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Setting the stage
… financiers and bankers wanting to understand what has just happened here in this space. Something big has changed, and if they don’t pay attention to what is happening here, at some point they’ll be out the window. They’re not connecting to this next generation of the internet any longer.
JANE
I am Jane McConnell, and welcome to Imaginize World, where we talk with forward thinkers, pioneering organizations and writers of speculative fiction. We explore emerging trends, technologies, world-changing ideas, and above all, share our journeys, challenges and successes.
Joachim’s journey past 10 years
Greetings today I’m with Joachim Stroh, and we’re going to talk about DAOs. DAOs are decentralized, autonomous organizations, completely different from organizations that most of us know today, and they are going to fundamentally change the way we function in this world from people to people. Let’s go.
JANE
Well, hi, Joachim. It’s so great to see you.
JOACHIM
Thank you so much, Jane, for this invitation.
JANE
It’s been 10 years since we’ve actually done something together. We were both members of Change Agents Worldwide, and it’s like another world for me, and I would guess that it’s quite a different world for you too. Now that you’re in what I call the DAO space Decentralized Autonomous Organizations. Before we actually get into everything we’re going to talk about, could you give us a sense of how you got from say, 10 years ago to where you are today? I think that would be interesting to know.
JOACHIM
Yes. Great. So yeah, again, thank you for inviting me to your podcast show, Imaginize here, really like to dive into this and give your viewers and listeners the heads-up on what’s happening, what has happened since we got together 10 years ago, right?
JANE
10 years, yeah. It’s been long.
JOACHIM
Yes, yes, yes. For me, this has been a journey, a journey that’s unfolding in front of me, which is really connected in some weird ways. When I left HR Consulting and then we founded this boutique Consultancy with
Change Agents, it was always like the technology was a bit further, a bit more ripe to say, let’s bring some of these social technologies into organizations, into enterprises. How can people connect within the organization and then outside of the organization, and how can we create communities within the organization? So the technology was there, and for me it was experimentation of, okay, how can we not begin to reach out to our colleagues at a different level, at a level that is going beyond just colleagues, having them and talking about projects. It’s like connecting at a personal level, connecting at a level that is meaningful not only for me, but also for the organization to have a voice inside the organization.
And that has been my pathway forward from Change Agents to the Digital Life Collective, looking at some of the broader picture of extractive technologies around us, the platforms that gather all of the data around us. Once again, spaces of collaboration, spaces of coming together and build the necessary level of trust. One of the ventures I did with friends was called Sceenius. Sceenius, was knowledge expeditions into virtual real spaces. Can you bring people into virtual online engagements, people that you don’t know, so from the network and say, “Let’s go on a journey, let’s go on an expedition and see how far we can take that.” So we had a small platform there to say, “Let’s build a story together, a virtual real story with visuals, with videos, with sound effects.” And you actually climb on something like Mount Everest, you go meet at Base Camp, let’s go to the next sort of camps up the mountain, and how do people respond to these circumstances?
DAOS: decentralized, autonomous organization
That is all things that I explored deeply over the last couple of years, and that led me to the thing that I’m building now called Hypha DAO. So again, it’s a container. It’s a space where you can build these environments that are meant for trust. It’s designed from trust. It’s a space where you invite people to solve problems together. And that is the fascinating aspect and the theme I see for me across all those years, come together, realize your potential. Look at the humanity here, right? Look at the relationships you’re building in these spaces and see if we have a better vehicle now, a vessel really to move us all forward to a better future.
JANE
Very interesting. You have a lot of passion for this topic, I can tell from the way you’re talking. That’s fantastic. Could you start with telling us what a DAO is? So I want people to understand what the concrete things that underlie your passion.
JOACHIM
Yes. So you mentioned already the three letters D-A-O stand for Decentralized Autonomous Organization. So decentralization is sort of a new aspect of an old aspect coming together, coming back now to the forefront. If you look at the history of the internet, so Web 1.0, Tim Berners-Lee created a first iteration of the internet for us. It was owned by us. We could build our own little blogs, little websites we owned, we controlled everything, the data, but then we moved on to this Web 2.0. There’s the interactive web. Beginning of the ’90s, I built the first eCommerce website with my wife here that, by the way, still is running today. So it was really an interesting juncture in time again, where the technology was right for eCommerce, you could actually build these stores away from the brick and mortar stuff down on the street corner, and people ask same questions. What is this thing that you’re building there on this? What internet space? How can you do this without being physically present in a store and grabbing these books or whatever it is?
Web 3.0 born to give us back control
So we did that and it was the time for Web 2.0 to come online to realize the potential that was there, but it also turned into something bigger. Obviously the big players came in, the Amazons, the Googles, the extractive players to say, “Hey, this data, we give it to you for free, but there’s a price to pay. This data we can sell, no, you don’t own it anymore.” And all the stories we have now discussing how manipulative this environment really is, how bad it can get.
