Bankless - Monolithic to Modular DAOs with Julz Rosenberg | Layer Zero

Episode Date: June 21, 2022

How do DAOs go from monolithic to modular? Julia aka Julz Rosenburg has the answer. Julz is the Co-Founder of Orca Protocol, a project trying to uncomplicate coordination by mirroring human coordination. How? One word: Pods! In their current state, most DAOs have coordination and hierarchical problems. However, with the help of Julz and the Orca Protocol team, this won’t always be the case. Why are pods essential for the future of DAOs and work? What obstacles stand in the way to achieve this future? Why aren’t you pod-pilled yet? Answers to these questions and so much more in the episode. ------ 📣 NOTIONAL | Real DeFi Yield https://bankless.cc/Notional  ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum  ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across  🏦 ROCKET POOL | STAKE YOUR ETH https://bankless.cc/RocketPool  👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave  ⚡️ LIDO | LIQUID ETH STAKING https://bankless.cc/lido  🔐 LEDGER | NANO S PLUS WALLET https://bankless.cc/Ledger  ------ Topics Covered: 0:00 Intro 4:31 What Julz is Here To Do 9:07 History & Summary of Governance 14:48 Trustware vs. Socialware 20:43 Innovation on the Trustware Layer 22:16 Orca Protocol 25:10 Why Pods Matter 30:30 DAO Governance Critiques 36:07 The U.S. Governance System 39:10 The Future of Work 43:34 Monolithic to Modular DAOs 48:05 DAO Metaphors 50:42 How to Get Culture to Scale Exponentially 56:03 Pod Coordination 57:40 DAO Governance Optimism 59:28 Julz’s Advice & Resources for DAOs 1:01:18 Orca’s Product & Capturing Resources ------ Resources: Julz on Twitter https://twitter.com/JulzRoze  Orca Protocol https://www.orcaprotocol.org/  https://twitter.com/OrcaProtocol  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Welcome to Layer Zero. Layer Zero is a podcast of unscripted conversations with the people that make up the Ethereum community. Crypto is built by code, but is composed by people, and each individual member of the crypto community has their own story to tell. Cypherpunks understood that the code they write impacts the people that use it, and Layer Zero focuses on the people behind the code, because Ethereum is people all the way down, and it always has been. Today on Layer Zero, I'm talking to my friend Julia, and Julia works at Orca Protocol, and I, I, without expecting it, get what's called, I guess, Orchapil during the show as we talk about things like Dow governance and Dow structure and where DAO's are currently and where they are going to be. Now, I don't know if I'm behind the curve on this conversation

or ahead of the curve on this conversation, but I think we just created a new meme in this podcast called the Modular Dow. Dow's being in their current form, monolithic DAO, just like how blockchains all started, monolithic. and some blockchains have then progressed into becoming modular and modular blockchains becoming the new frontier level of crypto economic research, I think DAOs are in that same state where every single DAO right now is monolithic, as in there's token weighted governance governing over every single decision and it's causing apathy. The DAO can't go in all directions at once.

And so some DAOs are flirting with the frontier of monolithic DAO structure. And that's really what ORCA protocol is. Julia works at ORCA. and they are pioneering on-chain compartmentalization of DAOs to have more like what they call pods, but like sub-dows or like an org chart of DAOs, if you will. And so we talk about the current state of DAO's and their problems. We talk about organizational history, both in Tradfai, traditional institution, org chart, and how that came about but also its flaws. We talked about the United States of America as the original DAO and how DAO's need to adapt

from this monolithic strategy into a modular strategy. just get completely pilled during this episode. You can literally hear the moment it happens about this whole podpilled or modular Dow strategy. So let's go ahead and get you, the listener, Pilled as well. So let's go ahead and get into this conversation with Julia Rosenberg of Orca Protocol and get you podpilled right after we listen to some of these fantastic sponsors that make the show possible. AVE is the leading decentralized liquidity protocol. And now AVEV3 is here. AVEV3 has powerful new features to enable you to get the most out of D5, including Isles. which allows for many more markets to be launched with more exotic collateral types,

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grab a ledger and take control over your crypto. What's up, Joe? How's it? How's it? Hi, David. This is a very rare opportunity of an in real life podcast. I know. I'm very blessed by your presence. Welcome to Williamsburg, finally. Oh, I'm having a fantastic time being here and very bullish on an in real life podcast. So we're going to see how this goes.

You're going to be my first guinea pig. Oh, I'm very excited to test this out. So what are you here to do in crypto? The ultimate question. I think that I am here in crypto to, figure out how we can use crypto and Ethereum, the blockchain, to better scale human coordination and how we can actually use this trust layer of the blockchain to actually better scale trust in organizations and douse. Okay. And how do we do that? Can we skip to the end? Can we just like

show me the solution? The magic pill. Yes, right. Well, I think, sadly, it's a very iterative process. I have been using this sort of framework that we created at ORCA called Trustware and Social Wear. Okay. We love new words. Yes. And basically the idea is that social wear is a mechanism that creates assurances through human coordination. This is playing off software. Yes.

Software, hardware. Cool. These are different flavors. So Socialware is more of the social processes and policies of an organization. Whereas Trustware is creating an assurance mechanism that means. minimizes the reliance on human coordination and human relationships, which is more of, you know, codifying the trust centers of an organization, which we haven't really had the opportunity to do yet with traditional organizations because really traditional organizations use

like digitization as a communications layer rather than a trust layer. And that's something that we're very familiar with in crypto is using, you know, Ethereum, the blockchain as a trust layer for our interactions, whether that be financial, whether that be around NFTs, any, all of these things. And so trustware is a new concept that we're able to use in Dow's to better scale human coordination using these sort of digitized trust centers of organizations. Digitized trust centers of organizations. Okay. Yeah.

