DAOs will be the future of online communities in five years

Online communities, those that share a common interest on the internet, can range from social networks, grassroots organizations and customer communities. We, as a society, are naturally communal, so it makes sense to engage in ideas and interests with others online. Whether we build relationships with people directly or indirectly, communities are built. However, how we do so differs.

In 2006, web expert Jakob Nielsen proposed a 90-9-1 rule based on participation inequality in social media and online communities. According to Nielsen, in most online communities, 90% of users are lurkers, i.e., those who observe, but don’t contribute, nine percent of users contribute a little and only one percent account for the most contributions.

But as the influence of online communities continues, their nature is beginning to change. The previous era was dominated by a user, customer and creator relationship. Now, though, we’re starting to see online communities taking ownership of what they want to share.

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The ownership and creator economy

With COVID-19 forcing many of us to work from home and socially distance ourselves from loved ones, digital connectivity has played an important role in how we stay connected. For many, this has resulted in a greater reliance on online communities. According to research by Facebook, in conjunction with The Governance Lab at New York University, 77% of respondents indicated that the most important group they’re part of operates online.

Today, we live in a world where content is readily created and shared. This creator economy, which builds on human creativity, intellectual property and technology, is a concept that continues to grow. And after a year of lockdowns, now more than ever is a time to appreciate the creator economy. As governments seek to rebuild their economies in the wake of the ongoing global COVID-19 pandemic, creative economies will play an important role. So much so that figures from Deloitte suggest that this sector could grow by 40% by 2030, adding more than eight million jobs.

The next logical step moves away from this sharing economy toward that of an ownership economy. Jesse Walden, the founder of Variant Fund, calls the ownership economy something that is “not only built, operated, and funded by individual users, but owned by users too.” An example of the creator economy and the ownership economy coming together is seen through nonfungible tokens (NFTs). NFTs are enabling creators to deliver a more intimate connection with their followers while removing issues associated with middlemen. By doing so, and thanks to the blockchain, creators have full ownership of their work and have free rein to copyright their creations while ensuring their authenticity. Delivering a golden opportunity for creators, NFTs are establishing creative ownership.

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And it’s the advent of crypto and decentralized finance (DeFi) that is helping to take online communities to the next level. As the sector uses assets that are shared by all shareholders, creating something that aligns with their interests, crypto and DeFi are a natural fit. Empowered by frictionless finance, the ownership economy enables novel approaches for real-world communities to leverage digital tools to create, capture and exchange value more effectively in virtuous cycles.

The ownership economy has been pioneered by Bitcoin (BTC). Arriving in 2009, Bitcoin proposed a new avenue of economic wealth while using technology on a computer. By doing so, anyone with an internet connection was incentivized while mining for newly minted Bitcoin, thus helping to secure the network while claiming ownership in the network itself.

Since then, the crypto market has grown exponentially and with it, online communities are being seen through new tooling and incentive design which comprises the trend known today as decentralized autonomous organizations (DAOs).

DAO online communities

A DAO is essentially a programmable organization of people that form around a shared mission and fosters an emergent online community. They jointly control a crypto multi-signature wallet, ensuring that its objectives — decided by DAO members — are met. The governance of DAOs and their operations are written in smart contracts, consisting of automated if-then statements, making them transparent and auditable.

What’s great about DAOs and their role in online communities is that the way they interact with each other is a wide-open surface area and there is much work being done in the space. Anyone can take part in a DAO regardless of where they are. All that’s required is the staking of funds, which creates a great building block for interacting with a community. DAOs are not walled gardens and therefore their participants have intrinsic and extrinsic incentives to collaborate with other DAO communities to bolster each other's capabilities while sharing in the ownership and direction of each project. With no central party standing in the way, everyone is given a right to have a say about how something is or should be done.

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DAOs and DAO2DAO collaborations are still very much “a crypto thing,” but real power for positive change lies in them when the methodologies, ownership models and tools created from this movement touch real-world communities, large and small.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.