World Economic Forum Releases DAO Toolkit 

World Economic Forum Releases DAO Toolkit 

The International non-governmental lobbying body has published a toolkit for Decentralised Autonomous Organisations (DAOs). The document offers a set of resources to help developers and policy-makers effectively evaluate and engage with DAOs by analyzing their governance processes, legal and regulatory challenges, and mitigation strategies. 

The World Economic Forum (WEF) released a toolkit for decentralized autonomous organizations (DAO). The Crypto Impact and Sustainability Accelerator (CISA) project and Wharton School of the University of Pennsylvania’s Blockchain and Digital Asset Project (BDAP) worked alongside 100 other industry experts to create a detailed guide that provides “a starting point for DAOs to develop effective operational, governance and legal strategies. 

CISA is a project by the WEF that aims to drive progress in the crypto sector under environmental, social, and governance (ESG) targets to ensure efficiency and sustainability across all crypto ecosystems. 

According to the WEF, Decentralised Autonomous Organisations are organizational structures that use blockchains, digital assets, and related technologies to allocate resources, coordinate activities, and make governance decisions. The document says that DAOs have three distinguishing characteristics; “use of blockchains, digital assets and related technologies”, which means the firms can make financial and operational information public; “allocation and coordination functions”, meaning DAOs can manage resources by coordinating activities to allocate capital like traditional companies; and “decentralized governance”, which means all participants in a DAO work together to make decisions. 

The DAO ecosystem has grown tremendously over the past couple of years in areas ranging from finance to social networking to philanthropy. As of 2021, the combined value of DAO treasuries has increased from $380 million to $1.6 billion. Although its ecosystem is diverse, WEF noted that DAOs face significant operational, legal, and regulatory challenges that can be solved by its recommendations. 

The toolkit opens by explaining what DAOs are, discusses their operations, governance, and legal structures, and ends by proposing a policy framework for the organizations. The WEF describes its 37-page toolkit as “a set of adaptable resources for key stakeholders to help realize the full potential of this emerging form”. The document says that DAOs have the potential to address the shortcomings of traditional firms while also recognizing more equitable governance and operations. WEF takes examples of active DAOs in the industry, like Web3-based creative firm Friends with Benefits (FWB), open-source software builder Gitcoin DAO (GTC), NounsDAO, the governing body of the Nouns NFT ecosystem, DeFi protocol Yearn Finance’s governance body YearnDAO, among others to explain operations undertaken by firms in various sectors of the crypto industry. 

WEF also points out that creating adequate policy and legal frameworks for DAOs is “crucial to realizing the benefits and mitigating the risks of this novel organizational form”. However, developing such policy recommendations is a complicated process due to several proposals that currently exist, like the Crypto-Asset Reporting Framework by the Organisation for Economic Co-operation and Development (OECD) and the U.S Infrastructure Bill, which could create “competing requirements” for DAOs.   

WEF concludes the report by stating that rather than providing a complete analysis of the DAO ecosystem, its toolkit offers a set of resources to help developers and policy-makers effectively evaluate and engage with DAOs by analyzing their governance processes, challenges, and mitigation strategies. 

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