So like an example of trustware would be like the governor contract. Like that is a small primitive. that was used to better scale decision making around different proposals. What's a governor contract? The governor contract is the contract that is used for token-weighted voting. So it's something that compound created a few years ago, and it's now kind of like the standard contract for token-weighted voting. So when people say, we forked compound governance, that's what we're talking about?

Yeah, that's all that they're talking about is the governor contract, which is basically the state of all about governance today. Is this thing that was created like two years ago. Sick. I'm not sure if I should be bullish or barrack. I mean, it is kind of an interesting state that, like, the governor contract was created, and people were like, we did it. We figured it out.

This is a centralized governance. Like, token way to voting. That's all we need to do. And now we're in this phase of, like, completely storming against DAO's and Dow processes and governance because we're like, this doesn't work. Like, there's so many whales that are voting, like, they can sway the vote or, you know, voter apathy. People are engaged.

People don't care. they're not informed enough to be making these decisions. And we have all of these problems now that exist with token weight of voting, which like we probably could have anticipated a little bit better. But I think it's really important now because I think people are seeing how important governance is at this stage. And we are starting to see organizations and Tao starting to iterate more on those governance processes. Because I think people understand the weight of those processes. sort of the friction that it's creating and basically becoming like a footgun on these organizations.

So I think here's how we can like speed run the history of the recent history of crypto, the recent ancient history. Compound makes is governor contract and simultaneously releases the comp token, which kicks off the bull market. Yep. So thanks compound for that. And I think like when we had all these defi options, we had Uniswap that launched in 2019. And, number of other defy applications came out after that compound being one of them there was a lot of people who were like these are the fundamentals of crypto defy is like what we're here to do and then with the compound governor contract it created the route the vehicle the path for all of these defy apps to have a token and that's really where this bull market gar started it's like oh we have

justifications for tokens now after everyone got burned in 2017 from icio tokens that were meaningless compound created the governor contract and gave a meaning to tokens yes and so for all the DeFi people were like, yes, we solved it. Like, we figured out how to tokenize stuff. It's with governance. And so we have these governance tokens. And then now we've solved like defy tokenization. And then I kicked off the bull market. And now then we all got drunk on the bull market. And now we're having our hangover. And our hangover is like, no, no, no.

You just brought us back to square one, which is the original problem of humanity, which is governance. Right. So like, you don't solve problems by governance. You just solve the fact that we now have tokens to speculate on via governance. That is a beautiful summary, David. But I also think that, like, we're not back to square one. I think that we just kind of, like, lost sight of it because, like, of this beautiful path that compound pay forward in being able to have this token with, like, utility that you can quite literally see and creating the path for many, many defy projects to launch a token,

that basically just became the path to creating a DAO. So everyone now, when you create a DAO, you. launch a governor contract or you do something very similar via like snapshot. But I think what was missing in a lot of that and was catching up to people now is that we didn't really implement the social systems to actually create meaningful governance around that. And that's kind of part of this framework that we created with ORCA is like the trustware versus social wear is that if you over index on either, you footgun your organization. Footgun meaning like you shoot yourself on the foot. Like you're creating problems for yourself. And if you over index on either,

of those, like you're creating massive problems for yourself. And so I think what's happened with a lot of DAVs is that they've over-indexed on the trustwheres. Like, we rely wholeheartedly on on-chain governance and like the governor contract and, you know, make a proposal and then token holders vote on it. Governor contract is law. Exactly. Code is law. Exactly. But then we're like, why is no one showing up to vote? Like, where are the people? Why is there no informed decision making around the proposals that are going up? Where's the culture? Where's the culture? Where's the community, all of these things. And so we started realizing that we're missing some of these social where processes, which is just like kind of the social bedrock and social policies and processes

that exist in an organization. Like, I bet if you went and asked, well, as a fun fact, even like delegates don't solve this problem. And like 75% of compound delegates have never voted on an on-chain proposal in their lifespan of being a compound delegate. And again, What signal should we get from that? What does that tell us? I think that tells us, it's a good question. Well, it's also potentially the other side of that fact is that equates to like 80% of all delegated compound. So the majority of delegated compound is voting because I think they understand the responsibility of it.

But the majority of delegates are not voting. And I think that says more about our delegate systems is that people don't understand their responsibility. they're taking on when they become a delegate. And we don't actually have clear responsibilities of what that even means. Like when we say, like, oh, yeah, like, I'll be a delegate. Like, sure, delegate your tokens to me. Like, this fun. It's kind of like popularity contest.

Like, you can see all these people delegate to me. I can have a bunch of points. Yeah, exactly. Give me the points. So I can be higher on the compound's top 16 favorites. Exactly. Like Julesaith. Yeah.

But then you start to realize, you're like, wait, what am I even supposed to be doing? Like, I'm not getting paid for this. Like, why should I even, like, waste my time on this? Like, I'm not going to get punished if I don't vote on behalf of all these people. People don't actually care enough to undelegate to me. So, like, it's really just a broken system in that sense. And I think that's where, like, all of the social where comes in is, like, you need to create these sort of policies and processes around how people operate in these systems. And I think, like, makers don't a really good job with that with their delegate system is that when you apply to become a delegate, like, you have to, you know, say,

like this is sort of the platform I'm running on. And like there's compensation involved. And like there's a much clear relationship there of what is expected of you. And that's all just social wear. That's not, there's nothing on chain that's saying like, you know, Hasu or Monet supply. Like if these statements. Right, right, right, right. It's just understood in the social layer.

Yes. It's like socially people know that Hazu is about this life and that Mo deus about that life. Yes. And that's not codified on chain. anywhere. Yes. So just to like differentiate between trustware and social wear just a little bit war. Trustware is what do you call it like synonymous with code is law? Like it's on the chain, token gate voting. We don't really need too much more than what's the data that's available on the blockchain. And then social wear is like literally everything off chain. Would you accept

those? Um, yeah. I sort of like the comparison of like a lemonade stand versus a vending machine. Like a lemonade stand relies on social wear of like you, the vendor, like, are asking for payment and I'm agreeing to those rules. Sure. Whereas money machines, like, if I literally don't put the money in, like, I don't get my output, I don't get my lemonade. Okay. And I think that is the key difference is like the reliance on human coordinations or

humans to execute on the decisions that remain. Okay. Yeah. Okay. Do you have any examples for us of organizations or things that have, because you talked about over indexing on either one or the other? Yeah. Do you have any examples of a Dow or org that overindex on one versus the other?

