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Most of us today make money on a simple 9-to-5
“work-to-earn” basis, but the future of income is “x-to-earn” — play to earn,
learn to earn, create to earn.
article here
What’s more, it would cut out the middle-men (read Facebook)
and reset the balance of the division of labor in favor of the working masses,
not the few owners of Capital.
“In the future, it’s likely that the average person will not
work for a company,” Ben Schecter, who works at crypto platform
RabbitHole, writes at Future a16z. “Instead, people will earn income in
non-traditional ways by taking actions such as playing games, learning new
skills, creating art, or curating content.”
If that sounds like the sort of post-capitalist utopia that
Karl Marx and Frederick Engels dreamed of in the 1840s — well that’s
intentional.
That’s because Schecter’s vision of the future of work is
being built on Decentralized Autonomous Organizations (DAOs). These are a set
of crypto protocols which are emerging as new ways of coordinating, measuring,
and rewarding contributions.
“The idea that most people would be employed by large
corporations would have seemed crazy to someone in the year 1800,” he says.
“This shift [to DAOs] is already beginning to unlock new earning potential for
individuals, and it is leading toward a growing transfer of value capture from
organizations to people participating as individuals in crypto networks.”
Imagine, “if we have chosen the position in life in which we
can most of all work for mankind, no burdens can bow us down, because they are
sacrifices for the benefit of all. Then we shall experience no petty, limited,
selfish joy, but our happiness will belong to millions, our deeds will live on
quietly but perpetually at work.”
Thus wrote Karl Marx. Are DAOs able to bring about the
societal change he called for without a revolution from below?
Leaning heavily on Schecter’s work, this article is a primer
on DAOs.
What’s the Problem with Work Now Anyway?
The central contention is that traditional corporate
employment is rapidly becoming outdated, pointing to the rise of alternative
forms of earning such as influencers, contractors, creators, gig economy
participants, and more.
“These ways of earning don’t necessarily feel like ‘work,’
but they are all examples of people participating as individual value providers
in complex networks, and earning income for their contributions,” Schecter
says.
“However, these non-traditional opportunities are limited in
number, and when available, often under-reward a contributor’s value. That’s
because these jobs are still based in a web2 paradigm in which corporations
continue to control the business model.”
DAOs, on the other hand, are core to web3, the suite of
technologies underpinning the metaverse and the next generation of online
interactions.
“The model of a company having strict boundaries between
internal and external may have made sense in the Industrial Age, but in the
Information Age, this leads to misaligned incentives and unsustainable
extraction,” says Schecter. “In our world of complex information and orbital
stakeholders, companies are no longer suited to help us coordinate our
activity. Crypto networks create better alignment between participants, and
DAOs will be the coordination layer for this new world.”
What’s a DAO Again?
An article from Utopian’s Derick David at Medium breaks
down what DAOs are: Purely internet-native; Digitally owned; Operated through
code and Decentralized (no one central source of power)
“The mechanism behind these internet-native organizations
enables people to form and coordinate economically, from the comfort of their
own homes on their computers and phones.”
DAOs matter because they create user-centric networks. In a
web3 network’s terminal point, a user-centric governance structure can better
align incentives between the DAO and its members.
Under the hood, DAOs run on two main technologies:
Blockchain and Smart Contracts.
Blockchain can be thought of a network, ledger, excel sheet,
or record of transactions. For smart contracts, think of Kickstarter, the
crowdfunding platform.
“Basically, DAOs bind people together through the rule of
code and the use of advanced blockchain technology,” says David. “By leveraging
such technology, members are able to collaborate on a whole different level.”
Unlike traditional companies or corporations, DAOs don’t
have CEOs or board members. When it comes to spending money, like how capital
will be managed and deployed or making decisions, like project proposals and
hiring, it requires the votes of all of its members.
Instead, these functions are enabled by technology. This is
claimed to be democratic “through highly participatory processes or
algorithms”, enforced by the rule of code or software, instead of written
agreements and operated with no requirement for a physical office.
According to the Antler Insights newsletter, DAOs
also claim to be: Permission-less (a broader base of people can participate);
autonomous implementation: (meaning that decisions are enforced via
self-executing smart contracts (software or code) versus human intervention;
and resistant to censorship (meaning DAO decisions cannot be censored since
they’re transparent).
Does this mean that DAOs are going to replace traditional
corporations?
“Not entirely,” writes David in another piece, “DAOs
Explained To a 12-Year-Old.”
“Not everything has to be a DAO. Some organizations are
better off as a traditional corporation and some are better off as a DAO. We’re
most likely going to see both types complement each other.”
