🔮 web3 Is In Our Nature I 🌱

How I Learned to Stop Worrying and Love The DAO

There’s a new version of the Internet coming down the tubes. Its decentralized ways can inject transparency and fairness into the uneven digital landscape we’ve somehow come to tolerate. New emergent design principles are informing the coordination effort necessary to build this web3 evolution into existence.

Part I here explores how web3 systems can transcend outmoded forms of coordination and begin to solve for persistent civilizational challenges.

Part II over here traces the roots of web3 to blueprints embedded deep inside our ecosystem.

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On March 12th, 2020 I said goodbye to a company I’d spent two decades helping to build. It felt like a break-up, complete with the dual sensations of sadness (that I could no longer be with a thing I’d loved) and disappointment (that our thing had failed to live up to its possibility). Dismay. That’s the word.

I decided to spend my first day of freedom in search of a book. It wasn’t a specific title I was after so much as it was an answer to a question: Why do companies and their people so often fail each other? I was on the hunt for alternative organizational frameworks that might more-successfully nurture our well-being. Hope! That’s the word.

That day, in the unclassifiable section of Skylight Books, I found my first clue: The Systems View of Life: A Unifying Vision by Fritjof Capra¹. The eco-literacy power-tome is the latest from a man who, in the most total sense, |absolutely| does not fuck around.

The Systems View of Life calls for a whole new way of thinking about the world around us. Instead of experiencing life here on Earth as a disparate collection of parts, Capra reminds us that we belong to a holistic interconnected system in which each node of life is inescapably dependent on every other node. With this, let me address the dispossessed: a kumbaya conceit this work is not; a theoretician in an ivory tower Capra is not.The Systems View of Life is an unapologetically technical manual that delivers a bulletproof upgrade on almost every aspect of organized society.

In Capra’s sweeping revision, embracing the laws of nature turn outmoded man-made paradigms on their head. Here’s a drastic oversimplification:

📏 Linear → Non-Linear 🧶

🖖 Rational → Intuitive ♒

⚙️ Mechanistic → Organic 🕸️

🌘 Reductionist → Holistic 🌕

📶 Quantity → Quality 💎

🤼 Competition → Cooperation 👯

🤴 Domination → Partnership 🤝

A portion of the metabolic pathways in a human eukaryotic cell

Capra applies these new paradigms to everything from sustainable economic growth to agrotechnology to consciousness. Here’s an example from the world of corporate management:

Thanks to squares like Descartes and Newton, we humans spent centuries perceiving the world around us as a mechanical system composed of elementary blocks. This machine metaphor informed all aspects of our behavior, ultimately leading to the mechanizing of our organizations. During the Industrial Revolution, mechanistic theories of management aimed to increase an organization’s efficiency by designing an assemblage of interlocking parts - division of labor. As organizational behavior theorist Gareth Morgan puts it, “Organizations that use machines became more and more like machines.”²

The Lackawana Steel Mill in Buffalo, 1903

As organizations evolved throughout the 20th century, “scientific management” gained steam as the preferred method of human coordination. In these organizations, an engineering approach governs the production of highly standardized products. Specialized duties are given to workers trained to perform them in a very exacting way. Long story short, managers do all the thinking while employees are left to do all the doing.

This top-down control structure permits agents from outside the production line to impose shape and objectives on an organization the same way an operator controls a machine with a set of instructions. There is however one very glaring built-in flaw to this selectively-convenient dynamic. Outside of the whole inhumanity thing, this top-heavy contraption will inevitably break down and/or become outdated. Operators then must manually restructure the machine, over and over again.

The Systems approach rises past this game of bureaucratic whack-a-mole. It holds that in the grand scheme of human evolution, scientific management as a means to production is merely a temporary ideological distortion. The argument holds that old-fashioned top-down structures will eventually be upgraded to one much more in-line with the self-organizing biological properties of us organisms. In other words, Systems learns on the job.

Instead of requiring an operator to continually fix problems, a self-generating network process upgrades an organization automatically based on a built-in set of instructions. This behavior forms a feedback loop and a more fluid order emerges, developed by all constituents from within rather than by a small largely self-appointed group from without. Ultimately, it’s a path to more sustainable human organizational structures.

Self-organizing map of a Kohonen Neural Network

Standing there in the bookstore I got about as far as the above. My next move was to the cash register. The next day, LA issued shelter in place restrictions.

As COVID stretched on, and theretofore unshakeable institutions began to wobble, The Systems View of Life began to feel even more crucial. I wanted everyone to read the book. But it was a lot to ask (trust me, I tried). I chipped away at ideas for how to lower the barrier to entry: Make it a podcast 😬 , This-Is-Water it with a set of animated explainers, produce a Sci Fi series where systems lessons are delivered by a cast of unexpected alien lifeforms. Nothing stuck. I was an island!

