Challenges in DAOs & Solution — Ink Finance: For DAOs That Are More Than Social Groups (part1.)

Ink Finance
3 min readDec 16, 2022

DAOs, with their unique organizational advantages, are quickly sweeping over the crypto world. Particularly, most of the newly launched crypto projects have adopted the organizational form of a DAO. Consequently, there are many DAO solutions aimed at meeting this sector’s mandates and their derived requirements. In practice, however, tasks carried by most DAOs cannot be integrated into one solution that includes all the necessary functional units; rather, they involve many incoherently developed products. With regard to DAO finance, specifically, a complete toolset should include the following components and a framework to thread them up coherently:

  • Organizational management — how is the house built
  • Governance — how to make decisions
  • Task Management — who can do what, and how to track and verify
  • Fiscal tools for execution — payment, transfer, custody, audit, etc.
  • Financial products — issuance & settlement, risk control, compliance

One can easily see that none of the solutions in the market offers a coherently integrated platform to address these very real and urgent demands. Some examples: The basic framework of Colony revolves around “domains” and account permissions; Gnosis Safe focuses on solving the multi-signing problem on Ethereum; Snapshot is committed to providing fair decision-making tools as proposing and voting; and CollabLand/Guild is a social management tool.

This means that a decentralized organization with non-trivial business goals, something that’s close to a real-world organization, is left to find a way by itself to assemble a collection of DAO management tools and to make them work together. The result is an awkward, inefficient, and often ineffective management structure that will greatly limit the future development and growth of the organization.

Although many tools do have certain ability to be integrated with, there is still the crucial issue of procedural control and the on-chain execution. For example, the high-level decision making flow and the actual execution of financial activities that are the consequence of the decision are very difficult to separate, particularly if the connection between the decision and the execution must be implemented on-chain. Gluing multiple dApps together doesn’t produce the efficiency or even the effectiveness, and it’s a frustrating and exploitable process.

Then comes the need, and the art, of the organizational management structure. Any non-trivial organization inevitably manages their business through separately focused divisions or subsidiaries. While blockchain and tokenization can truly offer many groundbreaking opportunities in this area, there is ironically very little effort made for DAOs to even match the effectiveness of the organizational structures that are often at core of traditional enterprises, let alone to replace them with new regimes on-chain. How functional units within a DAO are connected, and how the administrative or economic hierarchical relationships between meta-sub (or sub-sub) DAOs can be implemented on-chain is entirely unanswered.

Ink Finance (“INK”) is the only DAO tool in the current Web3 space that can fully integrate the organizational structure, the governance process, and the on-chain execution of the most consequential decisions, while assigning tangible economic meaning to a DAO’s meta token.

For decentralized organizations with very different missions from very different sectors, INK supports them with internal polymorphic organizational structures that can evolve and adapt as their businesses grow. The flexibility of hierarchical configuration, as well as the associated incentivisation and control schemes, allows for dynamic and versatile organizational efficiency.

INK’s fiscal and financial solutions, such as the treasury and portfolio management facilities embodies the best practice and professionalism, and they can be implemented in a true plug-and-play fashion, at each level of a hierarchical ecosystem.

If you just want to build a casual social group on-chain that handles simple fiscal tasks and does not deal with management at scale, there are indeed plenty of Web3 tools in the market to choose from. You may try to DIY by putting some of these systems together without being burdened by the resulting inefficiency. But if you want to build and operate a decentralized organization that is driven by real missions, carried by sustainable operations, and powered by strong financial capabilities, then take a deep and hard look at what Ink Finance offers.

To continue reading, please check: A BaaS Platform for DAOs —Ink Finance: For DAOs That Are More Than Social Groups (part2.)



Ink Finance

Ink Finance is the DeFi engine for Protocols, DAOs, and RWA Originators. Build On-Chain Competence & Financial Credit |