From Minimum Viable Product (MVP) to Minimum Viable DAO (MVD)
The concept of MVP was first introduced by Eric Ries in Lean Startup. It refers to developing a product prototype with a minimal build time while still offering sufficient features. By testing the product in the actual market, developers can then make improvements accordingly to suit market needs.
It's all about experimenting and upgrading. Find out what consumers want, and make that happen—through your products. If done right, this will surely bring in more users.
Presently, communities that formed on DAO have been causing paradigmatic shifts to this innovation. With the crypto boom taking off in 2021, it’s estimated that DAOs now have a total of about 1 million participants. According to ConsenSys, the top 20 DAOs collectively hold over $14 billion in digital assets. We used to think that without good ideas and creativity, there would be no users, and consumers became the new products by monetizing their data. In the Web3 space, however, it is true to some extent that without a community base, a project would not be possible. Consumers are experiencing a change in roles where they become community members, investors, and benefit-sharers instead of being a "product."
As power hierarchies become flatter, Web3 facilitates a creator-driven economy while rewarding consumer engagement, thus ushering in a new era of social networking. Consider this in your upcoming attempt to create an MVP: instead of assuming the value of the product itself, try converting it to a community-based consensus exchange mindset.
Value Hypothesis: Do users find the product useful and valuable to them, and do they find the product “astonishing" and "far superior to other products?"
Consensus Exchange: By proposing a valuable consensus, the initiator drives more people to coalesce and influence each other to exchange value and spread it autonomously.
Think about this: how can you make users your benefit-sharers and entrepreneurial partners, rather than just your customers?
To initiate a Minimum Viable DAO, you must take 4Ms into account, namely mission, member, mechanism, and money.
First of all, you need to define the vision or goal that you wish to accomplish. Secondly, determine the roles of your members—what kind of people do you wish to work with? Thirdly, picture an organizational mechanism that includes systems for voting, incentives, and decision-making. Lastly, factor in funds and means for value transfer, either in the form of NFTs or tokens.
Previously, one or two people proposed and defined product features; nowadays, a group of people contributes from the bottom up to launch a product in a way that complies with the DAO's motives and values. The Minimum Viable DAO puts community first in which consensus comes before a product. Whether it's forming proposals, voting, defining roles, or consuming, modular DAOs can be created through smart contracts.
In the case of Apecoin DAO, one of its visions is to foster a community of creators and innovators. Before anything begins, the initiators and the organization need to come up with a comprehensive set of protocols and rules. The foundation of it all is to increase the value of the tokens owned by each DAO member which will then feed into the DAO as a whole.
Another example is Bankless DAO, where its quality as well as its in-depth educational articles and structures have helped to accumulate the first round of consensus—the desire for a society without banks. From there, DAO members continue to branch out and form new guilds.
Typically, community members make proposals for future operations and then get together to vote on each proposal. Approved proposals then coalesce the community consensus, meaning passive acceptance in the past now gives way to community collaboration. In addition, each member of the DAO oversees the overall operation to some degree.
When voting, attention needs to be paid to the consistency of incentives and maximizing the benefits of an individual member and the organization. For example, ApeCoin holders can submit their ideas and thoughts through posts which will then be moderated to ensure compliance with community interests. An AIP idea can be a joint effort of multiple people of which others can comment on. Moderators can then publish the AIP to Snapshot. Once it is live on Snapshot, the Live AIP will be available for voting. The voting options are "yes" and "no", with "yes" meaning that voters are in favor of implementing the AIP exactly as it is.
In the past, MVPs focused heavily on user testing and feedback as that was what they relied on for development and upgrade. However, the focus has now become incentivizing user contribution and understanding of how to obtain funds and assign governance to them.
This is usually realized through a token offering or an NFT offering, both of which can raise funds to replenish the DAO's treasury. Token holders possess many rights including voting rights and partial governance rights. In addition, some freelancers, industry advocates, and people interested in the project are able to receive additional token compensation by joining the DAO's governance. Their role creates a unique value proposition and their commitment and effort put into the community can be tied directly to financial capital.