JANE
And what’s really bad, Joachim, is that some people don’t realize how bad it really is.
JOACHIM
Yes, yes, that is true. That is so true. And it’s like tapping into cognitive abilities we’re not even aware of, and then suddenly pushing us into these corners, into these fractions. It’s a movement that now I think finding sort of a counter movement now with sort of swinging back the pendulum from the centralized web, extractive web to, again, more of a decentralized web. A web where you own the data, where we have the potential to say, I create my own space here, and nobody else interfere with that. If you want to take it to the extreme, even governments have problems of interfering with these spaces because they are owned by the people, built for the people. They are spaces of trust that are entirely different from the distrust and mistrust disinformation that is happening on the current web.
So that’s where I think the DAO suddenly came into the picture. So as you’re familiar with blockchain technology, there was the first generation of blockchain that really set the stage for, whoa, there’s a new way of creating a shared ledger on the internet that nobody can control, and it’s owned by the people, and everything that’s written to the ledger is there. It’s transparent, it’s immutable. You really can’t go in there and mess up with the data anymore. It is just out there. That was the first generation that created Bitcoin. And interestingly, I was just at the Bitcoin Policy Summit in Washington DC last week, and this is where the players coming together, the miners and the producers, and also financiers and bankers wanting to understand what has just happened here in this space-
JANE
They sense that something has changed.
JOACHIM
Something big has changed, and if they don’t pay attention to what is happening here, at some point they’ll be out the window. They’re not connecting to this next generation of the internet any longer. Because for me, if you think Web 2.0 was big, the Googles, the Amazons, the big players, wait until you see Web 3.0. There’s going to be a much, much bigger space than Web 2.0. And that’s simply because you can now invite everybody else, everybody who got stranded or who didn’t have right financial means or other reasons why they couldn’t participate. This Web 3.0 thing is a participatory space. It’s inclusive enough to invite everybody else to say, “You have a voice, you have an idea. Welcome. Try it out. Join it, and see what you can do with this.”
JANE
So that’s very different from traditional companies. Traditional companies as organizational structures don’t operate like that. I mean, it’s almost, I would say, opposed to the way traditional companies operate.
JOACHIM
It’s something I think we’ve been waiting for this for a long, long time. If you go back to Frederick Taylor, we discussed the video at Change Agent Worldwide. I mean, this was a hundred years ago where you had the first structures of a formal organization, the traditional organizations, it’s top down, it’s command and control, and it has a specific purpose. So optimizing it, running it for profit, and squeezing out the things that you want to get out of the market. That was the idea of Taylor’s idea of these kind of scientific management principles applied to organizations. They’re still intact today. This is still how organizations operate. And now finally, a hundred years later, we have this new thing called the DAO, a new kind of organization really, that is now taking a step forward into what if we take a different look at markets instead of these competitive things, instead of the things that’s you against me, either I win or you win.
It’s something that we have to tackle together. Why? Because the complexity of the market around us and the urgencies that we see now creeping up everywhere around us, demand different ways of working together, demand different ways of organizing, of coordinating our efforts. And this is, I think, where suddenly the DAO came to the forefront to say, well, you actually can do this in the DAO. You actually can create an entity, a space that not only attracts your core team here at the beginning, but then quickly add on a whole community layer. And we can get into that later on.
The mechanics of DAOs
That would be very good to get into how it works together because it sounds, I would say, like magic only because it is so different from what we’re used to today. Maybe now would be a good time to get into a little bit of the mechanics of it.
JOACHIM
Sure, sure. So I mean, DAOs went through their own iterations. There was sort of the first version you heard about the Constitution DAO, or the very first DAO before that, that got hacked, and then people got into the treasury of the DAO and then they rethink everything, what the DAO actually could do. But it has been a long journey already. I mean, Hypha, the organization itself, we’ve been doing this for five years now.
JANE
Five years.
JOACHIM
And we actually sort of use the DAO to build the DAO platform. At the beginning we had another project called SEEDS. SEEDS is a regenerative currency. So we always we’re in the regeneration space in a space where socio-ecological aspects are really important. Socioeconomic ones, socio-political ones. So we tapped into sort of resonance fields suddenly where people feel like drawn towards something new, this DAO thing, and the regenerative aspect of that, that we have to save the planet. We have to come to a better future for generations ahead of us. And this tied together so much into, oh wow, then actually we can use this as a single container, but then expand that to, well, what happens if you have thousands of DAOs out there, but you have millions of DAOs out there? How do these DAOs starting to connect? How do they exchange value? How do they exchange knowledge? How is that space different from this highly competitive space where you have silos, where you have proprietary thinking, where’s my IP versus your IP? Let’s go to court. Who wins here?