Any stories around that? Yeah, well, I mean, this is something I love to talk about and shit on is traditional organizations generally, is them basically over indexing on social wear. And so not on purpose, though, right? No. Again, like, I think it's something that they've done on accident and sort of footgun themselves as a lot of these things are actually really productive over time. Like, what's really interesting in the United States is over the last like 100 years, productivity in the United States has been on like a crazy upward structure. Like every year we just become more and more productive as a workforce. And obviously there are like things in there that created massive gains for us like the industrial revolution and then like telecommunications and the internet and computers and all of these things. But what's really interesting is that in the last 10 years, like when technology and digitization is at an all time high is that we've actually plateaued in our productivity rates. We're actually becoming increasingly less. productive and efficient as like a workforce, which is I think a very interesting thing to think about.

And like my sort of thesis on it is that a lot of it is that the sort of improvements we're trying to make is really mostly in digitization, like more software, more technology. Like, you know, let's just add another SaaS tool to this organization or, you know, what's the next thing we can do up? And where traditional organizations have failed is that they increasingly add more friction via these sort of social wear mechanisms. So add a better expense like reporting software. Add like, you know, some trad-fi like software that. Generic project management tool that we have a meeting about to update every like three days.

Exactly. And so that's a big part of the problem, I think, is that we've basically over, like, indexed on the social processes. So, like, this is something I go back to all the time is read Hastings, like, culture, like Netflix, culture, presentation that you didn't in, I think 2008, where he really de-emphasized bureaucracy and creating these types of processes. Like, he felt very early on that the key to success in corporate culture is autonomy. and freedom and flexibility and sort of self-responsibility, which I think is... The opposite of what I associate with corporate culture. Exactly. Which I think is really interesting.

I think there's a lot to learn there and, like, very synonymous with some of the values we see in DAWS. Real quick, like, side quest. Why is something like a project management tool or like some expense tool, some trad web to software? Why is that a social way or not trustworthy? Because we're not relying on it for the execution of these things. Like, it's really just a means of analyzing things further. And I think that's where some of the efficiency or productivity plateau has come in is that our digitization isn't around making things happen quicker or faster or better. It's actually analyzing how people are working.

Talking about the problem. Exactly. Not doing, not fixing the problem. It's like measuring the problem rather than executing on the problem. And so, like, all of these expense software that we see in, like, traditional companies is really just measuring, like, how much is David spending every month? Like, and, you know, through all of these layers, like, that put, like, a person further away from David to make a decision based on, like, if he's spending too much and if we should approve these expenses. Okay. Rather than.

So somebody, like, three degrees away from me is saying that, like, David is being a degenerate and I need a fireman or something. Not knowing that, like, I'm actually doing allegedly really good stuff. Exactly. Right. Exactly. And so those are the types of things that really slow down people and organizations. And on the flip side, like I kind of pointed to the example of over-indexing on trustware when, like, some of these DAOs solely rely on, like, the governor contract or other on-chain mechanisms to, like, build out their governance systems. And again, that doesn't really, like, leave us in a good place in terms of how us as people are supposed to operate in a system.

And so I think that where we're starting to converge with some of the, like, outcries, I think we've recently seen around centralized governance is that we need to meet somewhere in the middle and that trustware independently can't be successful without like layers of social wear around it and vice versa. There was this recent meme going around a couple months ago, right during the peak of like private market hotness. It was like Dow tooling. Like Dow tooling, like this Dowdool raised this much money, this Dow tool raised that much money. Is Dow tooling like part of this trying to get at the social wear layer of douse? Is that kind of similar? That's a good question. Or where are we innovating at the trustware layer? Yeah. What does innovation on the trustware layer

look like? I think that's where we're still really struggling. And that's something like I'm obviously working on with Orca is like we're in the business of basically building trustware. So our key trust primitive are pods, which is the ability to group like small stakeholders based on their expertise and empower them in governance. When you say group them in what capacity, like you put them into a room together? Or like, how are we grouping these people? This is the new Web 3 Airbnb, actually. No, so we're basically creating like a permissions layer around these groups of people

and saying, you know, based on X, Y, and Z criteria or based on, you know, this stakeholder mapping that this organization has done, you have the permission to execute on high functioning governance parameters. We're talking about on-chain at this point. Yes, completely on-chain. So the group of people is a group of Ethereum address is on-chain that are approved to do something? Yes.

So is Orca trying to make like an on-chain org chart? Basically, yeah. Like what Orca enables is sort of mapping your stakeholders in your organization and as a result, like helping define your organizational shape. Okay. And that in a way also creates like this decentralized permissions layer. that you can better interact with all the tools that you're operating with. Okay.

So is it optimizing for like more user individuality and autonomy by breaking one DAO up into smaller DAO's? Yes. And allowing those smaller DAOs to move faster by the nature of what small organizations do because they're not held back by their bigger DAO, and then the bigger DAO just votes or by governance determines what the smaller DAO's actually are? Yep. 100%. Vitalik created a good framework around it.

a few years ago of bulldozer governance versus vatocracy, vetoocracy, and thetocracy is basically just like vetoocracy. So it's really just pointing to like stakeholder governance, which is everything that we know in decentralized governance today. And then bulldozer governance is more around giving specific individuals like high amounts of autonomy with like you can think about more as like optimistic governance. It's like we're going to assume that David's going to act benevolently on behalf of this organization.