This is an important step in transforming members into partakers and stakeholders. Members need to not only feel a sense of belonging and connection but also be able to invest in something they are interested in at the same time. The value of tokens is related to direct community values, such as member benefits and privileges, social capital and status, as well as long-term community impact, community profits, and token supply and demand. In the case of an NFT form of token issuance, it will also be related to other factors such as rarity.
Most DAOs or communities consist of the following categories of token and NFT holders: HODLer, Supporter, Advocates, Flipper, and Innovator. The proportions and combinations of members in each category also give a clue about the quality of the DAO.
Certainly, DAOs have their own bank accounts or treasuries, it’s like an Internet community with a shared bank account that autonomously sets rules on how to allocate community resources and financial rewards. For example, DoodlesBank, the community treasury of Doodles, is used to support various community-driven activities. In terms of decentralization, democratization, and economic participation, DAOs are Web3 communities in the purest sense and are the key principles of the new ownership economy.
Besides, staking can be used to facilitate the development of the token and the NFT ecosystem, which improves supply and demand while rewarding early adopters and existing partners. The double-pledge model adopted by ApeCoin DAO may become common in the future.
DAOs often call on the community to come up with interesting ideas through funded projects, and individuals with an entrepreneurial spirit are free to submit proposals. The level of engagement varies from DAO to DAO. For some, people gather in order to achieve a common goal, such as ConstitutionDAO and AssangeDAO, while others aim to facilitate the pooling of individual funds and find better investment directions, such as SharkDAO. In addition to that, we also see some project creators gather a group of people with common values through PFP so as to realize their plans step by step.
With the effect of time and the Internet, social media has earned itself billions of users. Large companies profit lucratively from their attention, time, and wallets. Due to this reason, Web3 aims to disrupt these norms not just by benefiting early investors and developers, but also users who play a role in the success of a project. As a result, users become part owners of the product as well.
The concepts of decentralization and equality paint a bright vision of the future, but we must also be aware that Web3 and DAO are not the answer to everything. Many blockchain projects rely on the idea that new technologies and concepts are capable of solving most of our existing social issues. However, technology is merely a means to achieving goals, only an adaptive mindset can bring us far. Nowadays, our attention is constantly being exploited by catchy headlines and new temptations in the industry, but this PFP craze, dazzling concepts, and decentralized systems will have to survive the test of time.
Find your community, then make a product.
With MVP, we assume there's a need for a feature; with MVD, we create and select any need, no assumptions required.
With MVP, a small group of people decide how big the market is and what's best for it; with MVD, we implement the best idea picked by the community's votes.
With MVP, the community becomes your testing ground; with MVD, the community becomes your investor.
With MVP, the community is your consumer; with MVD, the community is your partner.
A well-functioning DAO produces a more positive outcome than the MVPs of the Web2 era, where the flow of money from the community to the developer team is often accompanied by inevitable losses. In the case of DAO, the community and the developer team continuously attract people from outside of the community to join, and funds flow internally to benefit the whole community rather than just a small portion of people.
The transition from product-centered creation to individual-based creation also reflects new characteristics of the society that focus on participation and expression, with emphasis on individuality and uniqueness and highlights entertainment and consumption. In an individualized society, social classes are no longer distinct and self-expression becomes paramount. Nevertheless, if we truly wish to progress toward democracy and freedom and to take back power from large corporations, perhaps we need to start by leveling up our mindset. What will our motives be? How will the final rewards be distributed?
MVD is a practice in the journey of democratizing the existing monetary system. It may possibly become the new way of discourse in the future. Pay-to-use or shared revenue—whatever the ultimate purpose and scope of a DAO are, its success depends on its true recognition of community power and its ability to drive collective energy to produce results.