Decent CTO: DAOs should be transparent and hierarchical, not flat

Ashton Addison: What does Decent do, and what value does it add to the blockchain space?▶ 00:22

Adam Gall: These days Decent is an on-chain venture studio. We're modeling ourselves after the traditional venture studio, but leaning into crypto culture as an organizational structure. We've organized ourselves as a DAO, so our processes are becoming much more transparent: the treasury is on-chain, and decisions are made through transparent, democratic voting. We're figuring out how to run a sophisticated organization with many layers and people doing different things, in a way that's more in line with the ethos of crypto and of worldwide organizations that don't have a central head but many arms working together to build things.

Ashton: How hard has it been to build DAO functionality into a venture studio?▶ 01:37

Adam: Nothing about this is perfect. Perfection is what we're after, but there's a long way to get there. There aren't many models for us to rely on, so a lot of it is figuring out what works best as we go. A lot of people hear "DAO" and think of a very flat structure where everybody has an equal voice. That's not our main objective. We still believe in a hierarchical structure, but one with much more transparency in decision-making and resource allocation. Anybody in any arm of the organization can understand how it fits together, how they fit in and, most importantly, what they can do to drive better decisions up the chain. If those decisions are made in the public eye instead of behind closed doors in a boardroom, it allows ego to leave the room and allows pure efficiency to take over.

Ashton: Is there any existing company or DAO you can model this on?▶ 04:41

Adam: We've spent a lot of time looking at how other popular, big DAOs with lots of members organize and work, and there are plenty that have made a lot of progress building things in the space. But for our transition from an LLC in the regular business world to on-chain governance, while still moving existing contributors into this model and working out what new contributors look like, it's been tough to find organizations that have gone through that. ShapeShift is the exception, honestly, and it's been a pretty good model for us. They took on more risk than we did, since they were a pretty regulated company beforehand, doing money transmission, so there was a big spotlight on them to do it right.

Ashton: How does Decent approach treasury management, and how does it differ from a venture studio run as an LLC?▶ 07:14

Adam: I'd start with transparency, which may matter even more than decentralization at different layers. At the topmost layer, where the biggest treasury funds are, we should be most decentralized: a wide set of token holders voting on on-chain proposals dictates how treasury funds get spent. Further down there are work streams, like engineering, operations, product, design, marketing or legal, and these will have less and less decentralization. The people in charge there work out their budgets and plans for the next quarter, half year or year, and submit proposals to the larger treasury to get the funds they need. Within those work streams there may be further sub-dials for different initiatives, which are even less decentralized. Decentralization matters a lot at the top level, and probably less so as there are fewer funds to manage.

Ashton: What is Decent's investment thesis?▶ 09:39

Adam: Right now the investing is focused on our own team building new things. As of now we haven't made any outside investments. As a venture studio, we invest in building products that we've researched and see as important to the space. Our first project is a protocol called Fractal, a DAO governance framework for creating, managing and using DAO structures, much the way Decent is building and modeling its own DAO. We've been dogfooding it in our own organization, which helps us understand what features the MVP needs. It's very flexible on-chain, allowing any hierarchical structure you can imagine with any kind of permission schema between levels. The front end has templates for the types of governance structures our market research indicates will probably be used first, though anyone can configure it however they want.

Ashton: Decent could use one person one vote, seniority-based voting or one coin one vote. Which are you using?▶ 14:51

Adam: That's one of the challenges we're trying to figure out as a team right now. As of now the plan is token voting, so your stake in Decent dictates your stake in making good decisions for Decent's future. That's how we allocate resources and decide what to build. There's no reason that can't change in the future, but that's our approach for now.

Ashton: What will be the catalyst that gets more companies to move to a DAO structure?▶ 16:09

Adam: I can't speak for other organizations. For Decent, we've realized the DAO model is what's best for our goals, which are to curate the best people we can find to work on the most important problems in crypto. This model encourages the best minds to show up, prove their worth and then take over key processes. If other organizations want the same thing, and founders and leaders are willing to risk someone else coming in with a better proposal for running the organization, then a DAO is probably a good model for them. Is it right for everybody? Probably not. Even for those it suits, there's plenty to do to make it more user-friendly and efficient. We've been going through this transition for the better part of the year and we're building many of these tools and processes ourselves. As we go, we'll keep publishing what we build and sharing our knowledge and tools so others can use us as a model.