“The heart that gives, gathers.”  —  Lao Tzu

In 1816, a young lady, merely 18 at the time, withdrew herself from society alongside her lover and a handful of brilliant individuals. Bunkering into the "Villa Diodati" by lake Geneva, she and her accomplices settled to escape the "Year without summer" - a Volcanic Winter caused by the eruption of Mount Tambora a year prior - and remain amongst friends during a time in which outdoor activities were considered impossible.

One evening, the group settled around a fire and amused itself by recalling ghost stories translated from German into french. One individual proposed a challenge; each member was to spend their summer writing their own short ghost story and share it towards the end of their joint holiday. The young lady despaired for days until finally, one midnight, she experienced a "waking dream" - a moment of compelling visuals that both terrified her and encaptured her imagination. She went to work the following day and her short story, encouraged by her peers, became an entire novel named "Frankenstein." This young Mary Shelley recounted that summer as the moment she "stepped out from childhood into life."

Throughout history, works of art, literature and science were often envisioned during periods much like that experienced by the young Shelley: Beethoven wrote some of his greatest works living at the Lobkowicz Palace in Prague, whilst Scientists or Philosophers such as Carl Jung and Friedrich Nietzsche would prefer moments of withdrawal and solitude at Bollingen Tower or Villa Weimar. Politicians have historically sought the commonality of withdrawn locations like Davos or Bretton-Woods to conceptualise their ideas, converse and remove themselves from the outside noise. Bluecher and Napoleon even held a casual whereas brief conversation at Burg Düben, ignoring the war they were waging against one another for even just an instance ahead of the Battle of Leipzig.

The common theme amongst these examples is the fact that a withdrawal from society in places designed for incubation has often been the source of extraordinary creativity. Moreover, throughout history, buildings now seen as Cultural Heritage Sites have been the conductive force bringing great minds together. Unfortunately, however, society appears to have redefined such sites as landmarks to remind of the past and to symbolise former authority rather than to continue utilising them for the incubational purposes for which they were constructed. This year, at DAO Palace, a group of individuals from the broader Web3 community decided to change this.

Cultural Heritage Sites as Incubation Centres

Following two and a half years of COVID-19 and Lockdowns, many could surely relate to the forceful retreat Shelley experienced during the dark summer of 1816 and the communal experiences they engaged in by necessity. Nevertheless, we again forget the power of withdrawal from society - especially when surrounded by like-minded peers that have a hunger or desire to create. The extraordinary factor amongst the aforementioned examples is that most of the works incubated were not by agenda but instead emerged naturally from the environment created by extraordinary individuals being together in one inspiring location.

DAO Palace 2022 endeavoured to recreate this environment; for two weeks in July, 35 of the greatest minds from around the world and throughout Web3 gathered at the Bueckeburg Palace to understand the depths and limitations of nascent Decentralized Autonomous Organizations (DAOs). Throughout these two weeks, there was no pre-set agenda nor objective on outcomes but an encouragement to let projects, ideas or collaborations emerge naturally. The hidden goal, however, was for a community to emerge that would conceptualise ideas or projects to be worked on well beyond the duration of the event. This goal was undoubtedly met as over 24 projects were initiated during the event, and several others continued to develop amongst the participants in the following days.

For me, the objective was to reintroduce creation and life to the walls of a heritage site that has stood merely as a reminder of history since the past world war. It was an opportunity to invigorate the space the palace offered and let the history behind it inspire some of those brilliant minds. Furthermore, DAOs offered an opportunity to bring the most remarkable possible diversity in participants to the same location, guided by the common desire to solve coordination problems and empower communities worldwide. I was a newcomer to the DAO space and therefore learned a few broad-scale lessons which may or may not have been shared by the entirety of the community.

