10 Ways DAOs Differ from Traditional Organizations

The rise of blockchain technology and following emergence of Decentralized Autonomous Organizations (DAOs) has disrupted traditional organizations as we know them. In this blog post, we explore 10 key differences between DAOs and conventional, hierarchical organizations, highlighting the advantages and novel aspects teams can expect when embracing decentralization.

Before diving in, it’s important to note that DAOs’ alternative work approaches go beyond the blockchain technology they operate on. The DAO model transcends the classical notions of work, unearthing new possibilities for self-determination and purpose, offering transformative potential for both individual contributors and society as a whole. While the examples outlined below are specific to Hypha’s five years of experience building our “Organization-in-a-box” DAO toolkit, we welcome additional examples and suggestions to add to this growing list.

Discover the benefits of working for a DAO by signing up for Hypha’s Beta Launch waitlist or by joining an existing DAO within the Hypha Network.

1. Self-management Over Top-down Hierarchy

The defining characteristic that sets DAOs apart from traditional organizations is their adoption of self-management principles instead of conventional hierarchies. Contributors are responsible for self-organization, and their teams, known as Circles on Hypha’s platform, are empowered to make decisions and take ownership of their work. As a result, DAOs allow for a higher degree of individual and collective agency, fostering a more autonomous and empowered work environment than a more top-down approach where traditional employees have less autonomy and ownership over their work.

Hypha Example: Circles on Hypha’s platform actively manage themselves to achieve the broader goals and objectives of the DAO. Each circle receives its own budget, enabling compensation for roles and other payout activities directly from the circle’s designated funds.

2. Decentralized and Inclusive Decision-making

All DAOs operate on decentralized governance principles, distributing decision-making powers among core team and community members. Unlike traditional organizations with top-down hierarchies, DAOs submit proposals for voting on key decisions. This empowers members to actively shape the direction and operations of the DAO, creating a more democratic and inclusive work environment.

Hypha Example: We recently went through a brand update, where the marketing team submitted a new proposal for updated brand messaging and taglines. DAO members then submitted feedback and comments. A few rounds of edits and discussions followed before the proposal passed after reaching the required majority vote from DAO members.

3. Novel Ways to Motivate and Recognize Contributions

DAOs go beyond conventional salary-based incentives and rewards for their members. They have the flexibility to create customized systems that align with the community’s needs and values. These systems can include token-based incentives, reputation systems, or other innovative approaches to recognize contributions at various levels, starting from the moment a member joins the DAO.

Hypha Example: We use three different token types to recognize and reward contributions to our DAO: a cash token (cryptocurrency exchangeable for fiat currency), a voice token (providing increased voting power within the DAO), and a utility token (representing a members’ stake within the Hypha DAO).

4. Open and Transparent Culture

As a default, transparency is a core value for DAOs, provided operations, financials, and decisions are publicly available on the project’s home blockchain. This unprecedented transparency builds trust among core and community members, fostering accountability throughout the DAO. Unlike traditional organizations, where decisions often rest with a few individuals, DAOs create open discussion forums. Contributors can openly share ideas, provide feedback, and actively participate in decision-making while creating a verifiable record of their contributions. This level of transparency supports reputation building and opens doors for career development.

Hypha example: Anyone can visit Hypha’s DAO platform (dao.staging.hypha.earth), create a free account, and access all actions taken and decisions made by our core team and community members. The same goes for the 95+ other DAOs part of Hypha’s Network featured on Hypha’s above-mentioned platform.

5. Remote and Global Collaboration

DAOs transcend geographical boundaries and offer the flexibility of remote work. Unlike traditional jobs that often require a physical presence in a specific location, working for a DAO enables contributors to join from anywhere in the world. This global talent pool fosters diversity, collaboration, and the exchange of ideas among individuals from different cultures and backgrounds. It allows for flexible work arrangements, empowering contributors to maintain a better work-life balance.

Hypha Example: ~200+ members working across 20+ countries belong to Hypha DAO, with countless more represented across the various DAOs in the Hypha Network. On any given day, Hypha members can be found working from a beachside cafe in Sri Lanka, coworking spaces in Sydney, canal-side in Amsterdam, on the outskirts of New York City, and several more unique places.

