How DAOs Are Changing Decision-Making Culture
In the Web3 world, DAOs have been one of the most debated structures in recent years.
In the Web3 world, DAOs have been one of the most debated structures in recent years.
At first glance, they might seem like a purely technical topic and a bit confusing for those outside this world, but DAOs actually represent a structure that’s fundamentally changing our decision-making habits.
Last week, we touched on what DAOs are, how they came about, and their basic mechanisms. This week, though, I want to look at the decision-making process in DAOs from a Web2, traditional business perspective.
You’ve Got Tokens, Now What?
In a DAO, holding tokens for a community or project gives you the right to participate in some decision-making processes. This usually happens by voting on issues that need decisions.
But this process is quite different from the traditional business world perspective:
- When and how are decisions voted on?
- Who prepares the proposals for projects or issues that need decisions?
- How are votes counted, and how are results implemented?
DAO structures offer unconventional answers to these questions.
And at the heart of it, as I often mention in my writings, is this: It’s not just about technical change; a shift in perspective is needed too.
A few real-world examples of DAOs currently in action might clarify how the Web3 world views this topic.
Gitcoin DAO: More People, More Effective Decisions
Gitcoin is a platform set up to support open-source projects and communities.
They created a DAO model to let the community decide which projects to fund.
The standout system here is Quadratic Funding.
In this model, when you vote, you can also support your chosen project with a contribution similar to crowdfunding, and the fund matches the total support from the community. But according to the “quadratic funding” model, it’s not just the total amount that matters, it’s also how many people contribute.
So, ten people giving $1 each can be more impactful than one person giving $10.
From a traditional business perspective, this raises a familiar question:
“Will only big investors have a say, or is the support of the broader community more important?”
Optimism DAO: Resource Allocation Shaped by the Community
Optimism DAO, on the other hand, is more focused on budget management.
The community allocates resources to projects aimed at supporting growth on the chain. Even past projects can be funded retroactively based on their impact and success criteria. (Retro Funding)
Funding applications are prepared as proposal documents;
they’re discussed within the community and then shaped through voting.
But here’s the interesting part: a hybrid structure is often preferred here too.
Some strategic decisions are divided into substructures like “Citizen House” and “Token House,” presenting a different, perhaps slightly hybridized interpretation of decentralization.
DAO Culture: More of an Approach Than an Organization
In DAOs, decision-making is not just a procedure; it’s a philosophy, a cultural matter.
Creating space for community input, making processes transparent, and sharing responsibility are what set DAOs apart from traditional institutions.
However, leaving everything entirely to the community doesn’t always work.
That’s why many DAOs use hybrid models:
- Expert teams first shape the proposals.
- The community then chooses among these proposals.
This structure tries to ensure both participation and efficiency at the same time.
The Next Step: Does It Really Benefit?
Examples like Gitcoin and Optimism show that DAOs can be inspiring not just for Web3, but for any structure or institution looking to increase participation.
But the question remains:
“Does it really work? What’s the return on investment (ROI) for transitioning to this structure for an institution or business model?”
Next week, we’ll focus on this question:
What are the tangible impacts of these Web3-based participatory systems?
How can institutions benefit from these models?