Hello and welcome to MadeMeThink! Once a week I send out this newsletter with curated content, events and examples that have sparked my interest. It's a review of my last 7-days in Web3, NFTs and the Metaverse. Want to follow my thoughts on a daily basis? Then connect with me via Linkedin and Twitter. This article is also available in German.
Sorry for the silence in the last weeks. I had vacation, recharged my batteries for a very intense second half of the year and I was also quite busy with some interesting projects that I will talk about in the next weeks.
Today I want to write an article on the LIT DAO and my involvement as LIT DAO Council Member (DAOs explained. Deep Dive on DAOs; TLDR: A DAO is a Web3 organization form in which the community calls the shots). LIT is one of the Web3 communities I am very active in (LIT Linktree). With all the Web3 communities out there, why LIT? I was especially inspired by the values and principles of LIT. For the creation of LIT DAO these were revisited by @belikewater:
1. We don’t just create, we innovate
2. We lead with kindness
3. Quality is a fundamental part of everything we do.
4. The work we produce makes a difference, whether in this space or the world.
5. DAO members benefit directly, rather than just the DAO itself.
6. We keep it fun, weird and embrace the unexpected.
The LIT DAO is in the process of being formed. The LIT core team launched in December 2021 and has since launched several innovative projects, such as Project 2, which is a dynamic NFT where Robert de Niro reacts to ETH's price changes in the last 30 minutes / 24 hours / last week / last month / last year (check it out; the rarest are the NFTs with a year as a time span).
The LIT core team has brought some innovative NFT projects to the ground, but interestingly started the project with the launch of a $LIT token, which was once hyped for a short time, but has lost a lot of value in the meantime.
Half of all $LIT have been set aside and are available to the community, the LIT DAO. The current value of these tokens is around $4 million (see wallet). In addition to the core team of LIT, which drives projects forward, there will be a DAO in the future, which will pursue ideas from the community. But which ideas should be pursued? Here, community members can submit their own suggestions and then have them voted on. With regard to voting in a DAO, however, there are various options. In many DAOs, the voting power simply derives from the number of tokens someone owns, i.e. 100 $LIT would be 100 votes in an election (= Token Weighted Voting). Voting is often done off-chain via tools like Snapshot. In one of the last votes of the LIT community, the token weighted voting logic was used (see screenshot).
411 people from the LIT community participated in the vote, totaling a voting power of $1.853 billion $LIT. The top 10 $LIT token holders who participated in the vote contributed a voting power of $743 million $LIT, accounting for 40.09% of all votes. Wealthy people can consequently buy voting power in this token-weighted logic and have great influence on the community1. Preventing this was part of my motivation to run for election as a DAO Council Member. Enclosed is an excerpt from my election program ;)
Why do you want to be part of the DAO? Since I would like to stay with LIT for the long term, it is important to me that the DAO framework is done properly and serves the Litizens. There are some critical points to consider here. For example, if we go the route of token weighted voting, we could end up being controlled by whales2. In the LIT of my imagination, the active Litizens, those who are committed to the community, have the say, not those who simply have more money at their disposal. (Quelle)
Any LIT community member could run to be elected to the DAO Council. The community then voted on who should be part of the 13-member LIT DAO Council. I was able to reach 97 votes (see below; Global_Citizen is my username on Discord) and am now working hard over the last few weeks to build a framework for the LIT DAO.
There are several issues to consider when building a DAO that we are now discussing in the LIT DAO Council, for example:
How can community members submit their requests/suggestions/ideas for the DAO to a vote? There are various possibilities here. Interested parties could, for example, take a look at the procedure of the Ape Coin DAO.
How can the DAO be built up to be ready for the future? Is there a possibility of spin-offs via SubDAOs? If you have never heard of SubDAOs, read this article.
When a proposal is made, how is it voted on? Who has what voting power? There are various possibilities that can be applied, the linked article discusses a few of them.
How do we manage and secure the DAO's assets? I.e. who can make transfers, for example? Or should the DAO's assets be diversified? Interested readers can find out more here.
We have set different priorities within the DAO Council. I myself am working intensively on the voting logic and how the respective voting power arises. I will be happy to describe the insights and findings we have gained and worked out in the Council in more detail at a later point in time.
If you would like to take a deep dive on DAO governance, you might find this discussion interesting:
PS: The LIT core team is working on a LIT PFP (= Profile Picture). I am very curious to see what will be the result. If you are interested in PFP NFTs, you can read the plan for LIT Project Zero here. If PFPs don't sound familiar: In the NFT community, most people use a NFT as a profile picture on their social networks. For example, check out my Twitter account, where I use a Crypto Duckies NFT as my profile picture. The most famous PFP projects are Crypto Punks and Bored Ape Yacht Club.
Disclaimer: The thoughts published in this publication are my personal opinions and should not be viewed as investment advice. I am not a financial expert. My specialty is entrepreneurship, innovation & marketing. Readers should always do their own research. I own various cryptocurrencies and NFTs, however in many cases it is for the sake of researching the field and gaining a deeper understanding of Web3, NFTs and the Metaverse and not for investment purposes.
Quote from the Chainalysis (2022) “State of Web3” Report: „By analyzing the distribution of ten major DAOs’ governance tokens, we find that, across several major DAOs, less than 1% of all holders have 90% of voting power (...) This has meaningful implications for DAO governance. For example, if just a small portion of the top 1% of holders worked together, they could theoretically outvote the remaining 99% on any decision. This has obvious practical implications and, in terms of investor sentiment, likely affects whether small holders feel that they can meaningfully contribute to the proposal process."