The DAO-native way of structuring your organization

Sincere thanks to the many people who have greatly influenced our thinking over the years leading to the concepts in this post, and a special tip of the hat to those who provided specific feedback on the text found below, including Aaron Soskin, BPetes, Brennan Mulligan, Jon Hillis, moreReese, Richie Bonilla, Zakku, and Zayi.

In the search for more fair and fluid forms of coordination, DAOs have rejected the centralized power structures of traditional organizations in favor of flatter, more distributed means of organizing. This shift away from hierarchy toward greater decentralization has ushered in novel models for more democratic and inclusive decision-making. 

At the same time, however, this shift has also led to a general lack of role clarity, insufficient accountability mechanisms, and an over-reliance on full-consensus decision making. DAO governance is getting in the way of DAO effectiveness.

How can DAOs get things done with the same (or better) level of effectiveness as traditional organizations, while maintaining their core values of decentralization and individual autonomy? 

By incorporating a key building block of human organization that is consistently overlooked in DAOs: roles.

When roles are clear, work is no longer chaotic; people know who to turn to for critical information; individuals are empowered to make decisions within a specific domain of work; and the whole system has clarity over individual responsibilities and commitments. 

Roles are the fundamental unit of structure in any organization.

Roles for DAOs: Three Key Properties

Currently, non-hierarchical organizations do not have a good way to explicitly delegate or revoke roles, responsibilities, and authorities.

This insight led us to a key question: what should roles for DAOs look like?

We see three primary design goals for DAO-native roles:

1. The ultimate authority needs to be held by the DAO to maintain decentralization and gain the benefits of capture resistance. Roles must be able to be grantable and revocable by the DAO as a whole, and the DAO must be able to determine its own custom logic for role eligibility and maintenance.

2. Roles need to empower individuals to make decisions and take actions. This means the role needs to bring with it the necessary context, permissions, and accountabilities that people need to do their work.

3. DAO roles needs to be fundamentally composable within the web3 ecosystem, including but not limited to:

   1. plugging directly into token gates to enable on-chain powers as well as off-chain access rights, 

   2. Reading credentials, badges, and/or contribution and reputation data to automatically grant and revoke roles based on whatever custom logic the DAO creates,

   3. Working with existing governance structures, including DAO contracts, multisigs, pods, and more.

Hats Protocol is designed around these three properties. Hats are tokenized roles for DAOs, giving contributors the context, permissions, and accountabilities they need to do great work.

How Hats Works

Hats empowers DAOs to explicitly delegate specific roles and responsibilities, along with their associated authorities, to individuals or groups (or any smart contract). Authorities may include hard or soft powers such as accessing certain documents or communication channels, multisig signing authority, github admin rights, voting powers, and much more. 

Hats themselves are ERC-1155-compatible tokens that are transferable by the DAO but not the “wearer.” DAOs can create as many new hats as they want, and then plug the hat token IDs into token gates to give the wearers of each respective hat the necessary authorities and access to fulfill their responsibilities. 

DAOs can then take a number of actions regarding the hat, including:

• Deciding who “wears” each hat they create

• Deactivating hats

• Revoking hats from wearers, and

• Holding wearers accountable to their commitments. 

Each hat can also create and grant additional sub-hats, resulting in hats-trees that break down large scopes of work into more manageable pieces that can be delegated appropriately. 

DAOs can manually grant and revoke Hats to EOAs and multisigs (and even other contracts), but they can also extend Hats Protocol to implement their own logic for programmatic Hat granting and revocation.

What Hats Enables

Using Hats, DAOs can more effectively organize contributors and execute on important projects. Rather than a single power hierarchy, Hats allows organizations to create finite hierarchies within a collectively-governed whole. This allows fit-for-purpose structures to arise as needed to carry out specific functions, such as a bounty or grants program, dispute resolution process, client project team, or elected stewardship council. 

The organizing structure of the DAO is co-created rather than imposed, and power is delegated but can always be revoked. As a result, Hats Protocol provides a DAO-native way of structuring your organization to get things done.

We can get things done at scale without resorting to traditional power structures. We can empower individuals without giving up collective sovereignty. 

We can’t wait to see what you'll build with Hats!

To learn more about Hats Protocol, visit hatsprotocol.xyz