How Universal Profiles Can Relieve DAOs of their Pain
Sage breaks down the main issues and pain points that commonly occur in DAOs and then provides an insightful perspective on how Universal Profiles could relieve these pain points.
On X, Lyx Memes asked how Universal Profiles (UPs) can make DAOing easier, seeking ways that UPs could alleviate some of the pain points that plague DAOs. We had a back-and-forth discussion for a while, and I promised to draft my blog post this week to address this question. So, this week, we will delve into some of the major pain points for DAOs and how UPs can potentially help solve them.
One important thing to consider is that the true purpose of a DAO is governance, although "purpose" might not be the perfect word. This should not be confused with the goals of a DAO, as DAOs have various goals. Nevertheless, the ultimate purpose of the DAO is to facilitate the governance to achieve those goals, and in the process distribute social, reputational, and financial rewards to contributing individuals. (As always, shoutout to David Phelps for inspiring these thoughts.)
When we examine the pain points of DAO governance and its associated rewards, we can break them down into two key components: the individual participant and the DAO itself.
It's also important to note that I'm making several generalizations about DAOs, wallets, and systems. There are almost certainly specific DAOs, wallets, or protocols that ease certain pain points I'm addressing.
The Individual Experience
Identity and Reputation: The Turning Point
One significant issue for individuals within DAOs is establishing a unified identity. Current solutions, like EOAs (e.g., Metamask), lack long-term effectiveness. Users require a single account spanning various apps and interfaces to store their data and enable versatile usage. Without an account capable of properly housing an online identity, DAOs are unable to fully harness the potential of the individuals involved in their systems.
The most significant issues that arise for the DAO in this situation are:
Difficulty in accurately assessing reputation for voting.
Inability to optimize interactions across different applications.
Accountability and trust concerns.
While projects like Guild attempt to connect multiple accounts, this functionality remains limited for various reasons. Other apps would need to integrate Guild for cross-functionality to work seamlessly. Moreover, Guild connects off-chain accounts like X and Discord, which are not truly owned by the user in any case. However, that's more of an issue with centralized, non-blockchain-based social media platforms than with Guild itself. A more comprehensive solution is needed—enter UPs.
UPs are standardized accounts that can be easily utilized across the ecosystem, transcending platform-specific integrations. Being smart contract-based, they can seamlessly store and present data relevant to an individual's identity. Addressing the issues mentioned above, DAOs would now be able to have a much broader base of verified information for an individual, considering that this one UP account serves as their account for all their apps on-chain. This makes interacting with the individual safer across platforms while also enabling the DAO itself to create more complex governance systems thanks to the robust reputation options.
Transferring Reputation Between DAOs
Most DAOs are token-gated, which doesn't necessarily reflect users' expertise. It also makes it very hard for an individual to take their talents to another DAO, aside from their token count; it's mostly word of mouth. With UPs and LUKSO's unique token standards, the reputation you build in one DAO can be documented and presented wherever you go. Governance tokens can carry information, enhancing users' reputation across DAOs. This enables you to take your reputation from one DAO to another with ease, continuing to build reputation across various groups. This would also vastly improve the quality of DAO members, as their past contributions would be verified.
Current State Compared to the Future
To break down the current state for the individual, their identity is spread out over multiple apps and chains. Some accounts they own, and some they don't. Multiple wallets are used for safety and privacy reasons. It's scattered and fragmented. None of them are optimized to house any sort of rich information about the user, especially not in a presentable and interoperable manner. For DAOs, this is awful. It makes it hard to trust members, share information across platforms, or utilize social graphs.
With UPs, users can build a true online identity, carrying all their memories with them from DAO to DAO, keeping private information for themselves when needed. This will not only enable safer interactions for the individuals in the DAO, as well as the DAO itself but also enable the DAO to create more complex governance systems. We will elaborate on that next.
Empowering the DAO Itself
Now that we've addressed what Universal Profiles (UPs) can bring to the DAO members, we can get into how UPs can really solve DAO issues.