Here, we find it much more open. People are willing to participate, share their knowledge, really. I mean, this whole concept of knowledge sharing that we brought into organizations way back then, it’s not sort of the soil, it’s the ground. Just like Hypha, the name Hypha stands for the mycelium and the soil. We want to be the connector to make sure there’s enough attention paid to, yes, you can grow your own organizations in a very organic way using using our platform and using other platforms out there that help create these kind of organizations.
JANE
Can you give us some examples of how people work together and how they coordinate and how they achieve their goals in a DAO?
JOACHIM
Yes. Yes. Let me take a little detour here also to talk about the DAO itself. What do you do inside the DAO?
JANE
Yes, good.
JOACHIM
The term itself becomes, I think, more mainstream, but we’re not there yet, right? We’re still early days. There’s still, if you look at the adoption lifecycle curve, there’s this big chasm, right? It says, what is that thing and how do you explain that to people and how do you relate to that? So let me talk a little bit about the DAO functionality, sort of the feature sets we built into the DAO, because what we’ve done is we’ve taken the DAO as a first-generation construct. There were these initial DAOs, I mentioned, Constitution DAO, DAO House, a lot of ways of creating a DAO and especially became strong inside the blockchain communities. Because as you know, there’s now the second generation, Ethereum blockchain, much more sort of business and supply chain oriented. I think the big player will attach to that kind of second generation blockchain.
But then there’s also the third generation blockchain already. And for the third generation, you see a lot of improvements over the first one. If the energy consumption is so high in the early days, watch what you see in the later end of the spectrum with, for example, we’re using T-Los, our blockchain. That’s third generation blockchain based on EOS technology. And it uses the energy equivalent of the entire network, consumes like a washer and dryer. That’s it. No more than that.
JANE
That’s not much.
JOACHIM
Not a question anymore. Don’t talk about energy consumption, it’s already solved. Second generation blockchain Ethereum, but also get to that, they just went through a large revamp of their own platform and underlying proof of stake, proof of work protocols that were there in the early days. They become much more efficient now, and you don’t have to have these high energy costs and also transaction costs. Ethereum is still very expensive in terms of these gas fees as it’s called. So there are these fees suddenly coming up.
In the third generation, we don’t have these fees anymore. We say it’s actually free. We don’t pay anything for any transaction. That’s a huge incentive for coming into this space and then really exchange the value with other players. So if I can send you tokens and we agree on this token represents some value, or the thing that we’re creating or the product and service that you’re building here on switching to that token space, it’s a whole different dimension of how effective and efficient these things can become.
Tokens, a new form of assets
Can you talk a little bit about tokens? Because I think that’s not a commonly understood idea.
JOACHIM
Yes, yes. There are a lot of conversations right now. It’s called tokenize. What assets do you have that can be sort of tokenized? I’ll give you a few examples.
Early on, we were engaged in what’s called energy communities in Europe. There’s a legislation now in Europe that says, we sense there’s a crisis energy crisis in Europe. We need to do something about it. What about we look into decentralization as a way to solve this energy crisis there? And then suddenly they came up with, yes, we have now solar energy. It becomes more and more effective every year, cheaper every year. What if we decentralize this technology and tokenize this technology? So that means there’s some solar panels in some village somewhere, and you can actually convert this into tokens and say “You need energy? Well, you only need the energy token.” That is created through a DAO again.
And as soon as you own this token, and it’s actually called a utility token, the different kinds of tokens, we can get into that. But what Hypha has and what our token is a utility token. So there’s some access, some purpose of the token. It’s not meant to go on the market and speculate on the token. That was sort of the first wave of the cryptocurrency space that exploded and all the big players collapsed. Now we are, I think in a second phase where we recognize, oh, there’s actually something much more useful and meaningful you can do with this technology. So we are looking at things like the energy communities in Europe where you can create these hyperlocal communities. They produce energy, they are consumers, and then you create a local marketer. And the economy looks entirely different if you base it on these tokens because you can say that token is only used in that particular community.
So you buy and sell these tokens there, and then you can go further and say, okay, well it’s actually an energy token. Maybe we can tie this into other economic effects inside this small market and community. Why not buy things inside the farmer’s market? Why not tying it to the waste recycle process and earn tokens that way? So there could be many, many variations of these tokens being applied to this local community. And that for me creates a whole different way of regeneration, a different way of circular economies that you can build with these token-based systems. That’s the beauty of the DAO. Stepping a little bit out of the current financial system, highly regulated towards something that utility driven, it’s based on much more local circular economies that you can build and attract people towards.
JANE
Is that based on people using their phones or a digital means of exchanging tokens?
JOACHIM
Yeah, that’s a good question. How do you actually tap into this? Where do you begin with all this stuff?
