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DAO Lifecycle

Core Team Mechanics

Based on analysis of 15 DAOs there is aggregated DAO lifecycle towards decentralization. Some steps can be skipped or occur in a different order.

Pre-DAO Stage

  • Project launch
    • A project gets initiated and developed by its founders and core team. Idea of the project, core mechanics and operations are initialized and implemented.
    • At this step every DAO project acts in the similar way to traditional business — governance, decision making and financial streams are centralized within core team.
    • Strong core team is essential to successful project launch.
    • Transparency of the core team is usually pretty low - roadmaps (if exists), tasks, goals, KPIs, and OKRs are hidden internally.
    • Community role in governance tends to be minimal.
  • Community building
    • Once the concept of a project gets shaped, core team creates more exposure around the project to attract attention new followers.
    • Governance, decision making is still centralized within core team.
    • Transparency of the core team usually may gets increase, but still stays low - the core team may communicate important messages to the community.
    • Community may act as an advisor to the core team and source of feedback.
  • Preparation to DAO launch
    • This step occurs once (a) a solid group of highly engaged community members gets formed and (b) the core team ready to start delegating some governance right to the this community in exchange of funding. It’s important for the core team and the community to work together on an image of future DAO, rules, vision, goals and structure.
    • Crowdsourcing (core team and community) development of DAO manifesto or constitution. Among others, the following mechanics and topics should be covered:
      • Mission, Goals, and Value
      • Tokenomics
      • Governance
      • Treasury Management
      • Tools and platforms
      • Structure of DAO
      • Decision-making process
      • Decentralization plan and timeline
      • Sub-DAO, including sub-DAO withdrawal from the DAO
      • Minority tokenholders voting capabilities
    • Transparency of the core team and strategy should be significantly increased, since community should understand DAO rules, strategy, goals, vision and main milestones.
    • Before the token emission event, the core team still own full rights to the project.
    • Community plays significant role in rules making and DAO development.

“Centralized” DAO Stage

  • Flat structure
    • The core teams mainly responsible for project development, roadmap and strategy.
    • Community governs major DAO decisions as treasury management, but in terms of development it acts supplementary to the core team.
    • Community members start contributing to the DAO
  • Organization structure formation
    • Once community gets bigger and harder to coordinate evolutionarily centers of product specialization, expertise or business domains start to arise. It forms dedicated centers like departments or Working Groups/Squads/Sub-DAO.
    • The process can occur top-to-bottom, when the core team initiate creation of department or bottom-up, when most engaged community members initiate the process.
    • Departments may include internal structure, governance, leadership and treasury but usually they have a flat structure.
    • Departments are responsible for reporting to the DAO, approving budget and KPIs but relatively independent from the internal operations perspective.

DAO Stage

  • Core team as a Department
    • Core team finally becomes a part of community as one of department / working group / sub DAO. It may have preferred position in terms of decision making, but the whole framework is governed by community and community rules.
    • Core team may be rotated, replaced or dismissed based on community decision.
    • DAO fully operates as a decentralized organization.
  • Sub DAO Maturity
    • Departments or Sub-DAOs continue to growth and evolve from flat structure to more complex form of a body.
    • More independence in Sub-DAO operations, building funding sources or revenue streams other than the DAO.
    • Mature Sub-DAO internal processes, governance, layers, polycentricity.

Post-DAO Stage

  • Sub DAO independence
    • Potential step when one or many Sub-DAOs become more independent from the DAO and start acting as a completely independent body and stop reporting to the DAO. The interaction can be in form of partnership of equal bodies or can be stopped at all.
    • It’s is important to have a pre-defined mechanism of sub-DAO withdrawal to keep this process painless and secure stakeholders interest.
    • The role of initial core team at this step may be minimal, it’s community driven process.