Then, I discovered a movement that had been applying Capra’s lessons to fundamentally improve pretty much everything.

A year after finding A Systems View of Life I decided to perform an experiment. I dropped a piece of digital art inside an investigation into astral projection and put it up for auction as an NFT (as one does). It was March and I’d just returned to Los Angeles after being in relative isolation in a Canadian forest. The energy around the NFT craze was savage. The super technical blockchain stuff I’d come to know had weaseled its way into a meme with some turn-key tech and was now finally connecting with culture. People were frothing over limited-edition JPEGs and teaming up on opportunistic schemes all over the place. It was like a pixel-based fomo-powered fatberg had lodged itself into the zeitgeist. But above all the crypto-craze there was something else going on. Something much bigger was waking up.

From boardrooms to meet-ups to Discord channels, the more pensive folks on the scene were all asking a deeper question: what’s really happening here?? The answer came into focus slowly for me, then all at once. All this activity around NFTs was a mere tremor inside a larger tectonic shift. That shift is web3.

Web3’s not an easy one to explain. It’s mid-formation and all-encompassing, which renders many of its attributes abstract.

One might spend 30 minutes building a diagram to unpack how web3 changes the way humans communicate, only to fall way short 😬

One might use a metaphor: web3 is like an effortless hang with an old friend who you can confide in without question, won’t try to take your money, and remembers all your stories 😬

One might even try a trip through history: web1 (1989 - 2005) was a read-only information space for most folks, with little-to-know interactivity. web2 (2004 on) is a read-write space that harnesses interactivity to make the web a platform for all types of digital human behavior: retail, socializing, user-generated content, gaming et al. And then there’s web3. Well, [delivers pep talk to self], here’s a 3.5-sentence run at it:

web3 is a container label for the next version of the Internet. Inside this container are a collection of communities, protocols and tools that are building software-based rope bridges³ from the Internet we know today to a much more decentralized experience where trust is so built-in it becomes a non-concern, value can be exchanged between people without intermediaries and personal data isn’t a prime source of monetization. While web3’s engine is applied computer science, the movement is solving for an ancient problem: can radically new modes of coordination improve life here on Earth?

[Stands back] Not too shabby 💅

Whatever web 3 is and will be, it sounded familiar to me. It sounded like The Systems View of Life !

And then a second door opened. In the frame, backlit by a heavenly glow, stood the alternative to corporate organization I’d been seeking.

The web3 kingdom has many principalities. Despite divergent visions at times, the factions all sort of need each other for the movement to be a success. NFT creators and collectors are proving out incentive mechanisms and markets for token-backed goods. The Virtual Reality folks are building more ergonomic interaction environments. The DeFi pros are chipping away at crypto-powered financial products, services and infrastructure. But if you, like me, are in search of refreshing ways to replace old ineffective corporations, your tribe are the builders of Decentralized Autonomous Organizations (DAOs).

DAOs are a bit of a hot topic. Forcing them into a strict definition feels like walking on to a shooting range. While reductive, a simple unlock for describing a DAO is an internet community with a joint bank account operating according to a set of codified rules.

Here’s a diagrammatical shot at a compare-and-contrast between the traditional corporate structure and DAOs:

The rules of gravity inside a DAO feel good; they also feel unfamiliar. DAOs have no central leadership, control is distributed to the group, individuals derive value by contributing to the community, value is bestowed in the form of (usually proprietary) community tokens, which equates to ownership in the organization, which in turn grants participation in collective governance.

DAOs as an organizing principle can be deployed to coordinate communities to accomplish all sort of complex objectives. Metacartel Ventures is an investment DAO, Pleasr is an art collection DAO, RaidGuild is a service DAO (and a partner of EXO), Friends With Benefits is a social DAO and Klima DAO rewards participants with a carbon-backed, algorithmic digital currency that drives up the price of carbon futures, forcing companies to make low-carbon technologies and carbon-removal projects more profitable. Flip mode!

What was once a small band of Internet visionaries is now exploding with applications. Here’s a peek at a peek of the DAO landscape:

It’s no surprise that one of the more effective DAO operations out there comes from the very developer community that is responsible for bringing the web3 movement into existence. Gitcoin sits as a network at the center of web3; its denizens are open source software builders. Builders connect with peers who complement their skillsets, then team up on bounties, a Gitcoin nom de guerre for contract work. For their efforts, they are rewarded with crypto. Gitcoin as a public goods DAO is building the most rope bridges between web2 and web3.

