Jack Kubinec

In a year of hacks, lawsuits and rage quits, DAOs had an eventful 2023 working out the kinks in decentralized governance. As the year draws to a close, here are a few of the trends that could shape DAOs and similar organizations in 2024.



<h2 class="wp-block-heading">Separation of powers</h2>



Many DAOs are adopting varied strategies to address the idea that governance power must be divided. This approach is driven by the dual objectives of enhancing efficiency and establishing a robust system of checks and balances.



Optimism’s DAO uses a bicameral <a href="https://community.optimism.io/docs/governance/#">system</a>. The Token House is governed by Optimism’s OP token that was distributed via airdrop, and members vote on things like protocol upgrades and inflation tweaks.&nbsp;



Read more: <a href="https://blockworks.co/news/optimism-vc-backed-project-funding">Optimism squabbles over public goods funding to VC-backed projects</a>



The second branch, the Citizen House, uses identity-based governance to fund Optimism’s retroactive public goods program. In the Citizen House, individuals who contribute to the Optimism ecosystem are granted voting “badges” they can use to vote on who should draw from the tens of millions of dollars being offered up for public goods providers.&nbsp;



The Citizen House recently completed <a href="https://community.optimism.io/docs/governance/retropgf-3/">voting</a> on the third round of retroactive public goods funding.



<a href="https://blockworks.co/news/machiavellian-dao-governance-a16z-miles-jennings">A16z’s Miles Jennings wrote favorably</a> about the Citizen House’s non-token based system as one way to address the “decentralization theater” that can be caused by solely token-based schemes.



<h2 class="wp-block-heading">Rage quits</h2>



Some DAOs have begun allowing disgruntled members to exit, often with a pro-rata share of their treasury, as a form of minority protection.&nbsp;



The early returns on rage quits have been mixed. <a href="https://blockworks.co/news/nouns-dao-treasury-fork-governance">Nouns DAO lost half its treasury</a> in September when community members executed its new forking procedure. Nouns then <a href="https://blockworks.co/news/nouns-fork-two-dao-treasuries-spending">forked a second time</a> the next month and a <a href="https://nouns.wtf/fork/2">third</a> time in November. DAO members accused the activist forkers of exploiting an arbitrage opportunity — cashing out on their share of the treasury and leaving rather than wanting to try an alternative vision for Nouns.



FloorDAO saw members leave via rage quit and wrote in an October blog <a href="https://medium.com/floordao/floordao-floork-the-future-a220ae69bd9a">post</a> that “the DAO need to be as focused as possible” and it would not discuss certain topics for the next year.



<h2 class="wp-block-heading">Treasury squabbles</h2>



As a potential bull market returns, DAO treasuries are seeing their native tokens increase in price. At the same time, competition is heating up for who should receive treasury funds.&nbsp;



Some in the Optimism ecosystem complained that venture capital-backed projects <a href="https://blockworks.co/news/optimism-vc-backed-project-funding">shouldn’t receive public goods funding</a>.&nbsp;



And <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a>, the only layer-2 <a href="https://defillama.com/chains">larger</a> than Optimism by total value locked (TVL), has seen its $4.2 billion <a href="https://deepdao.io/organizations">treasury</a> become the source of multiple funding controversies. The community voted <a href="https://snapshot.org/#/arbitrumfoundation.eth/proposal/0x42f68a26ff5a5be692a80468a1d1885cf07d590836536f5169cc4b69f64f3f37">down</a> a proposal for Blockworks Research, Gauntlet, and Trail of Bits to receive over $2 million worth of Arbitrum (<a href="https://blockworks.co/price/arb">ARB</a>) tokens to manage the DAO’s governance. And the co-founders of Bankless burned their BANK tokens after some in the Arbitrum community felt that a BanklessDAO <a href="https://forum.arbitrum.foundation/t/proposal-banklessdaos-global-education-and-onboarding-campaign-for-arbitrum/19653">proposal</a> asked too steep a price for an education and onboarding service.



