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Exploring the Potential of DAOs: Empowering a Decentralized Future

S8 Ep3 with Marco Grendel and 0xJustice of Polygon DAO ecosystem

In the rapidly evolving world of blockchain technology and decentralized governance, DAOs (Decentralized Autonomous Organizations) are gaining significant attention. A recent episode of the Crypto Sapiens podcast, featuring Rachel as the host and her guests Marco Grendel and OxJustice, delves deep into the intricacies of DAOs. Join us as we highlight the key takeaways from their insightful conversation and shed light on the potential of DAOs to revolutionize traditional organizational structures.

Don't miss out on this opportunity to learn from industry experts and gain a deeper understanding of DAOs. Tune in to the Crypto Sapiens podcast and explore the possibilities that DAOs hold for the future. Together, we can shape a more inclusive, transparent, and decentralized world.

The Power of DAOs and Community Collaboration

Rachel begins the podcast by introducing Marco Grendel, the head of the DAO ecosystem at Polygon, and commending his continuous contributions to the community. She also mentions OxJustice, a passionate community builder who actively supports fellow builders. Rachel expresses her excitement about partnering with Marco and Justice, acknowledging that she learns a lot from their expertise in DAOs.

Marco Grendel's Journey in DAOs

Marco shares his background and how he developed an interest in DAOs. With a passion for technology and previous involvement in the internet space, Marco explored blockchain and various projects. He discusses his journey of contributing to small projects and engaging in marketing, development, and community management to help him build his comprehensive understanding of the blockchain space. Marco emphasizes his enthusiasm for DAOs and highlights BanklessDAO as a significant opportunity for him to engage and participate in governance. The chaotic and exciting nature of DAOs motivated him to grow and help others, eventually leading him to join Polygon to focus on nurturing DAOs.

Rachel's Involvement in BanklessDAO

Rachel relates to Marco's enthusiasm, sharing her involvement in Bankless DAO and Crypto Sapiens. She praises Bankless DAO as a starting point for anyone interested in learning about DAOs and highlights the guilds available for different areas of interest. The inclusivity of BanklessDAO is emphasized, positioning it as an accessible and supportive community for those exploring DAOs.

OxJustice's Fascination with DAOs

OxJustice introduces himself, highlighting his traditional IT background as a full-stack JavaScript developer and his experience founding startups. He expresses his deep fascination with DAOs, connecting it to his previous experiences in agile development and team coordination. Justice acknowledges the unique tools and possibilities that Web3 brings, which were absent in traditional, elegant spaces. He shares his privileged transition from enterprise IT-based work to full-time involvement in Web3, driven by his passion for DAOs.

The Potential of Web3 and DAOs for Empowerment

Rachel and Justice discuss their common starting point in Bankless DAO and their shared obsession with the concept. They recognize the potential for positive-sum collaboration and organizational structuring that DAOs offer. Despite Rachel's non-technical background, she emphasizes the potential of Web3 and DAOs for empowering individuals. They highlight the evolving nature of DAOs and the core principles that should guide their development.

What Makes a DAO Successful?

In response to the question of what makes a DAO successful, Marco and Justice offer their perspectives

Marco begins by highlighting two types of DAOs, ecosystem DAOs and social/community DAOs. He emphasizes that ecosystem DAOs should focus on becoming a means for the ecosystem to grow, attract new people and ideas, offer education, and foster a shared ethos. These DAOs aim to decentralize the ecosystem and ensure its sustainability even without the presence of founders. On the other hand, social/community DAOs prioritize a strong ethos and active engagement within the community, allowing different ideas to find the best path through governance and collaboration.

Justice builds on Marco's points by suggesting the term "DAO" can carry baggage and proposes replacing it with "organization." He emphasizes that the success of an organization depends on its purpose and structure. Organizations with revenue-generating capabilities should align their organizational structure with their goals and prevent capture by creating anti-capture measures through decentralization. Justice mentions starting with something valuable and leveraging resources to drive growth and collective participation. He raises the idea of considering the organic growth of organizations and questions whether the term "DAO" becomes more relevant as the organization grows. He mentions concepts like Conway's Law and Dunbar's number as additional considerations.

Rachel acknowledges the valuable insights shared by Marco and Justice, expressing her intention to look further into Conway's Law and Dunbar's number after the show.

The conversation touches upon the idea of writing a book on DAOs, with the hosts expressing their interest in reading a book by Marco and Justice due to their extensive experience and insights. The hosts mention the possibility of a book titled "Things Only DAO OGs Know" and highlight the value it could provide.

Challenges of Operating a DAO

Marco focuses on the importance of replicating existing operational models and finding new ways to build and operate. He emphasizes the need to identify stakeholders and understand their capabilities and limitations. Delegation and empowerment are crucial for scaling and operational success. Marco also mentions the significance of tracking operations and evaluating results to ensure effectiveness.