JANE
Yeah, where do you begin with all this?
The end of the username and password era
Web 2.0, everybody knows you need your username and password. You set up an account, you don’t own that account, it’s the company that owns it, right? Web 3.0 is entirely different, right? This is where you have your own what’s called a Wallet here. See, we have our created a Hypha Wallet where you actually have a way to now participate and make decisions through your own personal device. Much more secure because your private key is stored on this phone. It doesn’t exist anywhere else. So it’s kind of the end of the username and password era. Now you have a new era where only this thing called private key matters, and it gives you the right to participate. It gives you the right to transact. So if you have the same Wallet and you can download it for free and install it and create your account for free. So if you have that account, now I can actually transact with you. I can say, “I have a couple of tokens. Let me send that over to you.” And then you can send it to another person. And you immediately set some circular thing in motion.
And this is also how you interact with the DAO. So every DAO coming
back to the DAO itself, what we do there is setting up proposals. So meaning DAOs are, sometimes I call them agreement machines. So we want to come to agreements because now the fertility is there to create a space of trust. Now what did we do with this trust? Well, we make decisions. So we make proposals and see if everybody’s aligned with that proposal. And once you’ve done this proposal, you post it on the DAO, everybody sees it. It’s a transparent space, it’s highly visible. And then I can say, I support that proposal. Yes, I use my wallet again here, go in there and support it. And others do that too. So you can see how democratic that gets to say new proposals are floating up to the surface. We’re deciding on these together and then move forward from there.
JANE
Can anybody join any DAO? Surely there must be some kind of filtering or judgment of the people coming in,
Purpose, not profit
This is where I get into the dynamics of how do you build these DAOs? How do they originally start? Very much like our consultancy in the past. There’s a founding team, a couple of people coming together with the initial ideas. So they make up what we call the core team space. So the core team comes together, sets up maybe the first proposals to say, this is how we define how we work together. This is the purpose of our organization. For me, the DAO is like the ideal place to create purpose, more purpose-oriented organization, they’re not for profit, they’re for purpose really.
We have things like quests where you can apply for a small thing that you do to help the organization to go to the next layer, and then you fulfill the quest and you get tokens for that. And then on meta? you feel like you’re part of this thing called DAO, part of that team here, and this is how the DAO grows. This is then where you can attract more people. And then we can get to what does it mean for a community space that’s suddenly surrounding a DAO? They may have a role in this. They may contribute in different ways. They have ideas about new proposals that may be considered for refining or optimizing or doing whatever they want to do with the DAO.
JANE
So decision-making is a collaborative act. Does it have to be unanimous?
JOACHIM
Great question. This is again, where it’s mind-boggling to see the level of innovation happening in this Web 3.0 space. So you take a thing like governance or decision making and you break it down into how can we actually make decisions together, not with the boss is on top. I mentioned Hypha is an organization we used to actually create this thing. So for five years we did not have a boss. There’s no CEO. Nobody can tell anybody else what to do. It’s a democratic organization. We made over a thousand proposals and agreements over the last years, and I can tell you it works. I still have the same level of sense of trust inside the organization. I don’t feel like any kind of burnout or stress because of pressures that you see in traditional organizations. It just works this way. And it’s also not a new thing because there’ve been other types of organizations. Frederic Laloux talks about the type of flatter organizations, teal organizations, there’s sociocracy, holacracy, different kinds of models that have been out=
JANE
There’s lots of models out there, yes.
JOACHIM
Lots of models out there. That’s right. [inaudible 00:25 :20] or John Husband and knowledge-oriented organizations. There are many, many models out there. Suddenly with a DAO, you can say, Hey, here’s a container where you can actually realize this type of organization. You can set it up. You can configure this organization based on what you think is the best way to work together.
Decision-making in Hypha
So give an example for Hypha. So what we’re using is a simple, for a core team, a binary decision method. That’s a yes-no abstain thing. And you can then say, okay, what it means to say yes for the organization. You decide that, and there’s a thing called Unity in Quorum where you can say, we need an alignment of 60%, 70% of members need to say yes. The rest can say, no, it’s okay. Or we need to say we need at least 20% of people present for making this decision.
So the Unity Quorum is then a parameter that says, let’s tune that in a way that says, how far do you want go with this? is it full consensus? Does it mean? Yes, a hundred percent people need to be here to decide and they all need to say yes? Fine. So be it. You can try that. If it’s majority voting, you say, okay, it’s 51% of people saying yes and 51% at least need to show up here. So suddenly you have majority vote.
But then you get into all kinds of combinations that are really interesting to explore inside this binary decision space. At Hypha, we’re using something called AD-20, almost like a Pareto Principle. It’s like magic setting. As you said at the beginning, something magic about DAOs. Where you say 80% need to agree to that and 20% need to show up. And that has worked for over a thousand proposals for us, where we get to a point, yes, sometimes there’s disagreement and it does not pass, but then you always come back to, oh, we didn’t actually do enough sense-making.