1. DAOs converge talents through liberal dynamics

The liberal market theory is core to the Web3 ethos and founded on the belief that organisations or individuals will naturally shift, pivot or converge to fulfil existing needs or gaps within the market. DAOs, in certain ways, reflect this with talent: On a broader scope resulting from the element of ultimate transparency, DAOs remove value from the Intellectual Property of core products and place it on communities. This means that communities are formed based on interests, passions, missions or values and can involve numerous types of individuals. Such communities borderlessly aligned by these criteria become a desirable offer to members of highly diverse backgrounds. Early renditions were visible at DAO Palace, where most participants converged around one broader issue - to determine how collectives like these could manage themselves without wide-scaling coordination failures.

On a smaller scope, therefore, these dynamics play out on the immense talent pool that DAOs attract. Suddenly, people worldwide are constructing, experimenting with, and frameworking different incentives for others to join their community. It could be seen somewhat as bees attracted to certain types of flowers for their pollen. So if one finds a recipe to create a particular type of flower to attract any specific type of bee, the consequences could be tremendous for future communal coordination. Determining how best to construct and govern these communities is a problem worthwhile solving for people of widely variable backgrounds. As an example from DAO Palace: Matan Field (DAOStack - a project building open source software stack for DAOs), Geoffrey Arone (Logos DAO - a central DAO directory), Isaac Patka (Also Logos DAO), Will Papper (Syndicate - an Investment DAO Protocol), Primavera de Filippi (A Harvard Legal Scholar and Researcher) Trach (Coordinape - a Decentralised Compensation Protocol) and Joshua Tan (MetaGov - a project building and researching DAO Governance Frameworks) worked together to build the DAO governance OS, which would enable DAOs to modularly integrate individual aspects of other DAOs attributes in governance, tech stack or token functionalities. Each adding personal experiences and insights, the scale of such a project would cut across several use cases for these decentralised organisations, as well as the different Blockchains they rely on or the frameworks upon which they have been built. The various insights and experiences these individuals contribute therefore support the construction of such a wide-spanning target audience.

People building DAOs at this stage are highly early adopters. As most DAO use cases are still being explored, the space sits within a phase of its development in which the underlying frameworks are yet to be conceived. These need to be modular and loose enough to fit countless applications well beyond what is currently imaginable - a task requiring extreme creativity, foresight and respect towards security or moral values. Put into context, it requires highly diverse input from a wide array of early contributors. Most of them are building the space right now and constitute the best and brightest from academia, politics and industry. These early frameworks are akin to early renditions of political or economic infrastructures - they may change over time but need to be constructed knowing that DAOs and Web3 will likely affect millions of lives at later adoption cycles. They will therefore need to be responsibly designed with the security of their users at the core. Coordination is a compelling problem to solve across all segments of the human economy and attracts those of all backgrounds that are most passionate about discovering a disruptive innovation to current models. This is not to say that there is not a darker, opposing side to contributors within the space. However, it comforts me that there is a dedicated collective of individuals taking great care in their assumed responsibilities.

2. DAOs seek validation use cases

One of the most noteworthy takeaways from this event was the excellent care most, if not all, participants showed towards questioning how they could support society and solve major environmental or social problems most apparent in today's world. On average, 80-90% of the participants seemed passionate about using the technologies in discovery to create broad-scaling benefits for people and the planet - be it via facilitation of financial inclusivity in third-world countries or supporting environmental research via Blockchain-enabled Data Oracles and more. This was a remarkable statistic considering the usual predominant focus on the financial opportunity in emergent enterprises or improvements towards the acquisition or systems emerging thereof. Naturally, some may argue that this positivity is a common symptom of early industries and may later change as the market matures. Nevertheless, some of these applications had straightforward and powerful models that were more scalable than initiatives I was previously familiar with.

Part of the reason for this may be the underlying philosophies that attracted contributors to the space, such as inclusion, decentralisation or global access to ownership and resources. Another reason may be that DAOs currently seek a "North Star" - a Model example of a secure, scaleable and well-functioning DAO that powerfully addresses unsolved problems with unique innovations. To some degree, it may also be the subconscious desire for validation for the technology and DAOs. Past examples of the original DAO, as well as Constitution DAO or Uniswap, have shown that DAOs can aggregate vast financial and individual resources under one shared mission but have nevertheless not truly addressed causes that those outside the Web3 space care for. Problems such as hunger, poverty, global warming, and war are issues that are being solved primarily by governments and mature industries that have spent decades or even centuries maturing to the point that they can scale towards large populations. DAOs are able to reach these populations without necessarily having acquired the resources in advance and, nevertheless, have not yet been recognised for their ability to address these fundamental global problems. Perhaps, therefore, do DAOs need to focus on these validation use cases and create something that achieves what legacy structures have not.