Justice builds on Marco's points and highlights the need to design decentralized systems efficiently. He uses the analogy of a car being pushed by four people holding the axle and emphasizes the importance of considering the system's design to overcome operational challenges. He suggests that many challenges can be addressed by adopting a different mindset and recognizing that decentralized systems should be designed in a decentralized manner.

The conversation continues with Justice discussing the concept of self-improvement mechanisms within DAOs. He mentions improvement proposals and how they can be used to introduce gradual changes and enhancements to the system. By replicating the current functions of the DAO and iteratively improving them, a DAO can incrementally achieve a better internal design. Another approach mentioned is a complete rebuild, where a DAO creates a new version (e.g., 2.0) and allows participants to trade in their representation from the previous version for the new one.

Rachel expresses her enthusiasm for the insights shared by Marco and Justice, highlighting the importance of decentralized coordination and learning from their experiences. Rachel then shares her observations on the common denominators of successful DAOs based on her research:

1. Decentralization and community-driven nature: Successful DAOs exhibit a level of decentralization, allowing communities to grow in a decentralized manner. Automated processes and architectural considerations contribute to this aspect.

2. Utility and problem-solving: These DAOs are built with a clear purpose and effectively solve problems.

3. DAO token with intrinsic value: Many successful DAOs have tokens that hold value, whether for governance, voting, or incorporating tokenomics.

4. Fundraising and financial sustainability: Successful DAOs often have mechanisms for fundraising and ensuring financial sustainability, including profitability or grants from ecosystems they aim to grow within.

5. Development and value creation: These DAOs focus on building valuable solutions on-chain, contributing to the development of the ecosystem.

Rachel shares that these observations are derived from studying numerous DAOs and asks for Marco and Justice's thoughts on her findings.

Justice expands on the distinction between DAOs and tokenized communities, mentioning the work of Jihan Chu and his concept of tokenized communities. He emphasizes that tokenized communities and DAOs are complementary, with tokenized communities providing a breeding ground for creativity and value creation, which can then be integrated into the financial games of DAOs. Tokenized communities have shared tokens and a collective interest in creating value for those tokens. While they may not always have extensive on-chain structures, their tokens are decentralized and foster collaboration to generate value.

Justice also brings up the concept of reputation as a valuable component. He notes that reputation can be seen as a non-transferable property that can be leveraged to build a reputational system without money. DAOs can distribute shares and operate with reputational value before having any assets in their treasury. The interplay between tokenized communities, DAOs, and reputation highlights the different aspects that can be explored and combined to create mutually beneficial systems.

Rachel emphasizes the importance of reputation in the context of Web3 and life in general. She highlights how reputation shapes how individuals are perceived, trusted, and interact. Reputation holds significance in establishing relationships and trust within the community.

Overall, the discussion underscores the multifaceted nature of DAOs, tokenized communities, and reputations and how they contribute to the success and functionality of these decentralized entities.

Explore Polygon

In the discussion, the importance of balancing innovative technology with the human side of projects is highlighted. Marco emphasizes that Polygon's success is attributed to the people behind it, including the co-founders, the business development team, and the overall team composition. He mentions that the ethos of Web3 is deeply ingrained in Polygon's values, and the company maintains a clear vision and trust in the mission they are pursuing. Additionally, Marco mentions that Polygon prioritizes giving to partners and communities, allowing them to benefit more than Polygon itself, fostering a symbiotic relationship.

Justice reflects on his initial impression of Polygon, mentioning how the company started with a focus on user experience and redirected the generated wealth into future-proofing their technology. He compares the impact of Polygon's approach to Steve Jobs' emphasis on user experience in Apple's products. Justice highlights the significance of low transaction costs, its ability to build on-chain, and the future-proofing efforts that Polygon has undertaken.

The overall sentiment is that Polygon's success stems from a mixture of innovative technology, a strong team, a focus on user experience, and a commitment to supporting partners and communities.

The conversation takes a closer look at the importance of community in the Polygon ecosystem and the role it plays in the project's success. Both Marco and Justice emphasize the significance of community in terms of providing feedback, support, education, and mentorship to help projects within the ecosystem thrive.

Marco mentions the concept of delegating power to the community and how it is essential for the scalability and long-term sustainability of an ecosystem. He highlights the role of mentors, experienced individuals within the community who can provide support and guidance to projects. The community's involvement in education and sharing knowledge is seen as a vital component for the success of new projects.

Justice acknowledges Marco's foresight and strategic thinking in designing an ecosystem that perpetuates itself and grows, compared to a basic grant system. He also mentions the challenges of decentralizing business development (BD) and looks forward to further advancements in this area. Justice encourages the community to learn from past failures, rely on each other for support, and demonstrate perseverance and dedication (grit) in their work.

