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Web5, Celsius, layoffs, and working for a DAO
A TL;DR of the top crypto news this week, and a deep dive on working for a DAO IRL
Dani Pico & Tricia Jose
June 15, 2022
Happy Wednesday friends. We hope that you are enjoying this beautiful summer day as we are entering what looks to be a crypto winter. We won't lie- it's been a tough week and it's hard to make light of events that have real world impact, but we are here to unpack all of this with you and digest it together as a community. So let's get into it.
Quip of the Week
The Latest
From web3 to web5
Things in the crypto world started out fairly lightly at the tail end of last week since we last saw each other. While at Consensus, a major web3 conference in Austin, Jack Dorsey unveiled his plans for web5: a combination of web2 and web3 all built on Bitcoin and developed by TBD, the arm at his company Block (formerly Square) focused on Bitcoin. According to Dorsey, web5 is focused on security personal data that puts users in control. “The web democratized the exchange of information, but it’s missing a key layer: identity,” TBD sated. “We struggle to secure personal data with hundreds of accounts and passwords we can’t remember. On the web today, identity and personal data have become the property of third parties.” Though likely intended to be profound, the announcement left many people confused with more questions than answers and demanding justice for the non-existent web4.
Celsius leads the crash
Things start to get a little hairier over the weekend when Celsius, a major crypto exchange, announced they'd be pausing withdrawals and transfers between accounts due to "extreme market conditions." This news was alarming to many as Celsius is one of the largest players in crypto lending (and a risky one at that.) Basically how it works is that they presented an attractive offer to clients (6%+ yield interest), invested the money into to DeFi for higher yield, and kept the difference. It's not hard to see how this is a gamble, and as the market performed poorly, and customers wanted to sell and withdraw, they didn't have enough liquidity to pay everybody off. Celsius' actions were likely the cherry on top of a series of events both in the greater financial system (inflation + increasing interest rates -> investors stop buying + start selling) and crypto (Luna/Terra collapse) specifically that will be pushing us into a crypto winter.
So what's next? Nobody really knows but if it's any comfort, crashes have happened before: the dot com crash, and crypto's previous crashes in 2015 and 2018. Ultimately though it really comes down to two things: if you're in for the hype, well, that boat has left the harbour. If you're in for the long haul, be pragmatic and focus on what matters, because it's going to be a long and gloomy ride at the bottom for awhile.
Coinbase lays off nearly 20% of their staff
The most recent news to hit is that Coinbase is laying off 18% of their staff due to current market conditions. "We appear to be entering a recession," Coinbase's CEO Brian Armstrong said. "A recession could lead to another crypto winter, and could last for an extended period." For all those on Twitter who have been gloating about the market with their "I told you so's," this announcement really shows the real life impact of what a crypto winter means. And considering approximately 1100 people will be impacted by this particular announcement, in addition to the many new grads who had their offers rescinded by Coinbase, it's quite a significant impact to a substantial amount of people. Our hope is that as many of those folks find footing again soon, and a compassionate transition during a difficult time.
Deep dive: What is it like to work for a DAO?
Let's back up again....
A DAO is a decentralized autonomous organization which means it's a member-owned entity that is autonomous (smart contracts lay foundational rules so there is no need for a centralized governing structure) and transparent (all decisions are encoded on the blockchain). Governments are still figuring out how to handle the legal status of this type of organization, with Wyoming taking the lead on allowing individuals to legally incorporate a DAO.
At its simplest, most reductive form, DAOs can be described as something like a group chat with a protected bank account - a way to coordinate like-minded internet strangers worldwide that have a joint mission with the capital they need to achieve it.
So what is it like to work at a DAO?
DAOs encompass what many consider to be the best part of startups. Shared vision, a sense of community, the ability to work for yourself, the opposite of being the cog in the machine, everyone gets to be and act like a founder. It's no surprise that with many DAO's like Friends with Benefits or Shapeshift having a lot of success, people are starting to wonder what working at a DAO could look like for them. HBR, Forbes, and many others have explored how DAO's are the future of work. Before you quit your job, this deep dives aims to provide an overview of what the good, bad, and uncertainties of working in a DAO would look like.
The Good
Given the structure of a DAO, everyone benefits from any revenue of growth that the DAO experiences. Meaning, unlike in a traditional job where you might be providing more value than your salary reflects, in a DAO you share in the benefits of the DAO proportionally to your ownership.
Much like "traditional work" DAOs typically have many structures in which you can contribute and a lot of them are project based. If you want to contribute to a DAO you don't have to join something full time. You can even take on many different projects across different DAOs. Core to the DAO structure is that people to work that they WANT to do not have to do.
You get to participate in all decision making. This is arguably one of the most attractive features of DAOs. The collective makes the decisions about the DAO. This is both the most attractive, and most uncertain part of DAO management. The decision of the collective is not always the best decision and collective decision making, if it's not managed well, can slow responsiveness and lack a clear vision.
The Bad / Uncertain
Not all DAOs a truly decentralized, because there is no playbook for a DAO structure many people who are DAO founders are experimenting with different types of structures trying to find the best way to maintain order, momentum, and productivity. DAOs struggle with most of the same things traditional companies struggle with and similarly, you can find DAOs that are decentralized only in name, but not in operation.
Decentralized organizations are not government recognized everywhere, which puts DAO workers in complicated tax situations.
DAO workers are often compensated in cryptocurrencies. For some DAOs that can be the token specific to the DAO, for others its stablecoins and tokens that can easily be converted into cash. Given the volatility of the crypto market, working for a DAO could mean your paycheck fluctuates a lot based on your local currency.
In a lot of ways working for a DAO is like working for a startup; you are generating value towards an idea you believe in but there is no stability or guarantee that it will work. This is especially true in DAOs where a majority of the community can choose to dissolve the DAO without a central authority.
So.....
Hopefully, that gave you a bit of perspective on what the pros and cons of working in a DAO structure could be. The best way to continue to explore this is to get experience working for some DAOs. Kleoverse is DAO established to help people find "Bounties" or project based opportunities in DAOs. Give DAO projects a try! It can be writing, doing something creative, helping with operations, etc. For most people working in DAOs is still just a passive income stream or a way to get into earning tokens like Learn to Earn. DAOs, like any company, have their own structures, culture, focus etc. but given the growth in the space, we think exploring the organizational model is worth it.