It's a good bet. until he proves otherwise and then we slap him on the wrist for it. So go crazy until they F it up and then as soon as they F it up and then pull the plug? Exactly. But we don't really have like mechanisms for that today. Like again, the only like widely adopted primitive that we have is the governor contract. How many times will I say the governor contract in this podcast? But that's like really the only widely adopted primitive that we have and the only way we know how.

And I think people have had a really hard time with bulldozer governance and, again, giving individuals or groups of individuals high amounts of power or autonomy because we haven't really had the accountability systems to ensure that they act benevolently. Like we are all too familiar with malicious actors. And again, like we're putting potentially a lot of power in these people. And so that's again kind of like what Orca enables is creating these more flexible and modular permission systems so that when we, put David in a pod and delegate to the pod like some essential governance functions like let's say even some like protocol parameters like you get to mess with the contracts even we need to make sure that we can pull back those parameters at any moment or pull back you from those parameters at any moment and to the state we really haven't had mechanisms like that to create better accountability

systems around individuals that want to fill into high performing roles in organizations Okay. Okay. So at one level, this makes a ton of sense. Yeah. The general state of dows, I would say, there for every like 100 Dow people, there are like three that do stuff and get stuff done and move the needle. And then there's 97 people watching. Yeah. And so all about putting more power and resources into those three people. But where I'm still confused a little bit is like, why does putting them into a pod change anything? thing. Like, cool, we have, like, on-chain permissions and on-chain org charts, and maybe we can just put capital from the big org into their smaller pod so that they have the resource to go and run with it. Yeah. But, like, what does actually compartmentalizing them inside of a pod? Like, they were going to go

and build stuff anyways. What do we really unlock by putting them into a pod? Yeah. So you're basically creating this flexible container that's able to actually interact in the governance system. So, like, we all know that that already happens with like multi-sigs is like you know people send up a multi-sig and then they get funding and then they go and do their thing but they're not really part of the governance system or part of that ecosystem so what orca enables is the ability to create sort of like principal agent relationships within these pods so you could basically delegate what we call an admin key to another address that could be a specific person it could be another pod or even like a smart contract for example the governor contract and the admoner contract and the admoner

admin as a result has the ability to manage the members on that pod. So potentially in the future also manage the rules and requirements that they're beholden to. So for example, like we could put you in a pod and say like we're delegating the admin key to the governor contract, meaning that the token holders have direct control over who sits on this pod, not the decisions that they're making specifically. So again, it's just kind of breaking up some of those decision-making powers and creating these checks and balances systems within a more dynamic governance system. Okay, so like the governor contract has like access over the treasuries. And so they also can determine who is going to be in this pot-a. And so they can say like, all right, since the whole entire doubt, the big doubt through the governor contract says, let's give pot-a $10 million of resources, put $10 million in their treasury.

and they also get to update the contracts. And so they don't get to rug the entire treasury, but they do get to upgrade the software that the Dow runs. Like this is Yearn, for example. So we've got YerN core contributors, give them $10 million for their salary for 20, 23, and then they also can update the strategies. But they can't rug the entire treasury,

and maybe there's some other stuff too. But I'm on the right track here. Yeah. I think a good example is what we just did with Tribe, which I know is very contentious right now. And there was a lot of drama around some of the recent votes that happened, which I think was also potentially like misdirected because it actually worked exactly as it was intended. So an implementation we just did with Tribe was creating note Dow, which is basically Tribe created a few pods for each of their products specifically to hold like contract powers over. And those pods have the autonomy to make decisions over those.

but they're wrapped with a time lock contract, meaning that token holders have the ability to veto decisions that they make. So again, we're assuming you're acting correctly, and it's kind of an optimistic governance implementation. But if we disagree with a decision that you make, we have the opportunity to veto that and participate in these sort of governance decisions. And that's what recently happened.

So the pods can do whatever they want, but the big doubt can veto that. In this specific example, specific example. That tribe did of Noop Dow, that was, yeah, that was the case. Okay. Yeah. Cool.

Cool. And so like if in this particular case, tribe will, or one of the smaller DAOs, one of the smaller pods, will go and do something and it'll do something again, and then build something again, and hopefully they keep so working. And then they do something stupid. And then the Dow's like, no, we don't like that one. Yep. But up to that point, they had the total freedom and sovereignty to do whatever they want.

And they still have freedom and sovereignty to do whatever they want, but the Dow still still gets the ability to say no. Exactly. Right. And so that's creating the responsibility. more dynamic governance systems. And also I think what's worth calling out is that behind the scenes, like it could be argued that that's how a lot of this runs regardless. Like, and a bunch of the big protocols is that, you know, we all know the meme of like the core contributors and

investors run everything. Like they can basically sway the vote in any direction that they want. And potentially behind the curtain, that's already what's happening. But I think that's a really dangerous game to be playing is like if we're not honest about the power structures that do exist, then we can't actually grow those systems. And so I think it's really important to be like a lot more honest about the structures that do exist in these organizations because then we can meaningfully scale them and continue to grow them beyond just like, you know, a group of 20 insiders. Cool. Cool. One of the critiques of defy governance, Dow governance, is that like there's so many inactive participants in Dow governance. Yeah. And this has been true since Maker Dow. So even before we,

had called it DeFi, there was Dell governance because there was MakerDAO, and even at best, there would be like 20% MKR participation. And that was back in 2018 when MKR supply was super concentrated. I don't even think we're anywhere close to that now. Yeah. In defense of that, an abstention or a non-participation of MKR voting or just in Dow voting in general, could also be implied as if you're not getting up off of your butt to go vote with your tokens in the Dow, it's because the vote wasn't controversial enough to get you to get it up off your ass or you just were down for it to go through anyways. Yeah. Do you agree with that take?