Overall, the conversation underscores the community's role as the lifeblood of the Polygon ecosystem, contributing to its growth, success, and resilience.

Scaling and Decentralization

When discussing scaling and decentralization, they make the connection between the architectural aspect that Justice highlighted and the fact that scaling demands the development of systems. They emphasize that systems are usually created through centralized experiences, and they ponder how to achieve decentralization in the creation of systems.

Rachel then engages Justice in a discussion, questioning whether decentralization is the ultimate goal. They present an analogy, comparing decentralization to smashing a vase on the ground, which may result in decentralized pieces but also represents entropy and the loss of productive energy. 

Rachel suggests that this perspective can provide a new understanding of what is being built, why it is being built, and what the ultimate goal is. They further illustrate their point using the analogy of systems being like games, where people want to play established games rather than receive random game pieces to assemble.

Rachel concludes by highlighting the significance of allowing people to propose changes and improvements to the game and emphasizing the value of collaborative participation.

They mention that reaching maturity in decentralization involves starting with a value system that can't be exploited and allowing it to improve itself. They compare it to building games on top of existing ones, viewing new games as new product lines. This analogy highlights the amplification of utility when people build on existing decentralized systems.

Rachel emphasizes the importance of avoiding an excessive focus on preventing exploitation, as it can hinder efficiency and innovation. They express admiration for Justice's ability to break down complex concepts using metaphors and call for more individuals who can communicate such ideas in a digestible way.

Rachel expresses gratitude to the participants for answering their questions and shares an affirmation about striving for innovation and creating value in the context of Web3. They acknowledge that their perspective on decentralization has been influenced by Justice's insights and express interest in further contemplating the topic.

All Roads Lead to Polygon

Lastly, Rachel asks the participants about upcoming events they are excited about. They mention the excitement of meeting Marcel face-to-face at ECC and also mention an upcoming opportunity to speak to politicians in Columbus, Ohio, about Web3 use cases, focusing on blockchain applications without explicitly using the term "DAO."

The conversation shifts to the participants' excitement about meeting each other in person. The speaker expresses their anticipation of finally meeting Marco face-to-face at ECC and mentions that they have had the privilege of meeting Justice a few times before. They highlight the joy of having great calls with exceptional and incredible people, which can make their day or week. The speaker mentions the positive experience of attending in-person events and meeting passionate individuals who think progressively.

They also mention an amusing picture of when they met Justice at East Denver and express their intention to share it. The speaker acknowledges that they couldn't find the picture at that moment but assures the audience that they will show it later.

The conversation concludes with the speaker asking if there are any specific resources, calls to action, or upcoming events related to Polygon that the listeners should be aware of. They mention the anticipation of Justice's upcoming delivery called "the camp" and highlight the weekly "all roads lead to Polygon" events, which happen every Friday at 11 a.m. EST. They describe it as a community space that attracts around 60,000 people, noting the unique experience it offers compared to traditional meetings with cameras.

Stay Connected: Resources and Final Thoughts

The "Crypto Sapiens" podcast episode featuring Marco Grendel and Ox Justice provides valuable insights into the world of DAOs and their potential to reshape traditional organizational structures. By fostering inclusivity, collaboration, and transparency, DAOs create opportunities for individuals to contribute and participate actively. As the conversation highlights, DAOs offer a platform for positive-sum collaboration and hold the promise of empowering individuals in the Web3 era. By embracing DAOs, we can collectively shape a more inclusive, transparent, and decentralized future.

The conversation was concluded with the guests' reflections on the Twitter Spaces experience. They express that it felt more like hanging out at a Web3 conference than a formal meeting, highlighting the organic flow of discussions and the fun atmosphere. Thanks to Marco and Justice for being gracious guests and putting thought and intention into their answers. 

Rachel takes a moment to thank projects like BanklessDAO and Opolis for making season eight of Crypto Sapiens possible. They provide links in the description for viewers to learn more about Bankless and how to join BanklessDAO, mentioning the various guilds and projects available for those interested in getting involved in Web3. Lastly, they mention their work at a digital employment cooperative and provide a link for those interested in employer services related to web3 work.

If you're interested in learning more about joining Opolis, a platform that supports the production of season eight of Crypto Sapiens, we've included a referral link in the description. Take a look and explore the possibilities it offers.

Before we wrap up, we want to emphasize the importance of following and subscribing to Crypto Sapiens on YouTube. We also have a podcast that you won't want to miss. By staying connected with us, you'll be sure to receive the latest updates, valuable content, and thought-provoking discussions.

To stay up-to-date with everything happening at Crypto Sapiens, make sure to visit our website. It's a great resource for accessing additional information, exploring past episodes, and discovering more about the fascinating world of blockchain and Web3.

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