Funding Proposal: Test the Viability of DAO Consultants

I was reading about it. One could say I took partial inspiration. But my use case is much simpler. If DAO’s catch on like I’m hoping it will be one of the best and most interesting features in thr ecosystem.

In my mind there’s two big questions that need to be answered for this to work IRL:

Who/what do clients send money to?

While DAOs are on-chain, most clients are not. Most clients, I would imagine, are businesses that require a legal entity to send them an invoice for services. Is there a way for the entire transaction to be handled end-to-end with crypto (no legal wrapper), or would the “DAO” need a legal wrapper? (at which point it’s really just an LLC that’s managed on-chain vs a decentralized autonomous organization)

Who/what controls the data?

While you and I can manage this initially, if we were to scale beyond 2 people into some type of DAO we would need a way to manage data. Currently, AFAIK, all the good CRMs and/or task managers are centralized databases that require an admin (even if they’re open source). We could say that “senior members” get admin access and rookies don’t, but this isn’t very “DAO.” Then it’s just a business, which is totally OK, but if the goal is to create a DAO then I don’t know what we do here ¯\_(ツ)_/¯ Would we use a centralized database for the CRM and then just use the DAO to manage reputation/rewards, or is there another way to approach this?

Oh, I like this a lot @burrrata!

Yes, it greatly simplifies things if the client can enter into a consulting agreement with the individual consultants directly.

If that’s the case, then this would resemble the professional association model where the members pay membership dues. So if we go along with the Reputation DAO, member consultants could be required to pay monthly, quarterly, or annual dues. The dues collected would be used for DAO administration, screening/qualifying/certifying the consultants, and providing continuing education, networking events, etc.

I think the McKinsey model is still possible as many projects pay development grants in crypto, and therefore I don’t see why they wouldn’t agree to pay the DAO Consultants DAO (DCD???) in crypto as well. DAO Consultants DAO could then pay say 80% of the fees collected to the consultants who did the actual work, and retain 20% for distributing among all the co-owners or partners of the DAO. There could be senior partners, junior partners, apprentices, etc. If all payments are handled in crypto, then the DAO might not need a legal wrapper.

I have some friends who are lawyers in the blockchain space so I could ask them about how to set up a legal wrapper for the DAO.

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As I mentioned in my previous reply, many crypto projects pay out development grants in crypto, so I don’t see why they would not agree to pay the DAO in crypto as well for consulting services. The DAO would in turn pay out the individual consultants. Therefore, this would be an end-to-end crypto solution with no fiat dealings at all, and therefore a legal wrapper may not be required.

Perhaps if the DAO needed to formally enter into a contract of some kind, it could appoint an entity or law firm to act as power of attorney or its agent and execute contracts on its behalf.

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Check out Blockstack for decentralized solutions:

Arcane Docs / Arcane Office which works like Google Drive might work. I checked out Arcane and it looks cool! You can create documents, spreadsheets, forms, upload pictures, and export the files or share links to the files. All the files are stored on Gaia decentralized storage.

I’m a big fan of Blockstack! :heart_eyes:

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Regardless of the currency used for payment (fiat or crypto), legal entities (non-profit foundations) need to receive billable invoices in order to release funds. At least that’s the way I understand that it works in most major jurisdictions. Happy to be wrong here! So please correct me if you know of a way that legal entities (businesses or non-profits) can send crypto to DAOs without incurring the wrath of the regulatory and/or tax authorities.

Please do! There’s a lot of people working on it atm, but at the end of the day a person usually needs to sign something - so then it’s really a legal entity like an LLC that operates on-chain vs a decentralized autonomous organization that operates autonomously. Both are fine, but if the result is a business that transacts on chain we should call it that lol

Looks cool, but even if the data is stored on a decentralized server the data access model is still centralized. Someone has an account and a password right? If a DAO controlled the data as well as access to the data via membership tokens (like Aragon Drive: file storage and sharing within your Aragon DAO combined with memberships and/or subscriptions) that might help, but at the end of the day someone/something needs to control the data. Legal entities that control data require contractors to sign data disclosure agreements, and then at the end of the day the legal entity (not the people) owns the data.

If the consultants are independent and contract with clients themselves (payments as well as data policies) then that could work. This would greatly simplify the DAO to just a curated registry of members who vouch for other members. Not sure if that’s of interest, but as soon as you start controlling user data and money things get complicated lol

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If the DAO Consultants’s clients consist primarily of crypto projects, then I can point to many examples of crypto projects that have no legal entity behind them (Ravencoin with $145M market cap, Decred with $210M market cap and so on), so they would be in the same boat as DAO Consultants. Many coins created from mining and privacy coins have no legal entity associated with them, just like Bitcoin, which made it to #! position in market cap without any legal entity behind it. Their goals are to be a decentralized autonomous entity with decentralized governance, and since they themselves are not a formal legal entity attached to a traditional jurisdiction, I find it highly unlikely that they would require DAO Consultants to have a legal entity to execute contracts with or even require an invoice. Plus if an invoice were required, I could imagine a tool on the DAO Consultants online platform that would enable a client to self-generate an invoice from DAO Consultants. Would this type of decentralized autonomous crypto project require DAO Consultants to produce an articles of incorporation for a corporation or nonprofit organization, or articles of organization for an LLC? I doubt it.