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Arbitrum

3 DAO governance trends to watch in 2024

The second installment of The Rise of Blus, an animated movie being funded in chunks by the Nouns DAO, released Wednesday.&nbsp;



Produced by crypto-native animation studio Atrium, the movie’s $3 million budget is contingent on a string of governance proposals passing. In contrast to the film industry’s black box status quo, the studio’s founder Supriyo Roy periodically <a href="https://www.propdates.wtf/prop/317">publishes</a> on-chain updates regarding the film’s progress and how funds are being spent. <a href="https://drive.google.com/file/d/1gdInCNXaLvKA5Vrxe6aCTiOtE67jNpG6/view">Scripts</a> have also been made public ahead of the releases.&nbsp;



Several of the movie’s producers worked on Spider-Man: Into the Spider-Verse, Roy told Blockworks, giving the Nouns movie’s animation a similar flavor to the Marvel hit.&nbsp;



The Rise of Blus has a crew of 45 people and an estimated final budget of $2.78 million, Roy said. For context, the recent Teenage Mutant Ninja Turtles animated movie <a href="https://deadline.com/2023/08/teenage-mutant-ninja-turtles-mutant-mayhem-box-office-1235453107/">cost</a> $70 million to produce.&nbsp;



Five of the <a href="https://www.youtube.com/watch?v=tWETBcBsxPA">movie’s</a> eight chapters have been funded, and the next three episodes, running around 10 to 11 minutes each, will be <a href="https://houseofnouns.wtf/nouns/proposals/425">released</a> over the next eight months or so. If completed, the full movie will run around 80 minutes, Roy said.&nbsp;



The Rise of Blus follows a boy named Gi who lives in the floating city of Blus and wants to be an adventuresome “rover” rather than follow his father in becoming a boring “recycler” when he grows up. The Nouns NFTs’ signature “Noggles” feature prominently in the movie. Roy said the movie’s main conceit is the glasses providing freedom of choice.&nbsp;



While never mentioning NFTs or crypto, the movie seemingly pays homage to its origins. The second installment introduces viewers to an apparently important fictional substance named ether — which is also the name of the currency used to auction Nouns.&nbsp;



Read more: <a href="https://blockworks.co/news/nouns-fork-two-dao-treasuries-spending">Nouns DAO is forking again</a>



But Maria Shen, general partner at Atrium investor Electric Capital, said crypto may not matter much to the animators being funded by the DAO’s treasury.&nbsp;



“Frankly, alright, I don&#8217;t think any of them have a special affiliation with crypto,” Shen said. “They&#8217;re actually here because it&#8217;s an alternative way for them to have a revenue source and artistic freedom that they otherwise wouldn&#8217;t have…it&#8217;s really about what are the new use cases that crypto can enable? And this is very clearly one of them.”



<h2 class="wp-block-heading">Web3 games migrate networks in record numbers</h2>



65 Web3 games changed networks so far this year, up from 48 last year and 12 the year before, according to Game7’s “State of Web3 Gaming” <a href="https://research.game7.io/state-of-web3-gaming-2023">report</a>.



Leading destinations for games were layer-2s Polygon, Immutable and Arbitrum. 73% of games that changed networks this year chose an Ethereum virtual machine (EVM)-based chain, the report said.



The RPG “Champions Ascension” moved from Ethereum to Polygon in May, <a href="https://x.com/ChampionsIO/status/1656256600405934081?s=20">promising</a> an end to “bloated gas fees.”&nbsp;



<h2 class="wp-block-heading">One interesting stat:</h2>



<ul class="wp-block-list">
<li>Bitcoin ordinals, a protocol that enables NFT storage on bitcoin, <a href="https://app.blockworksresearch.com/analytics?category=btc">generated</a> over $4 million in transaction fees Thursday, according to Blockworks Research. Daily ordinal fees were in the $10,000 to $20,000 range for much of October.</li>
</ul>



<h2 class="wp-block-heading">Also of note:</h2>



<ul class="wp-block-list">
<li>Disney partnered with Dapper Labs to release collectible pins for Disney characters as NFTs. Notably, the product’s <a href="https://www.dapperlabs.com/newsroom/dapper-labs-announces-disney-pinnacle">marketing</a> shied away from using the term “NFT” to describe the pins.</li>



<li>SocialFi platform Friend.tech released a global <a href="https://www.friend.tech/account">feed</a> where users vote to rank posts. Votes are <a href="https://x.com/confugen/status/1725450313102983389?s=20">allocated</a> to users based on key prices.</li>



<li>Lens Protocol released V2 of its decentralized social infrastructure. It teased Smart Posts where content can be directly monetized — like a payment pop-up on blog posts, <a href="https://twitter.com/LensProtocol/status/1724064920139133146">for instance</a>.</li>
</ul>



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