So there’s always this distinction of sense-making before decision-making. Do some good sense-making, have people understand what the issues really are before you just hit the button and say yes or no on something. That has helped us a lot. This principle, core principle, it’s also deeply embedded in sociocracy. We have these debates and really conversations and alignment that lead to this consent-based decision that is prevalent there. So again, it’s a space that is really interesting opening up right in front of our eyes, and we haven’t even tapped into the next layer. When you get into the community space, how do you make decisions between 10-15 people? Binary is okay, but if you have a hundred, a thousand, 10,000 people-
JANE
What is the answer to that? How do you make that work?
JOACHIM
Yes. So that’s something we’re now building on top of the next level layer, we call it on Hypha, to bring the community into that. But we’ve been working with these decision methods for a long time. I’ll give you a few examples.
There’s decision methods that are delegated where you can say there are certain representatives, key people that you trust inside the organization and they have the decision power. So every couple of months you can say there’s an election happening and you elect a couple of people that decide for the rest of your community space. If you ask everyone in the community space, that’s a difficult thing to do if it’s going too big. But also, I mean there are other models where we have cooperatives. Cooperatives have member meetings, and every member has one voice. So one member, one voice, and you can do this with a DAO too. Suddenly say, this is our decision space and method to say, you, Jane, join the DAO. You have one account, you’re one member, and the next vote you can participate with one vote. And then you go on. But then other things come up and say, what if we have investors coming in? Obviously they want to have a bit more voice so they have an dedicated interest in making-
Money and DAOs
Sure you said investors, people who will put money into the DAO?
JOACHIM
That’s right. That’s right. Yeah, let’s get into that too. That’s not even possible.
JANE
We’ve got a lot to get into, but yeah, let’s do it. Investors, I would never imagine that you dealt with investors.
JOACHIM
Every DAO has a treasury. So a treasury is the place where you collect the tokens and they’re highly secured. Again, you’re in Web 3.0, space security is much higher there. And as soon as there are any transactions going in and out of the treasury, you have something called a multi-signature process. So that means multiple people of the core team have to be present to sign off on something that goes in and out of the treasury. So with the treasury, you can say every DAO now has what we call a native token, a token that represents your DAO.
So let’s say Imaginize is a DAO. You, Jane, come up and say, “I want to create a DAO for my network.” You create the DAO and you say, “My token is actually called Imaginize.” So you create that inside the DAO and then you can say, “Hey, investors, we’re doing cool podcasts. Watch what we’ve done in the past. They’re great. If you want to help me out, if you want to be part of this, buy some of my tokens.” So they simply go to your website and say, “Okay, give me 10, give me a hundred of your Imaginize tokens.” They of course use fiat currency to purchase these tokens.
JANE
So, they give me money for that?
JOACHIM
They give you money, that’s your working capital.
JANE
Fiat money, yes.
JOACHIM
Fiat money, working capital that you can then use to prepare other podcasts, increase your team size, whatever you want, buy technology. And that’s a signal now for others to say, look, someone actually purchased your Imaginize tokens. So the Imaginize token is now a representation of the value you’re creating for your own network. And that’s the fascinating aspect. Other people will see that they may want to contribute to that, and they may even become a member of your Imaginize DAO. So they say, “Yes, I’m a producer doing some great stuff here. Let me reward him,” and it can be a mix of both these native tokens, Imaginize tokens because eventually they will increase in value. People recognize the good work you’re doing and you can even go to secondary markets at some point and say, “Let’s offer this Imaginize token on an exchange.”
And then say other people, investors, again, can buy this token. So there’s a perfect interface for you to say, bring in people who feel like attracted to your vision. You’re actually building something. And this Imaginize token is not an imaginary thing. It’s real meaning you’re doing these real podcasts, you’re doing the real hard work on the ground, just like we’re doing at Hypha with building the platform. There’s value, there’s utility in that token. It’s not a security, it’s not a speculative investment here, it’s utility. Think about everybody cannot do this with their own DAO. You have your own ideas of how do you build these products and services? Just create it and I’ll just do it.
JANE
So that’s fascinating that at in fact, that gives me a good idea. I’ll have to think about that. People can create DAOs, even if they’re within their members, they’re salaried members of a large organization. They can create a DAO to achieve something with a particular goal, a particular purpose inside an organization, couldn’t they?
JOACHIM
They could, they could. If you’re not going against the framework of the organization itself, because as you know-
JANE
Right. From a legal viewpoint, yeah, legally speaking.
