Some quick notes on how I see SourceCred relating to the future of DAOs. All feedback/comments appreciated!
The classic mode for organizing human activity right now is centralized, top-down institutions, like corporations. There’s someone on top who has control of the capital, and they pay people to do things that serve the organization’s goals. This is pretty effective, corps get a lot done, but it’s also more corruptible and has all the downsides of centralization of power. Also, it’s permissioned, everyone participating in the system does so on the whims of those in power, and can get fired, etc. Also, corps are only good at optimizing profits and return on capital, and we live in a world that is literally getting ruined by this drive. So: we need something better! Something new!
We’re starting to experiment with new ways of organization, like DAOs. Systems that are permissionless, everyone can participate; if groups have a difference of opinion, they’re free to fork it and set out in their own direction. Doesn’t have the kind of corrupting centralization of power that corps do. We can see open-source projects as the most successful/widespread adopters of this model. Super decentralized, people coming together out of shared interest or enthusiasm, and they build great things. However, they struggle with incentivization. This means it can be hard to get people to do unglamorous but important work – look at how many OS projects have bad documentation, for example. They also struggle with things like UI design, possibly because UI designers aren’t bought into the implicit “cred” of open-source contribution, and open-source projects don’t have a good explicit way to reward them.
As the crypto experiment unfolds, we’re now starting to explore new models for incentives and rewards in decentralized organizations. Aragorn, Colony, Gitcoin all experimenting in this field. However, the “crypto-payment” paradigm has a weakness: how do you decide who to reward, and for what? So far, the approaches tend to be really high friction, like you need to scope the work perfectly to create a bounty (only a small %-age of work can be scoped so clearly, and doing the scoping is itself hard work).
SourceCred’s goal is to create a decentralized protocol for assessing the value of people’s contributions. In contrast to the classic corporate model, it’s much less centralized: rather than there being a CEO that determines everyone’s pay, everyone participates in flowing the cred around. Human judgement isn’t removed in SourceCred, but it’s channeled, combined with data and sophisticated algorithms, so that the subjectivity is applied in a principled and transparent way. The result is better than either data or judgment would produce on their own.
Also, unlike the corporate/capitalist model, SourceCred doesn’t assume that profits are the ultimate goal. Cred can be harnessed towards any goal that produces clear success metrics. (Money has the advantage that it’s a success metric that’s hard to fake; we’ll need to do a lot of research into building robust metrics that can be applied for other values, like ecological conservation.)
As SourceCred’s protocol matures, we will combine it with Grain to leverage the incredible incentive-aligning power of tokens. Then, everyone who contributes to a cred-and-grain enabled project will get clear feedback on how valuable their contributions have been, and will be rewarded with a long-term stake in the project itself.