Enabling Sybil Resistant Systems
Sybil attacks pose a significant challenge in DAOs. They lead to governance manipulation, forum flooding, resource depletion, loss of trust in the community, and more. As discussed, UPs enable proper identity and reputation management, reducing the susceptibility to such attacks in a DAO system. As governance criteria advance beyond token holdings into contribution tracking, community representation and attestation, and other reputation-based governance methods, we should slowly see sybil resistance become less of an issue.
Making Governance Fun (Again? Has it ever been fun?)
Arguably, one of the most significant pain points DAOs suffer from is a low participation rate in governance. It just isn't fun or enticing enough. Logging into an app as some random string of characters to submit a vote that doesn't earn you anything you want doesn't sound enjoyable at all.
Imagine this instead: you log in with an account that has your name, profile pic, and a bunch of fun, visible data attached. You go and submit a vote that earns you reputation points, unlocking experiences in your community. Afterward, you hop into the forum and proudly show your unlocks and achievements to your verified and easily findable friends. Wouldn't you be more likely to participate?
To bring that use case to life, we need proper accounts that can house and move that robust data set in a sleek way. An EOA that shows random numbers on-chain representing my assets doesn't suffice.
Leveraging a Reputation System for better Decision Making
Another issue DAOs are plagued with is the uneducated voter problem. Currently, DAOs often rely on unverified random users to educate themselves on the current proposals and make a group decision with the others who are participating. This isn't efficient nor effective in achieving the goal of swift and positive outcomes. But there are only so many ways the current EOA wallets can interact with a system.
UPs provide tools for better contribution tracking and organization. DAOs can create UPs for their organization, managing actions through key management. This fosters organizational design promoting ownership and access levels based on expertise, role, skill level, tenure, and more, using key management ideology. This has the potential to create a vibrant, interactive governance landscape that is primed for positive decision making.
CPR Management Improvements Thanks to Universal Profiles
Fund management is another issue with DAOs currently. The inability to distribute treasury funds to the proper subgroups within a DAO while maintaining security and accountability is very challenging.
In certain cases, DAOs keep the entirety of their treasury in one account that requires a governance proposal to move. This approach keeps the funds secure for the most part, but if the account were to become compromised, not only is a large group very slow to act, but the entire treasury is potentially at risk.
UPs offer vaults, improving Common Pool Resource (CPR) management and group funding. Funds can be distributed efficiently through layered vaults, controlled by individuals with verifiable trust. This approach expedites CPRs and mitigates risk by compartmentalizing access to funds.
Setting the Stage for an UP filled DAO future
Let's now bring all the common themes from this post together for an example of what we could expect UPs to enable:
Individuals join the DAO with their UPs and can begin interacting with the DAO's network.
They start building a reputation, participating in hackathons, engaging in the DAO's social web, earning attestations from fellow members, contributing to the DAO itself, and attaching rich data to their UP.
Now, the DAO can verify who the individuals are in its community that are participating daily and potentially have the ability to make an educated decision regarding their expertise.
The governance system is aligned around this robust reputation network, making it highly sybil-resistant and focused on tight groups of educated decision-makers. This enables swift and informed decisions.
Meshed with the governance system is a network of vaults, each belonging to the various sub-groups within the DAO (Devs, Marketing, BD, etc., each with their own treasury).
Because the DAO knows which members have been participating in which groups and who has verified interactions, you can create layered governance within the DAO that enables individuals to make decisions in their specific areas while being able to utilize their allotment of treasury and no more.
In theory, this could create a sybil-resistant network of individuals building interoperable reputational identities, making decisions in many smaller groups that form a large decentralized web, while independently managing their own treasuries and governance processes.
It's a big vision, but KEEZ sees it. Stay tuned for updates from us on that!
In summary, DAOs need Universal Profiles!
The main pain point for DAOs lies in the current account infrastructure, hindering identity and reputation building. UPs offer a comprehensive solution, benefiting both individual participants and DAOs as a whole. By addressing these pain points, UPs have the potential to reshape the future of DAO governance.
Last but not least, I leave you with a quote:
”Keep on dreaming boy cause when you stop dreaming its time to die” - Shannon Hoon lead singer of Blind Melon