And is that a good state for Dallas to be in? I agree with that take, but I don't know if it's a good state for Dallas to be in. Okay. Like I think, again, you're leaving it up to like the whim of the few engaged participants to decide if this is meaningful enough for them. And so as a result, you leave a lot of power on the table to be taken by whoever that is. And I think, again, like, that is like a super fair outcome is that there is a group of, like, specific people that feel that they have the expertise to vote on maybe the most boring proposals that no one cares about. But why are we not empowering them further in the organizations to just make those decisions freely? Okay.

Okay. Hmm. That doesn't unlock everything, right? I feel like this is one small, one small thing before we get to a much larger vision of highly sophisticated Dow structure. 100%. But I think that's like a key part of it is that we really haven't seen like that much innovation or experimentation happen in Dow's the last few years. Like they've all been following the same formula. And I think that's really problematic is like we need to be continuously iterating and like test. Test. testing out new frameworks like implementations of of how we're executing these decisions and growing the organization. But unfortunately, I think governance has been like too high stakes for anyone to like have the balls to do that basically. Do you think we do too much voting? Like it shouldn't the idea for Dow's to do minimum viable voting as in only the biggest things should really go to vote. And the smaller things and medium things should be kind of figured out in other mechanisms that don't require the signing of a ledger and should be like more broken down into

its subcomponent parts and like let smaller pockets of the Dow make those decisions in a more centralized fashion rather than it. I feel like the long term of Dowell should feel a little bit like a court model like where if some if a really big important decision is contentious, it goes all the way to the Supreme Court, which is. is like actual token vote at the whole entire Dow level. And then smaller, more minutia thing, as in like, do we accept marketing firm A or marketing firm B is not token vote, but like done at like a county level where there's like, you know, only a subsection of the Dowell.

Should Dallas just ultimately be that same sort of structure of just like trying to answer decisions as quickly as possible, mostly on the periphery as possible? Yes. Because I think, again, then you're taking the weight off of the token holders. So, like, if we have an ops pod that is strictly tasked with, like, approving, you know, different payment forms, like, yes, we choose marketing firm A versus marketing firm B. Like, that immediately frees up bandwidth from the rest of the token holders to vote, like you argued, on things that are actually contentious and actually important. And I think you kind of were just, like, pod-pilled in what you were describing. Yeah.

Yeah. Because that's basically like what we're envisioning is like you need to be able to create these systems to delegate power away and create these checks and balances systems. Like I was a politics major. Like love political systems. Like love studying all this. And however terrible the U.S. government is, like they were on to something at least the theoretical implementation. They were on to something.

At one point in time, they were on to something. Long, long time ago. In the theoretical implementation of like a three branch government, you know, like the different branches of government act on different things and that they all hold each other accountable in different ways. And I think that would be an interesting model for people to work towards, not necessarily in copying the U.S. government. Right. I'm absolutely not sorting that message. But I think more just in creating like multi-stakeholder group governance rather than just just one bucket we have of token holders. Right.

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there's probably like a pretty good number of decisions done per day. Yeah. Per second. Like, and some of them are bigger and more contentious. So they funnel upwards and upwards and upwards. And then like when it makes its way, the few things that do make their way to the Supreme court, like it starts to get like national media attention and people start like gluing their eyes to it and it sucks away the attention capital of everyone in the United States because

it actually like Roe v. Wade, for example, the entire country puts down what they're doing to pay attention to that. So like highly resource consumptive when something goes to the Supreme Court. And so the idea is like, and we've used this line on bankless a number of times. The United States is like the original model of a doubt. It is the OG, let's push decision making towards the margin. Let's have a representative democracy. And I will have the central government. but then we'll also have state rights and states governments and the states are like, well, like, we're also kind of big too. So we're going to go down to the counties and the counties go down to the cities. Yes. And so like, is this like this tree structure? Is this what you call

it getting orchopilled? Is this whole thing? Yes, 1,000 percent. You were officially orchapult. Congratulations. But it would be like, think about that. If we actually created a system like that within a doubt, like think about how much more productive and efficient we would be. Like, rather than everything rolling up to like a single body right now. Like that is our only option that we have currently. Yeah, that's kind of ridiculous. It is. It's crazy. But I think that's also just saying that like we're really early.

Like the other favorite line of pink was. We're so early. And these are so, so nascent. And I think again, it takes a lot to like unlearn what we know. Like the corporate model is so ingrained in us is like the only way that organizations can be built. And that takes like a lot of unlearning to think about how we can decouple that. And so I think we're like just at the beginning. But like I truly believe that in the future, Daos will be more efficient than traditional organizations because the most important part is you're

putting people as close as possible to the decision making like meat space of that organization. Like with the use of like trustware, you are quite literally giving people the execution power to perform what they need to do. And that is not something that's available in traditional organizations. If you want to make a decision in a traditional organization, good luck. Like, send it through the chain of command, get that budget analysis going, like, start doing all those things. I'm not saying that those aren't things we should practice in DAWs. Like, we can still, I think, learn a lot in terms of implementing some of those practices. But I think the key part is that you're bringing people who potentially have like the most expertise and,

excitement to work on those things as close to the decision meet space as possible. Right. The vision that I'm getting, picking up on a little bit, and this is a theme that I've noticed throughout the space, like one of the first times I kind of figured out this pattern was with Justin Blouse, Platform Royal, where like if you have a creator and the creator can have a token, you give the audience or the fans a way to reverberate the value that they see from the creator. And so like it's a two-way flow of value from like the creator creates the creation, and

then he gives it out to his fans. And then the fans are like, we really like that. Here's our feedback. And that feedback comes through the voice of the token. And what I'm seeing with like traditional orgs, traditional hierarchies, it's only one way. It's top down. You are bestowed your duties. And then you do them and you don't really have a way to like give feedback back up to the top. You just, you receive your inputs. You give your outputs and your outputs are the product of your labor, but not the outputs of your opinion. Your, your opinion. kind of stays fixed. Like, if you have the opinion of, we should change this.