Rendanheyi (Haier) has DAOs
HR and legal will have a say in that, right? How far can you actually create this inside organizations? But actually in fact, there’s actually a new thing happening. 33/07 If you’re familiar with Rendanheyi something that has developed in China with Haier, large appliances manufacturer in China.
JANE
Oh, of course, of course. Yes.
JOACHIM
It’s been there. So you know this story. So they create these what’s called micro enterprises inside the organization. And interestingly, they look very much like little DAOs inside an organization because they get the autonomy, they get the “do your own thing” and the connectivity too towards directly connected to customers, and they give the feedback and then they work on that. They became their own centers and their own DAOs, really. And for me, this is an interface now into a large organization. Actually, we’re working with a consultancy in Munich in Germany that is now looking at these models and say, okay, Rendanheyi is now done, has been around for quite a while. Can we use DAOs for that? So they’re actually exploring now things where other organizations like Bayer. Bayer has looked at that and says, yes, we want to do these micro enterprises too. What is a good vehicle to do that? And for me, that’s exactly the right time to say, “Hey, let’s introduce DAOs here.”
JANE
I worked with Bayer about 10 years ago or so for their digital workplace projects, and they were certainly far from the kind of thinking you’re talking about now. So there’s obviously been changes in their mindset and the way they see what they want to be and what they want to become.
JOACHIM
Yes, a lot of change happening in that space. And I think we need that. We’re ready to say there’s so much sort of change happening and look at the next generation. The workforce is coming in, the millennials, Gen Z, they’re so frustrated by this. They don’t want to work in an organization that’s highly top down. And I sit in my box in my cubicle somewhere and have no way of participating really in the decision process. Now we’re giving them [inaudible] a door to open that. Yeah.
JANE
Something I was wondering about as you were talking, the decision making process takes a little bit of time and in a hierarchical organization, someone at the top makes a decision and bang, it’s maybe implemented, maybe not implemented, but the decision is made quickly. If there’s a need for speed in some competitive context or a political context or some sort of environmental impact and things have to move fast, can a DAO function with speed?
Fast or slow decision-making
So for me, this is an African proverb that says, “If you want to go fast, go alone. If you want to go far, go together.” So for me, yes, there’s certain aspect where it makes sense in order to go fast, crisis situations where very structured approaches to how do you step in and say, help these people on the ground, disaster strike. What do we do? We already know what the solution is going to look like. We already know how to deploy resources, and you want to have a highly effective command and control chain that’s deployed in hours and solves the problem. DAOs on the other hand, is when you get into this other territory on, well, there are these other kinds of problems that are much more wicked. They’re hard to resolve in isolation as a central institution or organization, things that has the solution for that, most likely not. This is where you need to connect and coordinate activities around a wider network. And this is, again, where the strength of the DAO comes in to say yes, for that kind of territory, you should consider this way.
DAOs in education
I think education might be an example of that.
JOACHIM
Perfect example. That’s right. Education is a big piece. Working with a couple of groups to say what happens if you do DAOs for schools? So what if you suddenly open up this participatory space for all of the stakeholders in the school environment? So administrative people, yes, they have to run the school, but they’re the parents, they’re the teachers, they’re the students. Why not giving them some kind of voice to say, “Look, education is changing. Let’s adjust our curriculum, do something about it.” And then you can come into a DAO space to say, “Let’s propose something new. Let’s go through the sense-making process and the decision-making process. Once we come to an agreement, we can get this thing off the table and move on to the next question that’s opening up there.”
JANE
That’s very interesting. I’ve been doing some work on how educational institutions today are not at all adapted to the world that we live in. And I’ve interviewed a number of people and I’ve put together a little piece that I’ll talk about later, but it hasn’t been published yet, so I’m not going to talk about it. But the idea is that education needs to change and it needs to change dramatically. And what you’re describing would be a perfect solution in many cases. The number of people who do homeschooling now because they want to have a say in what their children are learning. And if you could get a group of people working together on homeschooling in a community, that could be a DAO, couldn’t it?
JOACHIM
Yes, absolutely. This is where you open up this new participatory space of saying, “We’re ready to do this.” And the barriers to entry are fairly low. All you need to do is invite people. All you need to do is [inaudible] we’re already doing this. We have school board meetings, we have parent-teacher meetings, so it’s nothing new here. It’s just saying, “No, actually we not only meet, we can make a decision.” A decision that’s written on the blockchain is public, it’s there, it’s transparent, and then we can take it further from there.
JANE
I’m just thinking about people out in the world who might want to be working in a DAO doing something like with education or with health or whatever the topic. Is there any kind of DAO marketplace, an open marketplace where people can express what they can bring to a DAO and people in DAOs can look and find more people if they need more people. Is there anything like that that exists?