The critical agenda is a race to develop stable DAO frameworks and find the correct problems they could most efficiently contribute towards - it is about understanding what broad global problem could best be solved by a DAO. Such a model DAO would not necessarily look like anything we have seen nowadays but may instead leverage the underlying network dynamics that make DAOs unique to other types of organisations. It may not even be called a "DAO" or necessarily emerge from the current Web3 industry. Instead, it may be one of a wide variety of Blockchain-Enabled Communities, of which DAOs are simply one segment, and be developed by a prominent industry player recognising their opportunities. This is speculative, whereas the vital attribute of DAOs, their scalability, has already been proven. Now DAOs need to be applied to more significant Problems and tailored towards them. Experiments on how creators of such organisations could apply models to different use cases are constantly being conducted and now increasingly applied to societal issues or inefficiencies as the tech stack underneath these communities become more stable and proven.

Another fundamental DAO question currently still underdeveloped is that of a relatable user experience. If the ingredients required for a validation use case are Security, Real-World Problem Applicability and Scalability, then such a DAO would need to be usable by incredible quantities of people with varying experience in technology. Most, whereas not all, would have some familiarity with Web2 Technologies. However, few would be able to navigate the self-sovereign landscape of Web3 interfaces, let alone safely store their tokens or participate in DAO votes. Therefore, early renditions of these validation experiments would need to cater to user segments similar to those encountered on a larger scale. They need to be simplistic, categorised, visually appealing and incentivising contribution. Their overall benefit would also need to be clear to the target users; it would need to be evident that joining such a system would significantly improve quality of life or have a measurable and emotional impact on the user or his/her environment.

One of the main projects emerging from DAO Palace is "DAOESCO," which is an attempt to merge Cultural Heritage Sites and Technological Innovation to create a win-win situation for both the sites and community members. It is effectively a full-year DAO palace-style residency that contributes to the maintenance of multiple historical sites around the world whilst fostering growth within the Web3 space. A significant point on the agenda of our frequent meetings was how best to "give back" to populations of towns surrounding these heritage sites, be it by supporting existing business operations, fundraising or, in some cases, developing safe systems for problems identified in these localities. The most underserved Cultural Heritage sites are predominantly located in rural areas that grow older and more distant from technologically advanced urban centres that attract young talent for fast-moving industries. This offers an opportunity for local communities and early creators alike: For rural communities, it is a chance to benefit from a global and diversified Brainpool with different viewpoints or methods of addressing such issues. For the creators, it is an exercise in problem-solution fit and forces them to find local issues most worthwhile solving for which DAOs or Web3 technologies may be best suited. Simultaneously, products or systems developed for these communities would need a simplistic user interface/user experience tailored towards those with less technical know-how. As a result, such systems are well suited to scaling towards a more comprehensive, global audience facing similar problems as the inhabitants of these rural areas. It becomes a robust dataset for project development with immediately measurable results. At the same time, building relationships with smaller communities to enable such implementations and experiments is more manageable, allowing them to serve as achievable validation use cases when discussing broader, perhaps national implementations.

3. DAOs are warming up to real-world collaborations

A memorable moment at DAO Palace was the visit of former German vice-chancellor Philip Roesler. During his visit, he spent some time talking to the participants, viewing some projects being worked on amongst the group, and holding a fireside chat - in which he answered some of the participants' questions. It was interesting to witness the variety of the questions asked, which ranged from how best DAOs could prove their worth to governments and regulators to how likely it would be for governments to hinder the growth of the Web3 space, given the current momentum. Philip answered truthfully and with respect towards the innovations occurring, himself having been fascinated by some of the projects being worked on and pondering how real-world politics may look if such systems were possible on a national scale. During a conversation after the event, he told me that he believed there was extraordinary power in how these online-native organisations could be governed and the tools that would enable them. However, he believed that we were still in the early stages of finding a compelling narrative that would capture the attention of politicians.

