HackMD
Lowering DAO barrier to entry for "the real world"
tags: DAO blockchain communities starters barriers
Ok, lets talk semantics first: when I say "real world", i mean the "old world" or "web2 world", or non web3-native world, whatever you want to call it. It is what people outside crypto/web3 describe as "real world". It is not used to suggest the web3 world isn't real, but to phrase it from the point of view of people that aren't web3 native. Phrasing things in the words of someone you disagree with may make it easier to convince them then if you first need to spend time explaining your semantics and why its better then theirs. This is what I'll do through this text.
It can be good to have a barrier to entry in a community. It auto selects the participants to the people who are really committed. But with such barriers, you may also exclude people that WANT to join, but just have another (practical) reason why that barrier is a problem for them. So reviewing your barriers to entry occasionally is important. Do they still fit with the audience you are trying to reach? Here I am looking at barriers to entry for non web3-native people. Depending on your DAO/community, those people may or may not be your target audience. If you start a DAO focused on investing in NFT's, crypto trading in general, or start a crypto-tech company, the non web3-native world may not be the target audience you're looking for to join your DAO. But for DAO's to really take off, eventually we'll need more people to start using DAO's. The crypto world is a nic(h)e market so far, but is looked at with suspicion from the outside by many different groups for different reasons. Even though they are potentially one of the killer apps that bring blockchain to a much broader audience, as long as only web3-native people realize it, DAO's will never grow beyond them. Here I try to explore what the barriers are to entry for this group of people. I sincerely invite anyone to comment in the text, or if someone is interested, I would love to make this a collaboration.
Fiat currency vs crypto currency
One major issue is the link between fiat currency that everybody uses, and crypto currency or tokens that DAOs use. Unfortunately governments find ways to keep a hold on the crypto world by controlling this link. Crypto currencies were always meant as an alternative to government controlled fiat currencies, but as long as people's "real world" income is still in fiat currency, for people to financially take part in DAO's, they will always end up having to buy crypto currencies with fiat currency. And this poses a big barrier to entry for a few reasons. First of all, the user experience in many of the exchanges isn't great. The KYC process that users have to go through is intimidating, and sometimes insurmountable. And most of the user interfaces of the crypto exchanges are aimed at traders and investors, not regular people who just want to top up on a token to pay for something. The second reason is the cost. Even if you get past the KYC and UI issues, topping up on a small amount of crypto can quickly become really expensive because of the commissions of the platform, plus the gas fees to buy, and potentially gas fees to transfer it out. Again for investors and traders, these fees may be fine if you talk about multi $1000 transactions. But most online transactions are far below the $100 level. Sending a tip to a content creator because they made a cool video, paying for some merch, buying a digital or physical artwork or song, and similar transactions can often be very small. For those the transaction fees can be gigantic. And the last reason for this barrier is geographic. Many people say crypto currencies are a solution for countries where the banking system is very limited, and large parts of society don't have access to banks. That would be true if those people earn their income in crypto currency. But as long as people still earn their income in fiat currency, getting crypto currency is neigh impossible. And even with access to a bank, many of the exchanges are only limited to North America and Europe. So for a large part of the world, obtaining crypto currency from fiat currency is very difficult or impossible.
So how do we solve this?
One option is to remove the need to bring in fiat or crypto currency, at least for starters in the DAO/community. If the DAO would provide a small base allowance in tokens to users, so they can become a member in the DAO, without giving something back directly, that would alleviate the issue. Then afterwards, users that actively contribute back to the community could earn more tokens, and become a serious part of the community. Their contributions could be in kind, for instance by creating cool content to a platform and receiving tips from community members in return or entering it as a proposal and receiving funding from the DAO, by doing work for the DAO, or in other means that fit with the DAO's community/goals. For people who are comfortable with crypto currencies, incentives could be given for investing in the DAO (with loot or voting tokens?). This would create a tiered community, but would reduce the initial barrier to entry, and would allow a more seamless flow for users from web3 illiteracy to becoming at least comfortable with the crypto world.
Another potential solution is to link en external revenue stream to the DAO centrally. In some DAOs there may be sources of revenue form the real world already. This could be ad-revenue from a content creation platforms, or online sales of products like art or merch for instance. If DAO's are centered around these types of communities, the link between fiat currency and the crypto tokens could come primarily from this source. The DAO could chose to contribute a fixed percentage of the "real world" revenue into crypto currencies, that then get turned into tokens in the DAO that are distributed to the members as new loot tokens. You could even base the new loot distribution based on contribution to the external platform, for instance analog to the reddit and stack overflow karma systems, or even just directly linked to real world purchases. There is definitely potential for abuse here though, so any systems would have to be well thought through.
Another idea that might skirt around (or just headfirst run into) legality issues, is to copy the idea from the gaming world where people can buy in-game currencies to buy dlc, loot boxes, weapons, whatever the game is about. If you could word your DAO/business case around a gaming oriented system where whatever people pay for has nothing to do with crypto "currency" and trading outside the DAO, but just with providing something to the DAO's own community, that might be interesting avenue too. But regulatory stuff can get pretty difficult here.
Gas fees
Gas fees are a prohibitive barrier to entry for many people. The issue is linked to the previous issue, but not the same. Gas fees of the equivalent of $15 or more, are really high if someone just wants to give a cool DAO they heard about a try, and move $30 worth of crypto around to use there. And for low-income countries, those $15 may easily amount to 2 days work for a day laborer, or even the weekly food allowance for a college student. But even in the western world, people would very easily shy away from spending $15 that that may be hard to distinguish from an ATM cash withdrawal fee. They wouldn't spend $15 on that either. If you need to first explain why gas fees exist, and that that money is actually given to the people that provide their (computing) power to keep the system alive, you'll have lost the majority.
level 2 tech
side chains with lower fees (xDAI)
"gassless" transactions moving the gass fees to the DAO
Perception
This is the hardest one. Since crypto people are often techy people, good at finding technical solutions, the issues above will no doubt be solved. How to change public perception about blockchain technology and crypto currency is harder.
