This is a cleaned-up version of a Discord thread I posted and several other community members contributed to between 2021/11/30 and 2021/12/17. The intent with posting this here is to make this material easier to find, reference, and share as appropriate.
Are incentives the most potent way we have to shape the behaviors in a DAO?
Given the focus on tokenomics in most of the governance articles I read, one could be forgiven for thinking so. However, traditional organizations are already realizing that incentives can only go so far.
The issue fundamentally comes down to our old friend the principal/agent problem again. While we can use incentives like money, prizes, and other rewards to shape behavior, the issue is that it is inadequate in a complex environment.
As described in Dave Snowden’s Cynefin framework, complex domains are ones where “we know more than we can say, and we can say more than we can write down”. Thus, there are always aspects of the adventure-vision that can’t be turned into metrics. Our incentives will miss these, which is how we end up with things like polluted rivers, people working 100 hours weeks, and tech support agents that are fast, pleasant, and completely unhelpful.
Fortunately, we can go deeper than incentives, and leading DAOs are already tapping into the next level - identity. Our identity shapes the way we see the world and which options for action we feel are viable, and which will not even be considered.
If I am in sync with the mission of a DAO, I’m going to go beyond the crude rewards or punishments of whatever metrics are in use when it’s required to advance the mission.
While this can (and has, and will be) abused, when we tune into identity in a healthy way, we can achieve more than if we rely on the potential for phat loot to drive the behaviors we want.
I used to think identity was the end-game for behavior change, but it turns out that isn’t quite true. There is a deeper level that is easy to miss.
Here’s a bit of a koan for you - “before you had a name, who were you?” Ponder that for a bit before moving on.
It turns out that we don’t start life as an identity, we start it as a relationship. I was the expected child of my parents, and even if I had a different name, I’d still have the same relationship. This is perfectly summed up by the joke “Friends will help you move, real friends will help you move a dead body”
We’ll do things we would never do for ourselves if the person with the right relationship asks us to. This can obviously be both wonderful, and lead to horrible atrocities, so we shouldn’t be casual in its use.
One of the potential benefits of a pod structure is to supplement the identification with a DAO with stronger relationships with a few key people that we work with closely in a pod. These relationships can form the basis for success not only in that DAO, but in other DAOs in the future.
We won’t get these benefits, though, if we continue to allow token incentives to be the primary driver for DAO involvement. The more that we can create positive identities via an effective adventure-vision, and strengthen the bonds between pod members, the more successful the DAO will be in achieving its goals.
Thus, it is critical that we create ways of working within DAOs that encourage healthy identity formation and healthy relationships, while still of course using tokenomics and other incentives to encourage fruitful behaviors as well. Let’s use the vast space of possibilities now in the DAOniverse to move things in a good direction!
Yes. And having NFTs as a membership card and having a dedicated pod page to represent that membership goes a long way in strengthening these relationships. Something as simple as being able to show that you own the same image as the other (presumably cool) people in a pod is a very strong signal.
Identity def a huge part for social clubs with token-gated Discords.
This discussion covers one third of the three characteristics that self-determination theory posits as crucial to explaining human motivation. They are Relatedness (I think is fairly well covered by the convo of identity above), Competence, and Autonomy. What sort of environment needs to be created where contributors have an opportunity to build/demonstrate Competence and Autonomy?
I hypothesize DAOs that are able to craft experiences where all three of these needs are met for the vast majority of their members will see levels of engagement & productivity that those leaning exclusively (or primarily) on extrinsic rewards will not even come close to approaching.
@Appt Pupil I like your focus here on identity, it points to the reality of the reputation economy. We tend to think of value in things, tokens, etc, but a big part of the value that you carry with you is stored social capital, your reputation. If you could choose between the following two, which do you think is more valuable?: 1. $1,000,000 cold hard cash, or 2. the reputation that you have the skills to regularly save large corporations millions of dollars. The later of those two things is intangible, but I would argue its a far superior asset (assuming its true and your reputation wont break when tested).
I feel that a lot of NFT projects currently are trying to emulate highly successful NFT projects blindly, without understanding what they represent. Big name NFTs are status symbols, tokens of reputation that suggest the holder is “wise” with NFTs. That makes the token holders appealing to put on boards of advisors, appealing to bring into a server, you just want them around more because their reputation bleshes over to your projects.
Not that reputation is the be all end all incentive. Lots of people want to preserve their privacy. But I think reputation effects are one type of incentive that should be taken into account
I think decentralized ID systems like Proof of Humanity or BrightID, coupled with reputation systems, are going to be integral to many DAOs
@Appt Pupil This is gold.
Thanks Sam! This is super useful. Do you have any suggested resources as to where to learn more about Self-Determination Theory?
the Center for Self-Determination Theory website is pretty good: Theory – selfdeterminationtheory.org
Awesome, much appreciated.