In the metaverse, nobody knows you’re a dog. But in reality, it’s helpful to have some basic systems of trust to protect the safety of strangers sharing a space. As a DAO operating a physical space, we are interested in exploring ways of granting verified access to that space, but using web3 technologies.
It’s also just fun to LARP as a nation state.
This comes as we grow as a DAO and think through the utility of the $CABIN token. Most DAOs issue a token to grant membership and reward contribution, but as we will explore here, tokens may not be the best tool for that.
If you look at the social DAO landscape, you’ll see communities with different token-based access models. Some, like FWB, use a fungible social token to gate community access. Many emerging PFP-based communities like BAYC use NFTs as the primary community gating mechanism. Whether fungible or non-fungible, social tokens in DAOs usually represent three different but overlapping roles:
Should all three of these roles be represented by a single token? Which of them are a better match for fungible and non-fungible tokens?
Economic value is the simplest to reason about. While NFTs can store tremendous economic value, they are inherently illiquid. Barter economies based on non-fungible assets inevitably get replaced by much more liquid economies denominated in a common fungible token. You don’t trade a house (illiquid, non-fungible), you sell it in your local currency (liquid, fungible) before buying another. Fungible tokens used by communities as a medium of exchange for goods and services represents an incredible opportunity to build new economies.
Governance rights face similar challenges with both fungible and non-fungible tokens: ownership naturally tends to have a power-law distribution. The question becomes: what do you do about whales? This recent essay by Vitalik paints a clear picture for why this will become an increasingly problematic issue for DAOs, both in terms of incentive misalignment and vulnerability to attacks.
There are essentially three ways to deal with the whale problem:
If you go down the “accept” or “minimize” routes, fungible tokens are better suited for governance. If you want to implement tighter controls to minimize or eliminate whales, non-fungible tokens are better.
Membership & access can be managed with fungible and non-fungible assets, or any combination of them. NFTs have the advantage of an internal and external social signaling layer (for example, through rarity of PFP images). Art with a greater sense of direct ownership can support complex social dynamics, deeper tribal affiliation, and serve as marketing for the DAO. As smart contracts, they also have the technical advantage of being programmed with more than just a numeric and/or social value.
So, what types of tokens should be used for which community purposes? As with most things in life, the answer is: it’s complicated! Each DAO needs to evaluate what type of community they are trying to build and determine the right combination of assets for economics, governance, and membership.
Cabin DAO currently operates a token-gated community accessed with $CABIN tokens. While $CABIN is a great internal medium of exchange, we want to explore membership, governance, and access privileges through non-fungible passport NFTs.
The eventual use-case for NFT passports will be role-based access to our Discord server as well as our physical space.
For example, we currently airdrop 1 $CABIN to new residents when they’re voted into a cohort so they can become full members of the Discord server. Instead, going forward, we intend to have them mint a passport that gives them access to the Discord server and to the physical location outside Austin.
We’ve planned the first three versions of this passport, which we will develop and release in phases.
The first version of the Cabin DAO passport is an NFT with multiple editions: Green, Bronze, Silver, and Gold. Each NFT gives you the ability to show your support of Cabin DAO and will grant you additional permissions and features in the future as new versions of the passport are released. For example, every passport holder of any edition will be able to mint future versions of the passport as they’re released. Hodlers of the Gold edition will be given access to the physical property for a private event to thank them for their contribution.
At the moment, the primary use-case for NFT smart contracts is as a transferable pointer to a jpeg on IPFS. But the possibilities of NFT smart contracts go way beyond that. The second version of the NFT passport will add functionality for handling different roles within the DAO.
From our example above, when someone is voted into a cohort, they will be able to mint themselves a passport with the role of “Resident.” This will give them access to the DAO Discord server channels, as well as the channels we set up for residents to use when they’re together IRL at the cabins.
Beyond tying roles and permissions to a member’s passport, we would also like to explore verifying ownership in-person. We imagine we could do this by adding a QR code to the passport. When scanned, we can send the owner a transaction that they have to sign, therefore verifying ownership in the metaverse and the meat space.
We would also like to add the ability for passport holders to set a passport image. Rather than a headshot, you could set it to your favorite PFP or another NFT of your choice. We think there’s value in being able to show membership in a standard format (like a passport) while being able to show individuality through customization.
We will continue to explore new use-cases for NFT passports and would love to hear from other DAOs interested in their own pseudo-state LARPs! Reach out to us @creatorcabins on Twitter or join our Discord server to continue the conversation.