Power To The People
To underline the utopian (socialist?) leanings of some
exponents of web3, David points out that what makes DAOs attractive and
powerful are the “billions of dollars getting lost or being wasted by
power-hungry and maniacally greedy executives” in the prevailing division of
labor.
The structure of a DAO is inherently open and accountable,
“a forcing function to share value with the participants who create it,” writes
Schecter. “The openness of crypto economies will allow people to participate in
several DAOs and crypto-networks, mixing and matching different income streams
and ownership returns.”
He adds that the best DAOs distribute ownership to their
participants through their own native token or NFT.
It is theorized that open economies will make work more
flexible, fluid, and playful than the 9-to-5s we are accustomed to.
People’s income will be a mix of things we already currently
do in our lives (such as play games), things we think of as traditional work
(like contracts), and things that are currently accessible to only a small
percentage of the population (like investing and passive income from things
like rent).
“To think of it another way, DAOs will expand the type and
quantity of opportunities that are open to several types of participants,
including token holders, bounty hunters, and core contributors,” Schecter says.
Further, in this new future of work, jobs will be more
transient and dynamic. The cost of switching jobs will be lower it is claimed,
opportunities will be more visible, work will be reduced down into more atomic
units, and the entire world will be unified under a single workforce with access
to all opportunities.
“We will discover new opportunities based on our on-chain
history, ownership, and reputation, and we will be matched to contribute where
we have the best comparative advantage.”
For comparison, here is Marx’s classic — if vague — idea of
a post-revolutionary future: “In communist society, where nobody has one
exclusive sphere of activity but each can become accomplished in any branch he
wishes, society regulates the general production and thus makes it possible for
me to do one thing today and another tomorrow, to hunt in the morning, fish in
the afternoon, rear cattle in the evening, criticize after dinner, just as I
have a mind, without ever becoming hunter, fisherman, herdsman or critic.”
Network Participants
The exciting part of the future of work, per Schecter, is
the idea of “participate-to-earn.” Within any given DAO, this is where the
majority of people will fall.
The idea is a critique of the current work/reward imbalance.
“Networks gain strength with more activity and additional participants, yet,
for years, users, consumers, and participants have been adding value to
networks without capturing their share of value (app developers for Apple,
creators for YouTube, and drivers for Uber, for example),” Schecter argues.
Functioning more like open economies than closed
organizations, DAOs will reward each individual contribution based on the value
it provides, regardless of who it comes from. This means that everyday actions
that are valuable to a network will be turned into income-earning
opportunities.
“Nearly every single person will earn some income from
simply living their lives online, using products, and participating as a user.
For people receiving compensation for their own participation in networks,
earning an income will feel a lot like a game.”
Play-To-Earn
Play-to-earn is a new type of gaming model that rewards
players for playing and unlocking achievements within a game. The traditional
gaming model involves a one-sided transfer of value towards the game creators
or platforms, whereas play-to-earn games reward users as well.
According to Schecter, play-to-earn games function like an
economy: players provide labor (their time and energy) and capital (often
purchasing NFTs to participate in the game), and are rewarded with fungible
tokens for their achievements and progress within the game.
Earning currency from games isn’t new, but instead of
rewarding players with in-game currencies confined to usage within the game,
play-to-earn games distribute NFT rewards that are swappable for other crypto
tokens or fiat currencies.
“This means that video game players can literally pay their
bills through their in-game achievements, particularly for people in countries
with lower wages and living expenses. This phenomena is already a source of
income for millions of people, most notably through blockchain game Axie
Infinity.”
Described as “ Pokémon on the blockchain,” Axie
Infinity is operated by a Vietnam-based company called Sky Mavis, and has made
more than $3 billion in total since launching in March 2018.
Possible Pitfalls
Schecter is careful to caveat his thesis, admitting that it
is unclear how much income can be earned through DAOs. X-to-earn does not mean
every single person will be able to make art and play video games for a living.
“X-to-earn is about rewarding value where it is created,” he
says. “DAOs make these non-traditional paths more sustainable and available for
more people, but the market will not reward everyone. Market dynamics are still
relevant, and to be rewarded, you will need to provide value. Creators will
need to find audiences, game players will need to achieve outcomes, and
bounty-hunters and contributors will need to create an impact.”
That said, Schecter believes in the fundamental (Marxist)
idea that creating value should be rewarded, and that DAOs will coordinate the
value reward within crypto networks enabling new income earning opportunities.
On one hand, DAOs allow people to choose how they work and
associate with communities where they are value-aligned. On the other, by
reducing much of work into atomic units and purely financial incentives for
actions, we risk reducing people’s meaning to purely financial rewards.
“We risk turning work into discrete, meaningless tasks,
where labor is reduced down to a commodity service.”
