What is a subDAO?
The age of DAOs has arrived.
Cryptography has opened up new opportunities for collaboration and organization among humans. One such development is the emergence of DAOs, which are internet-based communities with a shared mission and bank account.
DAOs have the potential to revolutionize the way future companies operate. Traditional companies rely on a hierarchical structure where decisions are made from the top down. However, in DAOs, decisions are made collectively, which does not necessarily guarantee efficiency.
To reap the benefits of both traditional organizations and Web3-based empowerment, DAOs should aim to strike a balance between strategic direction and rapid execution and decentralization.
As DAOs mature and grow, they must increase the level of decentralization through the use of subDAOs.
What is a subDAO?
subDAOs are working groups within a DAO that have their own particular mission and duties aligned with the overall purpose of the DAO.
As organizations expand, they often diversify by adding new departments, products, collaborations, teams, and initiatives. Similarly, Decentralized Autonomous Organizations (DAOs) can create specialized working groups, known as guilds, to achieve specific objectives.
These guilds can evolve over time to become subDAOs, which are autonomous units within the parent DAO. For a guild to be recognized as a subDAO, it must possess two key characteristics: a separate treasury and its own governance process.
Separate treasury
Separating subDAO treasuries from the main DAO treasury using Multi-sig allows for faster funding. This is accomplished by allowing one DAO member to allocate budgets to different subDAOs, while another member acts as the subDAO leader and makes decisions about how to use the budget. This increased autonomy and efficiency not only benefits subDAOs, but also helps the parent DAO to grow and innovate by decentralizing responsibilities.
Single Government Process
SubDAOs operate with a degree of autonomy, having their own governance process, while still adhering to the overarching governance principles of the parent DAO.
The parent DAO, also known as the matrix DAO, sets the basic laws and guidelines, while the subDAO is given the autonomy to establish its own unique governance mechanisms, which are determined by its members. By spreading governance power across different groups, it allows for better performance of the overall DAO.
Why create subDAOs?
DAOs create subDAOs to drive action and achieve specific objectives. By decentralizing decision-making and distributing efforts among different groups, DAOs can foster innovation and tap into the talents of its members.
Creating subDAOs provides several advantages, such as:
DAOs create subDAOs as decentralization can be complex, especially as the scope of the organization grows. To mitigate this complexity, members need to be grouped based on their skills and interests to facilitate coordination and organization.
An agile network of autonomous workgroups can create a decentralized organization while maintaining efficiency. The main goal of the DAO is to allow for operational autonomy while ensuring that the subDAOs align with the overall philosophy and objectives of the parent DAO through an incentive structure.
subDAOS types
The most prevalent types of subDAOs include:
Departments/ Guilds
These are functional groups where individuals perform work independently, usually specializing in one practice or discipline. Many DAOs have departments for treasury, legal, marketing, etc. These departments have leaders or administrators who are responsible to the parent DAO. These groups of jobs are typically permanent, even if positions are renewed over time.
Projects
DAOs may create multidisciplinary teams that are organized for a specific objective. These teams are typically disbanded after the project is completed or abandoned. Projects are initiated by a leader or group with a DAO governance proposal that calls for a set budget.
Services/Companies
SubDAOs do not have to be created within a DAO. A group of individuals may independently provide their specialized services to a DAO. For example, a guild of designers that acts as a subDAO for different DAOs. They receive a budget and objectives, which they work to independently.
Committees
Another common and necessary working group within a DAO are committees. A subDAO can be responsible for approving or auditing projects that are carried out in the DAO. Instead of a board of directors, DAOs create committees that are tasked with resolving alignment conflicts between departments and determining what is best for the entire organization.
Conclusion
The question of how best to organize ourselves is a fundamental and ongoing one for humanity.
DAOs, like traditional companies, present various challenges, one of which is to optimize their operations. By delegating tasks to specialized groups, the performance of the DAO is improved.
As DAOs grow, they attract more members, and management becomes more complex. In this context, subDAOs will play an increasingly critical role in the evolution of DAOs.
Some experts predict that DAOs will eventually surpass centralized organizations in size and influence, becoming larger than countries, companies, and other entities. This can be achieved by dividing efforts into subDAOs, allowing for more specialized and efficient operations.
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