Why is DAO seeing a boom? What challenges remain before it matures?

Author:goubi

The DAO Boom Over the past 18 to 24 months, we have seen a surge in DAO creation, similar to the gold rush of the mid-1800s. Just as hopeful miners travel thousands of miles in search of opportunity, crypto/web3/DAO builders and enthusiasts believe a better world awaits. In my opinion, there are four main reasons for the DAO boom.

1.Proven Layer 2 (L2) solutions L2 solutions are pieces of code that run on top of the Layer 1 blockchain (Bitcoin, Ether, etc.). These are the core infrastructure components that offload the processing of transactions from the layer 1 chain. Because these transactions are processed "off-chain", there is higher processing power, faster confirmation times, and lower gas fees.

This all adds up to a smoother end-user experience for the DAO ecosystem: from the creation of the DAO itself, to voting on specific proposals, to fund management.

2.COVID effect The depression and isolation that comes with a home blockade has led many to seek out digital communities to fill the void. The extra time at home and new ways of working also force people to question their relationship with work. Both of these effects drive individuals to seek out communities that share their values and atmosphere. It drives employees to question what they are doing, how they get their work done, and with whom they work. All of these pain points lead people into the DAO ecosystem.

3.encryption/web3/DAO narrative becomes mainstream

Between powerful VC companies launching crypto media machines, web3-based publishing platforms giving a voice to enthusiasts, and continuing to share and educate the broader community of diverse content creators, we've made great strides in comforting the masses with what crypto/Web3/DAO is and how to engage.

4.DAO operating system

I believe the last major challenge in explaining the DAO explosion is the maturation and adoption of "DAO operating systems," a term Coopahtroopa coined in his post on the DAO Landscape Breakdown. Platforms like Aragon, Daostack and Daohaus allow individuals to create and manage DAOs with the click of a button - no coding skills are required for DAO operators.

Future-oriented foundation Given the novelty of decentralized Internet-native organizations, many DAO founders and operators are unprepared for the long run. the rapid growth of the DAO population boom leaves little time for basic DAO tools and best practices to develop and mature. This sentiment is best portrayed in Julia Rosenberg's tweet：’Fortunately, this did not lead to the looting and violence faced in the gold rush. As the ecosystem learned and matured together, it mostly led to confusion and overwhelmed DAO contributors and operators having to face some level of pain.’

To scale, I believe that DAO founders and early DAO contributors have a lot to balance when considering how to achieve their long-term goals: Enable product/market matching and penetration Extend DAO operations with tools and processes Gradual decentralization over time

Given the current maturity of product management in general, achieving product market fit seems to be the most straightforward part of the DAO equation. There are best practices that outline how to iterate, test and learn to find product market fits for products, services, communities, open source software, etc. Not every DAO will achieve product market fit, but at least there are precedents and scripts to follow.

The biggest challenges facing the DAO core team include: Finding tools and processes to support current state DAO operations Laying the groundwork for a long-term decentralization plan

Even with a burgeoning DAO tool environment that supports core functional areas of DAO operations, many of these solutions do not provide the composability needed to incrementally build progressive decentralization.

The core decentralization themes of core team engagement, asset management, community engagement, and token distribution need to be modularly woven into the fabric of the DAO tool to support the core functional areas and DAO decentralization goals.

The most successful and widely adopted DAO tools of the future will support DAO's move towards decentralization through a frictionless and intuitive experience.

The explosive growth of the DAO ecosystem shows us the collective passion and energy. The promise of flexibility, autonomy, ownership, and more gives DAO founders and contributors all the motivation they need to continue building their products and communities to achieve their goals.

Conclusion However, the collective community should also acknowledge that the tools and associated infrastructure needed to allow DAO to scale and move frictionlessly toward decentralization do not yet exist. Without addressing these issues, the DAO core team, contributors, and community will continue to be frustrated, lost, and overwhelmed as they attempt to move forward with their products, services, and protocols. It is incumbent upon the community to continue to effectively and openly discuss, debate, and push for better solutions to meet the unmet needs of core DAO operations and decentralization goals.