GCR

In DAOs, as in every business, KPIs are crucial to lead any project to success. They allow keeping track of the growth and the evolution of a project, ensuring it goes in the right direction.

As Key Performance Indicators (KPIs) have shown their efficiency in Startups and traditional companies to provide teams a North Star, some promising Web3 tools are emerging, aiming at measuring better and rewarding more fairly members’ contributions. These new tools are revolutionizing how DAOs are evolving, letting leaders measure performance indicators better and incentivize contributors to achieve them.

1 – A myriad of tools have emerged to better measure KPIs…

Web3 is an attention economy. Every DAOs compete to attract the best talents, and the limited number of people keen to jump into this revolution makes many DAO leaders focus on quality instead of quantity to determine success.

This shift on measuring success is not the only paradigm shift that teams building KPI-oriented tools face. For these teams to succeed, it’s essential to consider the genuinely flat structure of DAOs. Simply taking a Web2 product and rebranding it for Web3 wouldn’t work because DAOs have a different structural model than traditional companies. Second, as most interactions today are happening on Discord, it’s crucial to build a tool that can be easily integrated and leverage the data available on the platform.

While intimidating at first glance, these elements can make any Web3 tool outperform Web2 KPI-product if well integrated into the final solution.

And when thinking about a tool that perfectly applied those new components, the first that comes to mind is Sourcecred. Sourcecred is helping measure the quality of interaction in a DAO thanks to its technology that makes the labor of individuals more visible and rewardable as they work together in a project or community. Basically, Sourcecred measures the participation of contributors in projects by analyzing the number and length of messages sent in Discord, the use of bad words, or the number of useful links sent. By gathering these data, anyone can better understand who is actively bringing value to the community. It also allows for easily tracking the quality of interactions happening daily and ensures a “Good Vibe” in every DAO – by following the number of messages sent daily, the % of link clicked, the number of emoji a message receive etc.. Once implemented, everything is automatized and at scale.

Collab.land is also a great example of Web3 KPI-oriented tool. This Discord bot helps DAO leaders manage their contributors and has an automatic tipping system.

The JUMP community, a tokenized community for agency professionals and brand marketers passionate about web3, has implemented Collab.land and has leveraged their tipping feature where any member can reward another by sending them Social Tokens. With the Bot connected and knowing members’ wallets, anyone can send tips to others by simply typing the command “!tip @name” – and the Bot will take care of withdrawing the tokens from the sender to send them to the receiver. This is fast, automatic, and provides ownership to every member. Not only does this allow leaders to track the number of tips send (and once again measure the “Good Vibes” KPI), but it also incentivizes members to collaborate actively and be gentle to each other, hoping for receiving a tip.

And this is why, in my opinion, Web3 tools are so powerful.

Because they’re creating experiences that do not only allow to better measure the quality of the work done but also incentivize any members to do their best work by providing ownership and financial reward.

The relation is not in one way as in traditional companies, where only a few leaders can reward good work. In DAO, everyone is responsible for the future of the community. It means that each member will do its best work, not because they are obliged, but because the reward system is much fairer and because the value of their tokens is directly correlated with the community’s attractiveness. These new tools, along with the DAO mentality, allow more contributors to achieve goals much quicker than traditional companies.

2 – … And incentivize contributors to reach these KPIs

In Web3, incentives are everything. The power of DAOs is that, by leveraging thousands of members worldwide, without a centralized power, they can work on much more projects simultaneously than any Web2 company will ever can. With this in mind, and for those new models of organization to be successful, they need to incentivize their contributors to do their best work and reach their KPIs, not manually, but by leveraging new types of tools, ones that are adapted and secure.

Coordinape is one of those. Coordinape is a tool already widely used in DAOs that lets DAO contributors create “Gift Circles,” permitting contributors to collectively reward each other depending on the value they perceived from each other’s work. It motivates contributors to do their best work and achieve the goals set by rewarding the best workers. Because, by nature, DAOs are organizations without hierarchy, such tools ensure good work will be recompensated even without a leader giving promotion or bonus. Furthermore, plenty of research supports the positive outcomes that autonomy and ownership inspire, and Coordinape provides more power and autonomy to contributors than in traditional companies.

Decentralized mechanisms are also emerging. KPI options, for example, are synthetic tokens that will pay out more rewards if the KPI meets preset goals before the predetermined expiry date. Put simply, the better the contributors work, the more tokens they receive. Instead of simply setting KPIs and hoping contributors will work hard to achieve them, this tool incentivizes and reward them fairly for their hard work.

Again, Web3 KPI tools are revolutionizing how projects are reaching their goals by letting leaders and contributors better measure the quality of interactions and work in a DAO and incentivizing these good behaviors.

Closing Thoughts

Many people are still doubting the usefulness of DAOs, not understanding the core advantages of this new structural model of organization. I think DAOs will succeed because of the ecosystem of tools around and the hundreds of teams building tools daily to revolutionize easy Web2 actions.

There are some very performing Web2 tools to track KPIs, but none of them also incentivize contributors to achieve these goals, and none of them allow the creation of mechanisms at scale without the need for centralized power. The strength of Web3 is the ownership it gives to community members.

Because they are decentralized and implement new tools, DAOs allow anyone to feel responsible for the project’s growth. After all, that’s what KPIs serve; they are Indicators and smaller goals that encourage any employee to achieve broader goals and make the overall project grow.

About Eliot Couvat

Eliot Couvat is a french writer passionate about Social Tokens, Web3 & the Creator economy. He works as a Head of Community & Growth at Coinvise, a thriving platform that allows anyone to create social tokens, where he helps hundreds of Web3 Creators & Communities build Open Economies. You can find him on Twitter @CDTEliot and subscribe to his newsletter.