Learning about the plusses and minuses of DAOs is vital as many issues are still to be resolved

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The tiny, unknown villages of Pakistan seem an unlikely place to troubleshoot decentralized autonomous organizations, or DAOs. But to Azeem Khan, a Pakistani-American, DAOs are the digitally native version of what he’s seen in the towns where his parents grew up – with their community rules, tribal leaders, and family cliques.

In these villages, there are specific names for things, unique ways resources are distributed, and socialism working on a small scale. Where communities function as a country, with members as citizens – much like the sentiment Balaji Srinivasan penned in The Network State.

By connecting his two worlds, Khan, the fundraising & partnerships lead at Gitcoin, realized there’s nothing inheritably new or novel about DAOs. He’s planning a trip back to his roots to unearth and apply the lessons of what does and doesn’t work in the villages.

Khan sees coming an evolution of people, a mass exodus from society as we know it, moving into a specifics space together – a small “village” with a shared vision, governance, and unique currency.

But we’re not there yet. With DAOs, there are more questions than answers, and many problems to fix. Sometimes the best way to look forward is to return to the past.

Khan spoke to me about issues and inspirations for DAOs.

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DeCential: What do you love most about DAOs?

Khan: To be able to do anything, in a frictionless and decentralized way, coordinated on a global scale. If you live in the United States, spin up a company and hire someone in Australia, you’re going to come up against many headaches. People say DAOs are like a group chat with a bank account, but it’s so much more than that. DAOs remove bureaucracies, makes payments and onboarding seamless, and decentralize geography. 

I think we’re going to be able to create small enclaves with people who relocate to more rural parts of the country, to offset the high costs of urban areas such as New York City.

DC: You’re vocal about the problems DAOs face. What do you see as the major issues?  

Khan: There are a lot of concerns, specifically the lack of legal protections, mentorship, and tax ambiguities. A bill passed recently stating if you vote on proposals, you could be held personally liable if something goes wrong.

As a steward with Gitcoin and a Friends With Benefits (FWB) token holder, as well as the lead for their trading category, this is frightening. There’s a lack of clarity around what is and isn’t legal. I’m very pro-America but it’s sad to see innovation stifled by regulators.

DAOs also lack the paperwork protections. If you’re a 1099 contractor or W-2 employee, we all understand what this means. DAOs are like start-ups in a less safe environment. How does health insurance, maternity leave, and financial equity work? Who is really benefiting in the DAO? And who is addressing these issues?

Some of the young people coming into DAOs don’t even know they’re supposed to file taxes. They just get paid and think, this is awesome. The IRS will never lose out on their money.

Read more: Gitcoin Grants Surviving Crypto Crash So Far, According to Program Lead Annika Lewis

DC: You also have a science background. Do we as humans need hierarchies?  

Khan: Yes, I think we do. Hierarchies are a natural thing that humans do. I have a Master’s in Biology, so I’ve studied evolution extensively. We see hierarchies everywhere in the wild. The natural ordering helps us create functioning societies.

In the context of DAOs, it’s idealistic to think that we can completely decentralize all forms of decision-making. It’s also ineffective to think we need consensus on everything, especially when there are specific groups of people who are capable of making the necessary calls.

There’s middle ground between zero hierarchy and monarchy.

Having a basic structure such as project managers and people who report to them can prevent double work or ideas that get lost in the ether. When there’s no reporting, there’s less accountability which leads to grey areas. When there’s no clear hierarchy, unclear hierarchies develop. They form, no matter what.

DC: The term “DAO polyamorous” has been used to describe DAO culture. Is this just a hot new take on freelancing?

Khan: It’s very much like freelancing. To be able to create a meaningful impact though, you usually do need to concentrate your efforts. It’s like that Steve Jobs’ quote on focus really being about saying no to 99 percent of things.

DAOs aren’t like a traditional job where you can’t be at Facebook, Google, and Salesforce at the same time. In Web3, you can be in three major DAOs at once. There’s risk in wanting to be everywhere. FOMO is expected because a month in crypto is a year in any other industry, but it’s something to wary of.

DC: You said you’re realistic but optimistic. What are you most excited to see play out?

Khan: I’m eager to see the tools mature to help more people onboard into web3. I love Metamask but it’s not simple enough for my mom to use yet. The wallet is the first place to start, as I don’t think it’s been properly tackled yet. I’m also excited about the solutions coming out of Latin America, Africa, and Southeast Asia, especially in terms of the unbanked and underbanked.

When I was at Devcon, I met the Latin American version of Metamask. They’re an Argentinian company offering USDC staking as a hedge against hyperinflation. It’s illegal to swap pesos for dollars, so citizens turn to the black market to be able to protect against inflation. To be able to put money into crypto, hold stable coins and even make a small amount of percentage of yield is life changing.

The fascination, enthusiasm, and qualms of DAOs isn’t just because it’s a frontier category. Corporations have been around since the late 1700s. It’s not just what we know, it’s all we know.

DAOism is a new school of thought – for communing, collaborating, commerce and exploring callings. It’s going to take time to acquiesce, to adjust, and get right. As web3 moves at the speed of light, it’s important not to turn our backs on everything that came before. As Khan said, “it’s foolish to assume corporate America got everything wrong.”