Another inspiring observation during his visit was that of the three projects we looked at, the most frequented room was led by Primavera de Filippi, who was running a session on using NFTs for Social impact. It was remarkable to see how many contributors were passionate about using the technologies to create social impact and how many have become open to collaborating or supporting existing governments on such issues. This is a significant shift in attitude from a previously unshakeable puritan decentralised and anti-institutional mentality. Whilst Decentralization is still a core value necessary to the development of the sector, few protocols have achieved it (if any!), and those that presumably have are a topic of high debate regarding how decentralised they genuinely are. What some have viewed as an opportunity to replace legacy structures fully is now taking a multitude of formats - some integrating with legacy systems and creating modular, more inclusive community representations. Some are replacing traditional models entirely, and others are creating new forms of organisations for a digital economy that would not benefit from traditional models in the same way. DAO Palace participants such as Songyi Lee and Will Papper (Founder of Syndicate) have begun looking at ways in which DAOs could impact societies around the world in collaboration with local Governments of developing nations, the Impact Collective and Syndicate Protocol.

For those looking at innovating on top of legacy infrastructure, DAO tooling is beginning to take forms that would have compelling use cases in the real world if at all applicable (which remains to be seen). Jack Chong (Home DAO - an Oxford Incubator DAO), Jordan Topoleski (Arkive DAO - A decentralised Museum) and Joshua Tan (MetaGov) worked on a study to examine the interrelation, differences and similarities of traditional politics with politics in Web3. Similarly, Josh also constructed a modular constitutional framework for DAOs, having analysed national and existing DAO constitutions to determine the most common attributes. As a result, DAOs could quickly develop their constitutions and apply characteristics from others to integrate into their organisation. Such systems, alongside the aforementioned DAO Governance OS, would be handy tools for governments relying on highly lengthy and challenging processes to legally implement laws or rulings they witness as functional within other nations. Since a "true" DAO is yet to be seen and thereby proven, one may conclude that the DAO tooling space has the most immediate explosive potential in the near term since it cuts across the boundaries of Web3 and has potentially powerful real-world applications in coordinating masses. Projects and products built by participants, such as (for example) Commonwealth, which participant George Beall represented, offer a glimpse into the potential of Web3 products breaking into the traditional world.

Beyond this, global brands have already begun branching out to explore the potential of DAOs for their operations. A well-known brand has approached our group to explore designing a residency similar to that of DAO palace to explore the opportunities the sector could offer their company. For legacy institutions, DAOs could act as a new method of community engagement or perhaps even as a decentralised Research and Development hub. Assume, for example, that a brand was willing to provide a DAO ownership of its digital assets alongside the associated IP rights whilst retaining a share of the token supply. The DAO would thereby be incentivised to create products or systems that could help grow the brand and determine new methods of engaging the nascent Web3 space. For the DAO, it would be an opportunity to collaborate and own a fraction of a brand it is passionate about. Conversely, for the brand, it would be a cost-effective and innovative method of entering a new digital space in which it does not have the workforce to engage. Of course, this brand would need to be prepared and structured to protect it from any potential fallout. The exact manner in which such a collaboration would function is yet to be determined and theoretical.