I have an opinion about how we should do this differently. That part doesn't flow back up. That part just stays in your brain and starts to accrue a ruin of resentment. And then you put your job and go into Web 3. Exactly. And so, like, if we have this org structure of DALs, which is a little bit more just like back and forth where information does flow both ways, that is in line with the pattern I see in Web 3,

where, like, you actually get to have feedback and autonomy and agency much more fluidly. than just like a top-down organization. 100%. And I think that's speaking a lot more to the future of work and the future of like labor markets and economies. It's like no one wants to be like a corporate like person their whole life anymore. Like that generation is like very outdated at this point.

Like people are changing jobs like every few years now. They want to level up. They want to get closer to the decision space. Like a lot of people are just quitting their corporate jobs entirely and going freelance. Like these are all the sort of labor trends that we're, seen and how people want to participate in these organizations and make meaningful contributions that isn't just creating like, you know, labor liquidity at these massive corporations. Labor liquidity. Nice. That's my new favorite word. Okay. How do we get there? How do we go

from having one Dow? Oh my gosh. It's like the, you know, the modular blockchain thesis? Tell me. Yes. Or the modular versus monolith. Yes. Okay. Yeah. Yeah. So like we're now in the state of monolithic dows. Yes. And we need to become modular dows. Yes. Exactly. Exactly. Modularity's tight. Podpilt. It is. It's the most important. How do we go from monolithic douse and modular dows? Because, you know, Ethereum's been trying to get modular to extend the metaphor. Ethereum's trying to be modular for years now. Is we're going to have a hard time turning our monolithic dows into modular dows? I mean, that's a big part of what we're doing. Like, I think. One of the answers is pods is like, how do we start to break down some of these governing systems or start to delegate power away from this monolithic structure? And I think we feel like very impassioned with helping DAs to do that. I think the biggest part is that you have to operate within the faulty coordination systems to implement the improved coordination system. So it's a bit of a chicken and egg problem. Yeah.

Yeah. A coordination problem? Yeah. Which we're very familiar with. But I think generally, like, most dows are moving this direction. Like, we have been meming the pod very hard for a while. And I think we're starting to see that in basically every dow, like, has their own implementation of pods or their own aspirations or flavor towards pods.

And we've seen it with several. Dau's too, like Maker House core units, Yearn, created Y teams, synthetic created like the Spartan Council. These were all like early forms of delegating power towards smaller committees or, you know, fewer individuals to give them. So we've already been doing this? We've seen the early implementations of it.

I think the biggest problem, though, is again, those accountability systems is we haven't had a way to include that in our governance systems, is that we kind of just have to like rely on human coordination and social trust to like send off these funds into a multi-sig that is not captured by our organization. Ah, right. And then just hope they do what they're doing. For just to pick synthetics, on-chain, there's like this Dow vote that puts money into

a multi-sig, but that multi-sig has no on-chain association with the actual org, other than the fact it received money, not any sort of like backwards flow of communication that's on-chain. Yep. And so we need to build flows. Like the multi-sig is formally part of the synthetics protocol or like whatever Dow. And not only does this pod, this multi-sig, did it receive money, but it can also control other things about the protocol. Yep. Exactly.

Tight. Tight. Tight. Tight. Tight. I am Phil. I am Oracle Hill. I love it.

No, this makes sense. And the modular idea I think fits really, really well. Yeah. Well, one of the arguments that we make about. about like the Ethereum modular strategy is that it seems to be the logical conclusion of blockchain. So like if you re-rolled the dice about the universe 10,000 times, maybe it wouldn't be called Ethereum, but it would be a modular blockchain with like a data availability layer and

multi-clients and all this stuff. And I feel like you could make the same claim about Dow's in the future. It's like re-roll the dice a thousand times and very, very, very, perhaps never would you ever end up at a monolithic Dow outcome? It's probably always going to converge on modularity. it's just a matter of how we get there. 100%. When you say, like, Orca is, like, is Orca primitive?

Yeah, I would say it's a primitive. Like, I think of pods as sort of like the nodes of this contributor graph. And Orca, the protocol, manages how all of these nodes are interconnected with each other. So that's sort of the way I would break it down. So after, like, the first Dow starts to, oh, it's also kind of like cellular division, right? You have like one monolithic cell and then it divides seven times into like smaller cell. that each start to optimize for different things and all of a sudden you can grow in body. I love nature.

There's so many like nature comparisons, technical comparisons to this, like just like human comparisons to this. Like it's amazing. Right. Not to speed run through that metaphor. So let's go into that. Yeah. So right now we have the monolithic Dow structure.

Yes. As like the status quo. Uh-huh. And it's inefficient. Can't really do anything. It's trying to get pulled in all directions at once, but it's just a cell. So it can't. Yeah.

Like it's a red blood cell. That's all it's supposed to do. Yeah. It's got one thing. Yep. And so in order to go in multiple directions at once, it needs to create parts of the overall cohesive structure that are optimized for that. So the cell starts dividing from one cell to two cells and two cells to many cells.

And then we start like a growing appendages. And so we have like. And copying that DNA as it goes, like the DNA of that organization, the purpose, the mission, the vision. The social contract. The social contract. It's built into the. cellular division. We would hope. I would hope so. Yeah. That's a different conversation.

I don't think you have the assurances of that. Socialware, trustware pill, too. Oh my God. Wait, what? There's another half of this conversation. Okay, but just to tie off the metaphor. Yeah. This Dow starts growing like eyeballs to understand its own metrics and APIs. It starts growing its own hands and fingers to go and reach out to other agencies to get stuff done it, to grab more tools. Yep. And so like different parts of these DAOs start specializing and optimizing in different directions.