For crypto projects with a company or nonprofit entity behind them, then yes, you are right, they would probably require a legal entity to execute contracts with or issue an invoice for accounting and tax purposes.

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From a security standpoint, I think you will always need a group of trusted admins who can grant and revoke privileges to data. If it was purely open access, that would be dangerous and a security risk. If there is a data breach, you want to be able to narrow it down to the limited group of individuals who had admin level access. You want to be able to establish the chain of custody of the information.

Anonymized data could be owned by the commons and made available to anyone who wants to learn from it, regardless of whether they are a DAO member.

If there is no legal entity behind DAO Consultants, then pretty much all the data except for identifying information would have to be in the commons and made freely available, since if there is a data breach there is no way to legally enforce a claim.

The DAO space is immature and evolving, so I think we will see new tools that will offer a good combination of security and open access to data.

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I am no expert on the legal structures of these projects, but I wouldn’t consider them the typical customer of DAO Consultants. I expect that most projects requesting DAO consultants services are either already existing organizations wanting to use DAOs for some of their operations, or small projects wanting to kickstart their operations and governance with a DAO.

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Hi everyone!

This might help us solve the legal entity and legal wrapper issue for DAO Consultants:
https://docs.opencollective.com/help/collectives/collectives

When a client wants to pay DAO Consultants for services, they could pay a fiscal sponsor (usually a nonprofit with legal status), and the fiscal sponsor could in turn pay the individual members of DAO Consultants for work done, or reimbursement for goods or items paid on behalf of DAO Consultants. A fiscal sponsor could have multiple projects or collectives under its wing and handle funds collection and payments for all of them. This opens up the possibility for DAO Consultants to operate separate projects or collectives, with separate accounting for each, and have funds collection and payments handled by a single fiscal sponsor.

Open Collective is a platform that enables projects to raise money without having a legal entity or bank account. The use of a fiscal sponsor facilitates these fiat transactions, from the sponsor/donor to the fiscal sponsor, and from the fiscal sponsor to the individuals who supply the goods and services.

Open Collective also provides a platform for transparent accounting where the movement of funds can be seen and tracked and invoices can be submitted and paid transparently.

Open Collective is fiat based, but perhaps we could use a similar structure or fiscal sponsor for DAO Consultants. DAO Consultants could deal solely with crypto, or both crypto and fiat. If fiat is handled, then it may be easier to use the Open Collective platform.

@burrrata @LouisGrx What do you think about this?

I think the use of a fiscal sponsor opens up interesting possibilities. Maybe the members of the DAO should vote on what type of structure they prefer. If they want a professional association-type structure, like what @burrrata mentioned about a consultant registry and membership/subscription dues, then that model could be used.

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Hey Louis,

Thanks for your feedback! :smiley: Excited to see what type of project would like to use such DAO consulting services!

I’ve create a new community thread related to the use of fiscal sponsors:

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Very happy to see that you are moving the DAO Consultants idea forward. I really like it. Let’s make it work one way or the other!

As far as I know, most of our current users are small to medium sized projects.

  • Some of them are looking to increase the legitimacy of their governance process. They do that by leveraging the transparency and security of AragonOS. They also try to involve a larger set of participants (committees, community members) and be innovative with governance schemes.
  • Another category might be communities trying to become more organized, efficient (i.e. more economic). To do that they may want to leverage tokens, voting (Ex: DAOnuts) and fund management .
  • Associations and companies wanting to increase engagement in their community of users and contributors may use DAOs as tools to set up a bunch of community initiatives. I really like this use-case.
  • Ephemeral/pop-up projects like StFame are also interesting use cases for small, creative collectives…

TL;DR We are still early in the adoption of Aragon DAOs but it seems that they are a good plug and play solution for small/medium size projects and communities. While big projects often build their own custom governance (Ex: Bitcoin, Ethereum, Maker, Tezos, Decred…)

Good idea, i’m checking this out right away :slight_smile:

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I’ve just added a new community thread which is related to the merits of this funding proposal:
How Aragon DAOs can empower and enhance Corporate Social Responsibility (CSR) and Corporate Social Value (CSV)

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@burrrata Please check your inbox for my DM to you. :smiley:

I have a few DAOs that I want to get going which vary in complexity - if you want a guinea pig!

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Love to be involved in and support that process!

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Phillip, I would love and really appreciate your help! :smiley:

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Whatever I can do for the cause! I have been hanging out for DAOs to become usable while I worked on my for-profit but mostly my non-profit projects - so now I have a number of use cases.

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Hi everyone! :smiley:

Thanks for your interest and fantastic feedback so far with this grant proposal. :+1:

Since the original grant proposal, @burrrata and I have discussed the best way to move forward. We have decided that the grant amount requested should be reduced from $4000 to $2000 as @burrrata is already doing substantial work with Aragon Association that is related to the objectives and scope of work of the current grant proposal, and @burrrata would be providing support to me via AA if the grant proposal is approved.

Accordingly, the original grant proposal has been edited to reflect the lower grant amount requested of $2000.

As this proposal has been live on the forum for several weeks we are moving forward with a CFDAO request. The CFDAO vote link will be added to the grant proposal soon. Please vote if you’d like to support our efforts to reach out to users to help them understand and realize the value of Aragon! :slight_smile:

Thanks everyone!

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