The Gitcoin guy is Kevin Owocki. His job title alternates between founder, DAO member and spokesmeme. A CEO designation is nowhere to be found. Kevin’s ability to translate his immense technical expertise into actual English makes him a sort of sage on the quest to figure out how to DAO. I asked Kevin if he'd make an appearance in this here article to help break down DAOs. He obliged. 

Kevin graduated with a BS in Computer science. “They ushered us into corporate America because it’s Delaware and there are a bunch of banks, and I hated corporate America,” he said. A healthy distaste for overly-controlling organizations is a prevailing sentiment in the web3 world. After stints with tech start-ups and ten years as a rover VP Engineer, Kevin saw a light. “I started Gitcoin because I learned recruiters are just middlemen who don’t add any value and open-source developers were severely underpaid and under-appreciated,” he lamented. “I felt blockchain could solve both of those problems.” Kevin then went macro to hammer home Gitcoin’s position:

Open Source creates $500 bn per year in economic value for the world and there’s no business model for it. We want to correct that using cryptoeconomics. We are building a world in which the average software engineer at JP Morgan can quit their job and work for the open Internet.

Kevin has a pointed perspective on the difference between a company and a DAO. “A company is only in one legal jurisdiction and is much more expensive to settle disputes with cause the court system is much more expensive than paying gas on the Ethereum network,” he said. “A DAO,” Kevin continued, “is a global network that makes it easier to handle disputes, and provides a wider design service area cause it’s Turing Complete.” Veering away from a technical rabbit hole, Kevin summarized, “I think DAOs are the future in the Information Age and companies and hierarchies are the Industrial Age.”

With more than a modicum of schadenfreude, I asked Kevin to try his hand at an even tighter definition of a DAO. He delivered:

A DAO is a unit of human organization that balances and integrates actors' interests using blockchain and a bunch of other technologies. The key is that it’s on a more transparent, more efficient, more global settlement layer than any corporation that came before it. As a result, the design space is much more vast. It's a punctuated equilibrium in which all of a sudden there's a new opportunity for a set of organisms to evolve.

DAOists are coordination junkies who apply their fixation to scientifically designing communities. In September, I attended a DAO mecca of sorts. MCON brought visionaries from across the DAO spectrum to Denver for a massive brainstorm on the future of how us humans can get together to improve stuff. While the focus was very much on how DAOs can contribute to public goods, the language employed to describe the objectives was all-encompassing. Here are some soundbites from the 3 days:

• “The Infrastructure from previous generations can’t handle the coordination necessary to solve today’s problems.” - Metadreamer, Metacartel

• “Any sentence that starts with ‘why can’t we all just’ is the beginning of a waste of time.” - Ameen Soleimani, RAI

• “DAOs are the way to get out from under large corporations” - Literally everyone

• “We are now a digital nation and have to craft relationships with legacy governments.” - The Jiho, Axie Infinity

• “We are here to keep capital and labor at the same level.” - Anonymous 23-year old, party in a warehouse

• “If you don’t know someone’s background then it’s a true meritocracy.” - Felix Fang, Set Protocol

• “We’re moving to a reciprocated-based employment dynamic from a subjugated one.” - Griff Green, The Commons Stack

• “Don’t let capital get stuck in too many pockets. That’s latent energy not being used.” - James Young, Collab.Land

• “5 people who share a mission are more powerful than 5 million who don’t.” - Jess Sloss, Seed Club

It felt like a fucking revolution.

On the flight home from MCON, I felt a deep sense of thankfulness. At the end of a year searching for ways to build a more human-friendly organization, I’d found this extraordinary community who’d turned the mission up to 11.

The words of one particular speaker named Rolf Hoefer stuck with me. Rolf is the co-founder of Cultur3 which invests in token-based ventures. In an off-hand remark he mused, “we’re thinking of DAOs as the ultimate form of organism.”

That gave me an idea.

Perhaps a line of correlation could be drawn between insights from The Systems View of Life and these emerging utility-driven communities. Perhaps the answers for how to navigate the early days of web3 and Decentralized Autonomous Organizations lie deep inside our ecosystem.

Proceed to Part II for an exploration of how life here on Earth harnesses decentralized decision-making to survive and thrive.

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The dimensions of this here Substack are expanding. EXO is adding to its one-way publishing model with a real-life community! If you‘re into raising the bar on how we tell stories on the Internet, tuning into out-there speakers, or simply enjoy a good old-fashioned digital soundbath, come on in!

1. Capra, Fritjof and Luisi, Pier. The Systems View of Life, 2014. Cambridge University Press

2. Morgan, Garret. Images of Organization, 1986. Sage Publications.

3. The use of rope bridges to describe small unlocks from web2 to the web3 kingdom was coined by Ben Palmer of the New Computer Corporation.