6. Fluid Work Assignments Enable Easier Collaboration

Compared to traditional roles with lengthy interview and onboarding processes, DAOs offer a more dynamic and adaptable workforce. Contributors can join multiple DAOs based on their skills and interests. Interested individuals can propose one-time contributions called “quests” on Hypha’s platform or apply for longer-term core team roles by selecting from defined role archetypes and compensation bands. These “a la carte” engagements not only give DAOs access to talent often difficult to find in traditional structures but also make the process more convenient and flexible for contributors.

Hypha example: In the past five years, members have submitted nearly 1,400 proposals. Most of these proposals were for short-term engagements like quests or contributions, where compensation was provided upon achieving results. This model allows Hypha to easily attract global contributors with specialized expertise, tapping into talent that traditional organizations often miss out on. These contributors offer services like leading specialized workshops, benefiting both the team and the contributor, who is paid upon completion. They then have the freedom to suggest more short-term engagements, apply for longer-term roles, or remain involved as community members for future opportunities to contribute. This dynamic approach ensures a continuous influx of talent and fosters an engaged and collaborative Hypha DAO community.

7. Gamified Community Engagement via Tokenization

Every team, DAO or not, benefits from cultivating a strong and supportive community. The question is, how can you build one? Traditional organizations’ community building efforts are based on keeping parties informed about project updates and hosting events, whereas DAOs invite community members to become part of the project itself. Hypha’s platform makes this possible by providing features such as community proposals, payouts, and badges, enabling teams to onboard and assign tasks to community members, taking advantage of the collective intelligence that may remain unrealized otherwise.

Hypha Example: The features highlighted above will be rolled out as part of Hypha’s upcoming Beta Launch (sign up here!). From there, these community engagement tools will engage all Hypha token holders for initiatives such as input/feedback on major topics such as Hypha’s constitution, tokenomics, and so on.

8. Automated Operations and Distributed Human Resources Management

Every team is familiar with challenges posed by administrative requirements such as compensation, onboarding new team members, resource allocation, and more. DAOs provide the opportunity to automate these time-intensive tasks by programming them into smart contracts. By leveraging blockchain technology, DAOs reduce time spent on administrative duties, minimize reliance on centralized intermediaries, streamline processes, and enhance overall efficiency. This automated approach revolutionizes the administrative aspect of organizational management compared to traditional organizations.

Hypha example: Whenever new prospective core team members apply to join Hypha, they can select from a list of defined roles complete with compensation bands and thus, bi-weekly compensation. After the DAO accepts their proposal and the necessary time has passed, compensation is sent to their wallets upon multi-signatory approval from DAO members with treasury badges, requiring only a few clicks.

9. Encouraging Collaboration over Competition

Unlike traditional work mechanisms encouraging silos and competition, DAOs enable a collaborative environment with other decentralized organizations within the larger blockchain ecosystem. This collaborative approach allows sovereign but aligned projects to establish synergies, share resources, and explore new opportunities beyond traditional organizational boundaries.

Hypha Example: Every DAO within the Hypha Network can decide to support the ecosystem’s growth by providing marketing, sales, service, or technology development support. This way, Hypha Network DAOs contribute to the ecosystem’s health in collaborative fashion. DAOs can post quests to deliver services to other DAOs.

10. Mutual Investment in the Project’s Success

In contrast to traditional organizations, DAOs include all stakeholders within the organization, including customers, suppliers, and investors. Everyone involved is considered a contributor and part of a trusted space. This inclusive approach fosters new dynamics, aligns incentives, and promotes collaborative win-win scenarios through circular models.

Hypha Example: Within Hypha DAO, contributors post proposals and receive Hypha tokens for the value they create, whether that value is financial, expertise, intellectual property, time, or strategies. By receiving Hypha tokens, these contributors become co-invested in Hypha’s success. This concept is now being extended to the Hypha Network as we invite talented individuals and other DAOs to get involved in the network’s expansion by becoming ambassadors, affiliates, consultants, Service DAOs, technology partners, and more.

DAOs are certainly gaining momentum as a strong alternative for future work models, and Hypha’s “Organization-in-a-box” DAO toolkit is poised to lead this revolution. The next opportunity to get involved and create your DAO using Hypha’s tools is participating in our upcoming Beta Launch. Sign up now to join the waitlist!

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