And over time, we have like different organs with different sensory inputs and the ability to create outputs because we have modular DAOs that are optimized in many different ways, many different flavors. But they're all tied together by this one meta-dow and the meta-dow, the actual DAO is like the prefrontal cortex of the damn thing. Done. Tight. Beautiful. I actually love that too. Yeah. Like imagine if we relied on our entire.

bodily capacity on one organ in our body. Right. Now it's time to beat the heart. Be the brain, heart, kidney, and bladder all in one day of it. And if you forgot about anything else, those things stop working. We will self-inflode in one day. Oh my God. Okay.

So part of trad-fi, trad orgs, hierarchies, is that the culture doesn't, like, extend, or it doesn't permeate throughout the org. Yeah. Like one of the reasons why we have been at bankless very, very intentionally slow to scale is that we need. Right? We love that. Right. Everyone's got to tie into the culture before we add in another person.

Yes. You don't add 13 people at once because how do you scale out culture to like when we are literally a team of 13-ish or so it could you take? And you double the size of your org. How do you get all of those people to add in to join the culture efficiently? So like we're very intentionally slow to scale and that's worked out really, really well for us. If we're trying to build a. out DAOs to and have like one DAO be like fucking massive excuse the language, how do we get culture to also like scale out with all of these cell divisions? Because cell divisions is a

geometric growth, right? Like like exponential growth. How do we get culture to scale exponentially? Yeah. This is my other favorite topic is that you really are hitting at all. Tapping into this. Organs. People. But I think this is like also one of the. biggest potential failures that we can tap into is that more people does not equal more productive. And that's something that, like, you have beautifully discovered as a leader within bankless and growing your team is that, like, sure, we could, if we wanted to hire 30 more people and just build this machine. But like, how would that, you know, how would that DNA copy from each person to the next? And it wouldn't. Lots of, lots of bad mutations. Yeah, exactly. We would have some

cells die on themselves. And I think that's something that we have to be really aware of. Like, I always forget if it's Trache or Zaku from Kordnaype that said this, but you can only scale at the speed of trust. And so that was a big part of like our early plot thinking is that like the most basic primitive or like the smallest unit of an organization is just small groups of people. And like that was a big part of how I sort of landed into Orca was just thinking about consumer behavior and that we have this like obsession in web two like internet culture and also like corporate culture that it's just a game in the mass and it's like the more people the better more subscribers more followers more you know people in the community like let's just

grow this thing as big as we can get and what I saw so like aggressively happening was just that it actually degraded those systems really really quickly was that you know if you had this like let's say special internet community and you decided like let's get to a million followers is like it was actually way more powerful when it was like a hundred people right and that path is actually really dangerous and you start to lose sort of like the value alignment and integrity of that thing right because some followers are like why are we here yeah or they're like I don't really care to show up in a meaningful way and like I think the same thing has happened with corporate companies like in building this concept of like labor liquidity.

Like if we just hire as many people as possible, that creates some type of moat for us that, you know, we're safe because we just have all these people to build a meaningless shit for us that we'll never make it into production. And so that was like a really big part of our early thinking with pods is that the most functional unit of an organization is just a small group of people. And as soon as you've scaled beyond like maybe eight people in that single pod, like you've lost it.

Like you've basically lost your optimal like window of effective coordination, communication, collaboration. And that is really what we need to be optimizing for. So I think that is kind of the way that you have to think about it. Like the Orca team is now 11 people. And we just recently split it up into two pods because we're like, this is no, this isn't too big to have a single group. of people on a meeting, talking, trying to connect with each other. And we'll likely probably break it down even further because I can only like effectively

communicate or collaborate with like a kumbaya like circle of people. And that applies to everything. Like our friends, our like corporate team, our like yoga class, like whatever it is. That's just kind of how we naturally operate as people. Like the Dow world is obsessed with this Dunbar's number. Right. And I think it's really relevant. It's just like the internet has created this new version of Dunbar's number that like every circle is actually thousands and thousands of people because of our digital networks.

But at the same time, like, how are we actually meaningfully showing up and participating in a meaningful and engaging way in those circles? And that still looks a lot smaller. Like, again, eight-ish people. Right. So when you break up your pod into two pods, how does, how do those two pods coordinate? Like, how does that happen? Yeah. Because do you need a third pod to get that done?

Or like, what happens with this? Yeah. I mean, I think it depends on the group. Like, I think that's what's sort of beautiful about the way Orca operates. It's like, we're not opinionated about how you coordinate or how you do the work that you need to do. do. Like a lot of that lies at the social layer is the answer is just figure it out. Yeah. It's not that hard. That question is actually not that big of a deal, David. I mean, it is a big deal, though, because I think that is what a lot of doubts are struggling with right now is like, okay,

you know, the ops team is saying that we need to reduce our burn rate and like, oops, we're accidentally spending $50 million a year. Like, how did that happen? And then the marketing pot is still just pumping out like money for ads and all these things. So I, do think it's really important. I think that's where we sort of rely on social wear systems. Like how do we create like a pod that maybe is a source of truth for funding and how we're allocating budgeting and funds? But that's actually a pod of pods where every pod has a seat at the table to advocate for themselves or create proposals that are aligned with, you know, how they want to proceed. So I think it's a combination. And I think it,

is important to be very clear about where there are failures in those communications. What about the current state of Dow governance makes you optimistic? I think the thing that makes me most optimistic about the state of Dow governance is that people are as bearish as ever. So we're in like problem solving mentality? Yeah. Like I think people are finally realizing like, oh shit, this isn't working. and like this is creating massive ripple effects if we don't figure this out.

Like there will be massive liquidations. There will be financial repercussions. Like we will not control our burn rate. Like all of these things are rising. Like I told you so. Not going to lie. But I think that's really important is that we are sort of in this like storming phase of doubts where people are like, it isn't working.

Like why are we doing this? If you look at the P&Ls, we are dead. Exactly. Absolutely. It's always DAWS. I actually have like, I really think that I'm like very bullish on DAOs during a bear market because, you know, cash is tight. Like things aren't insane anymore. And I think it really pushes DAWS to figure their shit out and think very critically about the systems that they're adopting as an organization. So I'm actually like very optimistic for this sense of frustration that's happening in Dow governance. Right. Right. Yes. Because we only move. forward if we actually feel pain. Exactly. And ironically, that is absolutely true.

