The DAO Handbook: Unlocking the Potential of Decentralized Autonomous Organizations

• DAOs have recently begun to pursue audacious acquisitions of real-world assets, such as rare art, a golf course, a copy of the U.S. Constitution and real estate.
• Coordination and regulatory costs are preventing the DAOs from reaching their full potential.
• Scott Fitsimones, the co-founder of CityDAO, which collectively governs 40 acres of land in Wyoming, and author of „The DAO Handbook,“ considers solutions to the coordination and regulatory problems plaguing decentralized autonomous organizations.

In 2021, the world of decentralized autonomous organizations (DAOs) began to expand beyond the blockchain and into the real world. DAOs are collaborative networks of stakeholders who together manage a shared pool of resources or assets. The potential of these powerful new vehicles for crowdfunding and organization is immense, but their progress has been hindered by enormous coordination and regulatory costs.

Scott Fitsimones, the co-founder of CityDAO, which collectively governs 40 acres of land in Wyoming, and author of „The DAO Handbook,“ is one of many who have been exploring solutions to the coordination and regulatory problems plaguing DAOs. Fitsimones‘ interest in DAOs was sparked when, in 2021, a set of new DAO laws were adopted in Wyoming, Vermont and Tennessee. These laws enabled a wave of crypto-collectives to pursue audacious acquisitions of real-world assets. CityDAO, for example, purchased 40 acres of land in Wyoming.

Since then, DAOs have sought to acquire a range of assets, from rare art and a golf course to a copy of the U.S. Constitution and a National Basketball Association team. However, these organizations are facing numerous challenges when it comes to coordination and regulation. For example, incentives are not always aligned, and there is a lack of a governance framework to ensure decisions are made in the collective’s best interest. Additionally, DAOs must abide by local laws and regulations, and this can be difficult to do when the collective is decentralized and spans multiple jurisdictions.

In order to address these issues, Fitsimones has proposed a range of solutions. These include the use of tokenized incentives to incentivize participants to stay aligned with the collective’s interests and a decentralized governance framework to ensure decisions are made in the best interest of the collective. Additionally, Fitsimones suggests that DAOs should use a global regulatory framework that would enable them to abide by local laws while still operating as a decentralized organization.

Ultimately, Fitsimones believes that the potential of DAOs is immense, and that with the right solutions in place, these organizations could revolutionize the way we do business. By addressing the coordination and regulatory issues that are currently holding them back, DAOs could unlock a new era of global collaboration and resource sharing.