Part VI, Chapter 14
Operational DAO Models

DAO operations and management is true to the term as it refers to the manner in which operations within the DAO are managed in detail, from day-to-day activities to collaborations and decision-making processes in general which are set in such a way that they affect the general output and lead the DAO towards the success of its original goal. It involves the allocation of resources, structures for governance, interactions within the community and processes to ensure the organization carries out its day to day activities effectively.

Operational Model Deep Dive

This refers to the framework that the DAO follows for the success of its day-day activities with its goals in view. The goal of a DAO influences its adopted framework. DAOs are formed with unique or multiple goals in focus. For instance, decentralized governance is a common goal for all DAOs and a default framework/operational model to adopt would be one that is keen on distributed governance and transparent voting methods which give stakeholders a stance in making decisions.

Other goals and their supporting operational models include but are not limited to:

Innovation & Experimentation

At different levels of transitioning or starting a DAO, the goal could saunter towards innovation and experimentation and in line with this, a perfect model would be one with a structured approach for conducting experiments and gathering insights. The model must be flexible, easy to adjust and adaptable to experimental conditions. This would require the adoption of sandbox experiments for testing in small capacities, observation, data collection & analysis.

Scalability & Efficiency

If scalability and efficiency is the main goal of a DAO, what they want is for their technology to expand as the DAO grows by ensuring that the system/network can continually handle an increment in workload or user demand without breaking down and interrupting its performance. In this sense, it is normal to expect that their adopted framework will lean towards automated methods which can foster an upgrade. In line with this, they may opt for automated smart contracts for the execution of routine tasks and an infrastructure that caters to a huge number of members & transactions. The methods involved would include the use of blockchains built with the purpose of executing transactions in a faster and cheaper way (layer 2 solutions) and off-chain governance tools to speed up voting processes.

Sustainability & Longevity

A DAO with a goal of sustainability & longevity would be keen on sustaining itself from the inside to withstand misuse and adapt to changes in the long term. To achieve this goal, the DAO may adopt a framework that leans on strong governance mechanisms, inculcate risk management strategies and prioritize financial sustainability models to assess the viability of all ideas and how it will affect them in the long term. The processes involved will most likely see the organization reserving funds, conducting thorough assessments of governance processes and strengthening membership numbers for the purpose of continuity.

Social Impact

Social impact goals (such as inclusivity, support of a certain cause or education) can prompt the creation of a Decentralized Autonomous Organization and the process of reaching this goal would require operational methods that align with the social cause. These methods could include the implementation of governance structures to ensure accountability and measure progress while automating administrative/financial aspects to ensure fairness.

Specialization

A DAO can center its goals around a specific sector and in line with that, its objectives and activities are dedicated to innovation, service and contribution for that sector. For its success, it must ensure that its operational methods cater to the needs and challenges of that sector. A perfect example would be the process of prioritizing financial protocols, security measures and risk management strategies which are specific to decentralized finance when dealing with the operational models for a DeFi-focused DAO.

The process of implementing these operational methods within the DAO must be geared towards establishing a sustainable structure that can be repeated continuously until it births effectiveness and efficiency. Defining goals of the DAO, designing a governance structure, educating members & stakeholders, and leaving room for improvement are basic ways to implement the operational models of a DAO.

Best Practices

How can a DAO enhance its operational efficiency and effectiveness? These best practices are the optimal solution for questions that may arise regarding the process of operating and managing a DAO properly:

The promotion of decentralized decision making. A transparent governance structure with defined roles, decision-making processes and needed mechanisms within the DAO. Clear communication between stakeholders and members. Risk management to identify, assess and mitigate issues that may arise in the process of establishment. Legal/ Jurisdictional compliance Continuous evaluation and improvement of operations within the DAO.