How to join a DAO
So we launched our beta in October last year. So after the four and a half years there, we said, we’re ready for beta, right? We had a lot alphas meaning friends and family, trying this thing out. Now we have the beta up and running and anybody who’s interested can go to the Hypha.earth website and then try it out for themselves. We even changed our pricing model. Initially we thought, oh, we need to do some kind of a Web 2.0 subscription model that everybody does, the classic SaaS model. We said no to that because Web 3.0 is different. The value is actually created over time. The value is not there at the beginning. You don’t have to pay for that piece. When you have your first founders coming together and setting up the first proposal, we said, we believe in you, in your vision, in your service, in the product you’re creating.
Let’s hold onto that and create a model that is based on the participants. So you set up your DAO and there’s a mechanism that says you believe in a DAO. You stake tokens into a DAO. There’s this thing for Web 3.0 called staking. So again, it’s like you have your Imaginize tokens in your DAO, people can buy this and then they can actually stake this token. They can say, I want to support your DAO. Let me stake some tokens. So they kind of freeze this as an asset and say, now you can use it for longer term. Now you can invite other members for your DAO to participate in a way.
JANE
How can those people check out my Imaginize DAO and make sure it’s legitimate?
JOACHIM
Yes. So that comes back to the marketplace you mentioned. So since we launched in October, we have about 300 organizations in the marketplace. We have our own view. Again, it’s accessible. I’ll send you the link after this.
JANE
Yeah, we’ll put them on the webpage for the podcast.
JOACHIM
Yeah, please, that’d be great. So you can actually look into each and every DAO and see what is happening, who are they inviting, what proposals are they launching? And then you learn from each other. So for me, again, that comes back to this idea of this is commons or knowledge commons. Everybody is learning from each other. If somebody finds out something new and it worked for them, they share that with the rest of the community, with the rest of the ecosystem, and, if they want to, with the entire network. So we are learning from each other, we are benefiting from each other, and this is how we’re going to solve the real difficult problems together.
Roles inside a DAO
Yeah, it’s really inspirational. I think I told you, I put out a note on LinkedIn and one on Substack, telling them, I was going to be talking to you about DAOs and did they have questions? And we’ve covered a number of the questions already, but one in particular that I find interesting is they wanted to know what kind of roles do you need in a DAO? Because these are all people coming from a company environment. And so when you’re in a company, you have a job title, you have a role in most companies, and in DAOs I gather, you don’t have a role as such.
JOACHIM
So I think first generation of DAOs didn’t have that capacity. They were meant to make vast decisions for projects because there’s money coming in for blockchain communities, a lot of investors, and they want to see this needs to be driven forward. There need to be some more projects, some more technology pieces that would make this blockchain better. We said, because my background is in HR consulting, so building organizations and with Change Agents as designing organizations from the ground up, what does it mean to create a new type of organization? I said, we need to bring these elements into a DAO. And that’s what we did over the last five years. So you see reward systems, our compensation-based system brought into the DAO. You will see a proposal system that I mentioned, but you also see a role-based system. So you can actually create roles that are based on what we call role archetypes.
JANE
Archetypes.
JOACHIM
Certain archetypes you see are sort of prevalent in organizations, and you can define a template for them. Jane, you come in as say an architect or a catalyst. Catalyst will be a good role for you. So I’m creating a role archetype for the imagined DAO to say, there’s a catalyst role. You are the catalyst and the only thing you do is you apply for that role. And based on USA expertise, we can also break it down into different levels of roles. So it could be beginner entry level, it could be highly, an advanced expert level. You decide, again, you decide that for your DAO, it could be a single salary band, a single band that says only everybody earns equal amounts of tokens. And that’s it. End of story. Or you can go highly granular or you can go Microsoft a hundred bands with lots and lots…
The second thing is circles. So how do you structure an organization? And again, you can go back to a hierarchical thing where it’s like layer after layer after layer after layer, right? It’s these nested circles, core principle of sociocracy as you know. And they have these holons and holons and it can mimic a hierarchical organization in that thing too.
But what we found is this type of organization’s much more organic. It’s driven by humans being there. So that means it can adjust, it can change over time. So our organizational structure has changed many times. So new circles came up, sub-circles were created. They moved around. And the organization sort of evolved really in a very organic way over the years. And now we yet in another iteration to say, what are the three fundamental aspects of any organization that has to do with the knowledge it retains, it has to do with the relationship, it builds with its customer, with the people, and it has to do with the technology or product or service that they’re creating. And this is really it. And then you see them almost as a Venn diagram, overlapping Venn diagram where technology or the product plays very much into the relationship building, you need to explain that, plays very much into the blueprints and the knowledge you’re creating in the organization. So there are new kinds of organizational structure that are coming out of this kind of research and experimentation, really, in that space.
JANE
I think we’re going to have to schedule a second talk a little bit later because there’s a lot of things we haven’t covered. But I’d like to ask you, based on what you’ve seen so far, in what, five years you said you’ve been in this space?