Exactly. I mean, people are looking at their treasuries and they're like, huh, why didn't we do a treasury diversification like 10 months ago? They're like, we just couldn't get the proposal through. Sorry, guys. Our token sound bad. Rip. For all of the DOWers that are listening to this, whether it was a Dau community member

or a Dau leader, what would you say? And they're already pilled. All right, like, I understand the modular Dau vision. Yeah. My Dow is super too monolithic. I need to make it more modular. What steps should they take? What needs to happen first?

That's a good question. I think just thinking about the biggest pain points in their organization, like where are the biggest failure is happening? And then also what type of structure do you want to create? I think that's like also part of the problem right now is that everyone just sort of looks to what's been done. And people really want like a template or a mental model to adopt. But I think you just have to think very critically about, one, like, what are the essential governance functions that you have in your organization? And two, who, like, should basically be responsible for those essential governance functions. And that's how you start figuring out, like, what your organizational structure should look like.

Cool. Yeah. Cool. If people need resources to access these tools, where should they go? We're actually building out a ton of resources at Orca right now. obviously all of our trustware product that we're building, but we're actually building out some cool social wear templates too. Chase Chapman and Frog Monkey on our team. And Chase is obsessed with like holocracy and sociocracy, co-op models and trying to take a lot of learnings from

some of those systems and think about how we can incorporate like productive processes and policies. So we actually are coming up with some really cool resources. So check us out on Twitter, Orca Protocol, come through to the Discord. all of those things. So like, what is Orca, though? Because cool, you guys have this cool Dow structure. Yeah. But like, what's the point?

Like, do you get it? It's just like, Bjorn Dow makes a yield aggregator. Maker Dow runs a credit facility. Orca Dow is governance, but governance over what? You mean, like, what will Orca Protocol the Dow be? Yes. Okay. Yes.

What's the product? Other than, being really good at governing. Don't we have to govern over something? Well, so basically it's kind of what I was saying. It's like the product that we're building with Orca are pods. That's like our key primitive that we're building. Kind of like how NOSIS makes NOSIS Multis-Sysid?

Yeah. Okay. And so we're building this permissions wrapper around multisig to create more modular governance systems. Okay. And we will be continuing to, I think, create interesting features in that sort of governable surface area there. So again, like pods are sort of like the nodes

of this permissions graph and orca the protocol helps manage the relationships between those. So, for example, something that's like a feature that's upcoming with ORCA is that you can actually assign like arbitrary rule logic to gatekeep membership. So you could assign, you know, very basic things. Like let's say, you know, you must hold 20,000 bank tokens to sit on this pod. Or you must be X amount active in. like on-chain proposals to maintain your position in the meta-governance pod. So you can start to create sort of little parameters to ensure that people are acting

like benevolently or in good faith on behalf of these orcs. And I think we'll help create some more like complex agreements so that, you know, you can build out, I think more interesting use cases of that. So like those are examples of protocol developments that like we'll be happening in the next few months. So eventually like that. protocol, like Orca, the protocol element that is helping manage the relationships between pods, will have like a ton of meat space in terms of what can be explored in helping, you know, these small units interact with each other and, again, just build more dynamic governance systems.

And how does Orca capture resources from this? It's a great question. Just also as an FYI, we are not a Dow yet. Oh, okay. Yeah. So what you were asking? No, so, well, like, I mean, every Dow captures resources in one way or another. right?

Like Unisotap captures trade fees, urine takes a percentage off of their yield aggregation. Yeah. Orca Dow gets money from like... Borka Protocol. I think it's still very much to be determined. I mean, I think the sort of permissions layer of DAOs is one of the most important things to be working towards. Like, I think the financial element is very commoditized. Like, that's the easiest thing to do in crypto is. send money, it's very difficult to move people and move people around. And that's what we're simplifying with our product is basically creating this sort of orchestration layer for DAWS and organizations to better manage the orchestration layer for DAVs to better manage the relationships, the contributors, and permissions that exist within their organizations.

Cool. Yeah. One last question that might be off in a different direction, but like, say, some DAO org just like just kills it with a pod structure. Mm-hmm. And they make like this template where like the very basic template of that kind of how like everyone forks compound the governor contract. Well, the compound governor contract is like the monolithic DAO or perhaps just like the prefrontal cortex of a DAO, which is actually where DAO's you would think would start. It's like, okay, if we're going to make, if we're going to make a whole entire body, you've got to

start with the brain because you have the brain has to think. about how to create the body, but then summeda is successful in going from monolithic to modular, and they create this basic, like, system, like, that is totally copyable. Can, like, other orgs just take that off the shelf and just, like, start spitting out Dow's and have, like, a bull mania for Dow's? Yes. That's what's so fucking cool is that we're, like, going to help also build out those templates. So we're in the process of building what we call the podarchy builder.

So podarchy, pod hierarchy. nice little map system we were going to call it podography but it sounded too much like pornography yeah that's pretty close yeah you approve of our word choice um where you can actually like go and explore other like dial implementation so you could go and see like tribes noked down implementation and say like that's really cool to like you can have this time lot contract around the pods and blah blah blah blah you can quite literally like duplicate that and it's plug it right in. Exactly.

Cool. Like build a block institution. Yes. Exactly. Oh my God. Well, I mean, this fits right into the whole idea that crypto just does everything that we've already done before, but faster and better and forkable and replicatable. Yes.

All the things that we love. Cool. I know. I'm so excited. This is making me bullish on Dallas. I love it. See? I know I would get you there.

Jules, thanks to you for coming on a layer zero and pulling me about, okay. Of course. Thanks, David. For having me. Podpilling? Podpilled. 100%. All right, listener.

You just got podpilt if you listened to this podcast.