The inconvenient truth is that beyond the benefits to society and legacy systems DAOs or their tooling could provide, they will need to begin warming up to regulatory scrutiny. A primary reason for this is that they span beyond the boundaries that cryptocurrencies have traditionally faced as sources for transactions or investment and are beginning to range into various aspects of life across previously untouched societal categories. Their vastly increasing network effects and ability to supercharge the growth of Web3 adoption means that they have the potential to become disruptive in a far faster nature than previous Web3 sectors. As a result, Governments may worry that the systemic risk associated with affecting multiple sectors at once could be too much to bear. The space cannot disrupt the entire ecosystem at once: There are too many lives at stake, especially when approaching underserved communities. This means that DAOs should collaborate with governments to understand how best to cater to their concerns and jointly solve problems both are hoping to approach instead of seeking conflict with them. Secondarily, some DAO models act as supercharged lobbies, meaning there is no reason to assume that a DAO with potentially dangerous objectives would not leverage the same tools or technologies to inflict widespread harm. Having witnessed the power of Facebook communities igniting the Arab spring or the alt-right push in the United States, what is to stop DAOs from overcoming coordination failure to attack groups of individuals or entire nations? What is to stop an ISIS DAO or Fascist DAO, or one secretly controlled by national adversaries? Such a scenario would (rightfully) attract the attention of Governmental institutions well beyond the familiar SEC, CDIC or Financially-oriented bodies, instead paving the way for National Security Agencies to approach DAOs as potential threats. Fortunately, such scenarios have not yet emerged. However, they remain a possibility that the industry should be aware of as it continues - the usual guideline for the conversation being the age-old responsibility associated with new power. Addressing and concerning oneself with these questions allows contributors to front-run a typecast for DAOs as a whole in being hostile, dangerous or outright evil across the board.

Communities, Coordination, Proto network-states

As DAOs venture forward in their nascence to discover how to validate their existence, coordinate masses and integrate or cooperate with legacy institutions, the rest of the world sits restlessly in insecurity of its economic future. The fragility of post-covid society and the prospect of a changing world order provide a ripe breeding ground for communities to emerge beyond financial incentives; focused on other forms of capital contribution. New forms of wealth are beginning to include social-, intellectual-, cultural-, or political capital that has historically had functions in nation-states as opposed to smaller online communities or businesses. They become valuable and enticing to individuals flocking towards borderless networks of anonymous contributors, unified around joint missions - most of which may or may not find direct relevance in today's uncertain global climate. To some, these may offer a valuable counterbalance or security layer against national crises, much like national DAOs created around particular issues (see Ukraine DAO). Conveniently, these particular examples and the current climate may offer the validation use-cases and integrations into the real world both Web3 and DAOs seek.

DAOs or Blockchain Enabled Communities will likely continue to grow as a driving force in developments for mass coordination - their current premise is the accumulation of large communities. However, the most valuable outcome may just become the innovations in managing these masses afterwards. Accumulating these large communities, therefore, becomes a cross-disciplinary contribution mechanism, bringing some of the most extraordinary talents into the space early on. DAO Palace and DAOESCO are an expanding snapshot of this global talent pool - their agendaless conference frameworks being tailored to bright individuals that are self-motivated and looking to build tools that may fairly and democratically manage millions in the future. Such events, alongside the DAO space as a whole, thereby become an area that political and economic innovators should view with great interest - regardless of whether or not their ultimate outcome is precisely as envisioned. Viewing a DAO or Blockchain Enabled Community as somewhat of a microstate, and comparing their ability to govern assets trustlessly, incentivise contributors and manage micro-economies in real-time could have valuable, if not revolutionary, implications. They could affect our abilities to flexibly handle national economies in the future and avoid potential pitfalls of slow decision-making during the information age. It may just prevent an economic crisis or, at the very least, allow for a quick recovery on a global level in certain instances - at least in theory.

The space is in its nascence and will shift; the most valuable outcomes may lie well beyond our current optimistic assumptions. Events such as DAO Palace look to ensure that some of the critical defining principles making DAOs attractive will continue to be integrated. Autonomy, Trustless Labor relationships or aggregation of leverage over influential centralised players will continue to democratise new asset classes in ways the Internet has democratised access to information and empowered masses in previously unseen ways. Perhaps these are the attributes naturally emerging from agendaless conferences in sites that inspire brilliant individuals - or perhaps these locations are simply overdue to re-emerge as incubation centres for the masses, inspiring them to inscribe new moments of history on their walls.

This article expresses my personal views and opinions following the DAO Palace 2022 event at Schloss Bueckeburg, Germany.

For more information on DAO Palace 2023, DAOESCO or 3.O Labs, contact me at donatus@3olabs.io