JOACHIM
Yeah.
How to start a DAO
What would you advise people? If someone wants to start a DAO, what advice would you give to them?
JOACHIM
First point is recognizing to see this as a sort of expanding space, as an open space, as an invitation for others to contribute. That you are a contributor to something that’s anchored in a purpose, in a mission. So see if you can align with that kind of vision. See if you can align with the people, sense the trust that is already present in this space. That’s the first thing. If we have new people coming to join the Hypha DAO is they sense it immediately that something is different from a traditional organization. The way we talk, the way we meet, the way we make these agreements is different. And that’s a hard thing for a lot of people to let go of the baggage they brought in from the traditional thing. Where are my employees? Who do I report to? Well, nobody, there is no boss here.
It’s very much this is self-organizing thing to that where yes, you have to reorient yourself, but there are others around you that help you that go through the onboarding process with you. And every DAO can design that in their own ways. They can go as far as creating a protocol for onboarding and go step by step, or they just throw them into the water and say, this is how we work, this is what we do. Maybe you want to talk to this circle over here that may be even more functional in nature, right? It’s a marketing circle and they do marketing stuff. Great. Talk to them, see if you want to join them, and then come to agreement. What kind of role do you want to have in that marketing circle? And so be it.
So it’s a very sort of organic, yes, but also decentralized environment where you push these things to the edges of the organization. You don’t want concentrate this on the top or into an-
JANE
In the center even.
JOACHIM
… additional layer. You just push it to the edges and see what happens. But then if critical things happen, if critical decisions need to be made in the organization, you come back together, you say, here’s a proposal that affects everyone in the organization.
JANE
So something that’s very important is the mindset of the person who wants to start the DAO and the mindset that will then spread or the mindset that will attract other people with a similar desire to work in that way.
DHO – decentralized human organization
That’s right. I think that’s a critical piece here. So stepping away from this competitive mindset you have in traditional organization, you need to fight your way up the ladder. If you don’t do it, you’re out. Two, it’s a mindset that says I’m collaborating. I’m with other people here. In fact, we call the DAO the D-H-O. So it’s a decentralized human organization.
JANE
I like that. D-H-O.
JOACHIM
D-H-O. So the DHO. Come in and DHO stuff, and it’s human, its people are making decisions. Even though another big topic is AI is coming. So generative AI is now finding its way into organizations. What do we do with that suddenly? But in the end, there’re still humans. There’re still humans who make the decisions. We have to decide which path are we taking. We’re not handing this over to the AI, but there’s the strong aspect of I need to trust you Jane. I need to make sure that the decisions we’re making together are fully aligned. It resonates with the purpose we are having here for our Imaginize DAO, and let’s do that.
JANE
Well, you’ve got me inspired Joachim to create an Imaginize DAO. Seriously, I’d never thought of that. Do you have any last point that you’d like to make before we close?
JOACHIM
Sure. So for me, it’s try to see what is happening on the internet right now. See what this Web 3.0 is about. And you don’t have to fully understand what everything is, but see, there are new opportunities now, new doors really opening and see if you feel attracted to some of those, feel if you have maybe some people around you and maybe a community you’ve created a while ago, but it wasn’t really ready to take action, it wasn’t really ready to create something out of this gathering. You may have had great conversations, really interesting people coming together. But if you want to take it to the next level to say, we’re actually building something together here. We want to have an impact on what we’re doing here. We want to hand over things to the next generation. What happens if we go into retirement? We’re not getting any younger here, so what happens with the next generation? We need to bring them on board so they can take over at some point and then set their own things into motion.
A fun space
So think more long-term, think what you can do today and then try it out. For me, it’s like, yes, jump into the water, see how far you can take. It’s still early days, so experiment a lot. Expect that things will go wrong because these are new concepts that you have to deal with. But it’s fun. It’s a fun space. It’s a space that’s changing every single day. There’s something new, innovative things coming up, new breakthroughs coming up every single day. You see that in the DAO landscape. So yeah, jump in.
JANE
Okay. Well, I think we’ll probably wait a little bit of time and then jump back in with you again. I think there’ll probably be reactions and comments to what we’ve actually talked about.
But Joachim like to thank you so much for your time and your ability to communicate with such passion, the vision that you have, and a vision in a sense of… Vision is a word that’s used badly sometimes, so it’s something you see, it’s sort of words on a piece of paper. But you have a real vision, a living vision based on the ground, what’s happening on the ground. And I think you’ve shared that really, really well. And I want to thank you for that.
JOACHIM
Thank you so much, Jane. That was a great conversation. To be continued, as they say, right?
JANE
Yes. We will continue absolutely.
JOACHIM
Thank you so much. Take care.
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