realised, before spending big money.

My 2 gwei, in any case, this should belong to its own post.

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@itamargo, welcome to BanklessDAO

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