Let’s jump of with the discussion on what is a DAO. You would have probably heard the term DAO before, perhaps in a discussion about web3 and its future. For people who doesn’t know, in a moment well be able to grasp its basic.
DAOs (Decentralized Autonomous Organizations) is an organization built to be autonomous and decentralized. The concept of DAOs is simple but application is little complex.
In simple words, DAOs are communities of people who share the same interests or work or vision on the same projects. The company you work in, the public corporation, your team, your big WhatsApp group – hell even the country you live in – could all be DAOs! DAOs can be startups, groups, music band, a group of people who love art etc, anything where group of people with shared goal/interest and work on it.
DAOs operate using smart contracts which is a piece of code that automatically execute whenever a set of criteria are met. Theses smart contracts establish the DAOs rules where it is transparent. Those with a stake in a DAO gets the voting rights and influence how the organization operates by deciding on or creating new governance proposals.
DAOs are less about governance and more about ephemeral team, spontaneous capital formation and made to order capital allocation. For mode on DAOs – you can learn from here.
As more DAOs come into existence, DAOs will become the main way we organize and would become an alternate to traditional forms of organization. DAOs are acting like a building block on web3 infrastructure, and more users come to this web3 space the more they become accessible to DAOs. But, as the DAOs are being created there is a huge gap in having access to DAOs framework, there is no right infrastructure for DAOs to achieve their goals seamlessly. Until now, DAO have been dependent on Discord to make decisions but now few prominent players are coming up providing right infrastructure for native teams or DAOs to achieve. One of the projects, that has recently come up in providing this infrastructure is Squads.
Squads
Squads is a DAO framework on Solana. Squads provides a collaborative infrastructure for Web3 native teams or groups who are on a mission building protocols, dropping NFTs and managing community or creating community for a shared goal/mission etc. The contracts in Squads have been audited by Neodime (which offers deep dive technical audits and trainings, an independent security research team). Neodime seems safe making the smart contracts in Squads safe and secure.
In simple words, Squads is a decentralized application where it provides DAO tools to create and manage DAO. Their mission is to make Squads a DAO framework, an accessible vehicle to both the Web3 native users and people who are yet to ride in Web3 space. Web3 native teams or groups can organize members, make decisions on-chain, and manage digital assets together.
Squads strongly believes DAO framework is well positioned in the market to provide alternative solution to the traditional forms of organization managing its economic and social activity. As Solana is very widely scalable and faster, Squads have chosen Solana which helps them to scale their framework for DAOs in a smoother user experience and with as low cost as possible and with high transactional speed.
Squads have easy to use UI with most of the functionality which are good for some specific projects.
Team
Squads was started by 3 co-founders Stepan Simkin, Sean Ganser and Deni Ershtukaev. Squad is backed by a team of enthusiastic builders and investors like Jump Crypto, Collab + Currency, Solana Ventures and many more prominent angel investors.
Ok, let’s dive more deeper and discuss about what you can do with Squads.
What Squad offers?
Squads offers Multisigs controlled by governance that allows teams or communities for flexible allocation of voting power making the community purely democratic. Multisigs are multi-signature where you can manage team asserts by requiring multiple signatures of your team members to confirm a transaction.
Squads also offers Treasury Diversification, where you can diversify your team assets through built-in DeFi integrations by swapping tokens.
Squads offer Vault where you can deposit multiple fungible tokens or NFTs directly into Squads treasury and you can manage the value of these assets as a team.
And of course, as mentioned above, through Squads offer proposal framework, where you can engage in on-chain tokenless voting with your team members or community.
What can you do here?
As Squads provide tools to for DAO framework, you can create an organization or DAO or small group of teams on Solana to not just make decisions but also manage your digital assets as a collective of teams.
This works the same way like in Web2 how you register a new company to start your journey as new venture, the same way you can start with Squad on Web3 space.
You in Web3 can provide services to DAOs, receive bounties for it and you can distribute it to your group or team using Squads.
You can pool funds, co-invest with your teams, and share the profits using Squads framework or
You can put out a proposal for your project, get votes, you can store VC funds and pay to the contributors without much hassle using Squads.
There are two types currently, that can be created on Squads: -
Multisig (Multi signatures): Where you can create a DAO which has multi-signature wallet. In this you require multiple team members to confirm a transaction. You can decide how many owners necessary according to the project and how many signatures needed for a wallet to confirm a transaction.
Teams: You can create teams where everyone gets codified on-chain membership, and this squad is tokenless and the members weighted on-chain voting. Teams can be SubDAO or NFT communities, working groups where you can manage treasury, manage money of parent DAO, you can initiate discussions, swap assets, asset holding. You an organize decisions and make the process of governance easy with Squads tools.
Guide to Squads
Step 1: Once you reach Squads website and have a look on the homepage and click the button “Launch app” on the right top corner of the page.
Step 2: Once you click that, you’ll be reaching a new page.
Step 3: Connect your Web3 wallet here. You can also checkout their providers, currently they have Phantom, Solfare Extension, Solfare Web and Ledger.
I’m using Phantom to connect to Squads.
Click on create squad. You can either create a multisig or Teams for your group or community. Both options will have Vault where you can deposit or manage DAOs treasury.
Multsig
Step 5: Give a name, picture, and description to you squad.
Remember once you deploy the DAO you cannot change any details of these.
Step 6: As you can add owners to this multisig once you deploy. Right now, you can add up to 3 initial owners. (I’m adding one more owner other than me)
Step 7: In this stage, you can select how many confirmations needed to approve a transaction.
For example, let say, you are team of 4 people, and 2 of them are co-founders and 1 is investor and the other 1 does not much contribute to the team as other do. Then, you can select 3 confirmations as necessary to confirm a transaction in the squad. Like this you can think of multiple scenarios based on the goal, member etc.
In multisig it’s about every person has the equal amount of voting, equal amount of governance in the DAO. Let say if there are 5 members in the DAO, then each of them will have 1/5th of the total voting power.
PS: In Squads initially you can only 3 (currently) but through proposals after deploying you can add up to 150 members into your DAOs.
Once you check the final review, you can deploy your squad. Once you deploy squad name, picture and description cannot be changed.
The deploy fee is way cheaper is as you can see is 0.08 SOL than in traditional Web2 world.
For Teams
The whole process is almost same until adding members in the team.
Once you reach Step 6, in Teams, you will additionally see “Voting Token amount” and Percentage etc.
Voting token amount is how many tokens will be minted for initial squad members. These squad tokens are locked into a program created for your squad upon deployment. These tokens are not airdrops in the members wallets, but they are owned by your squad program which links them to your public key.
The approach of Squads here is different from Relams . In SPL governance setup you get governance tokens in your wallet which you can deposit into the DAO, which enables voting power or governance power within the DAO.
But with Squads, the tokens are stored in the program itself, the program Squads deploy for your team or DAO, and you don’t actually get the tokens in your wallet. It just creates the link between the program and your wallet.
Coming back, I’m creating 1000 tokens for me and my other member creating 50-50 scenario. As additional member keep getting added, they can mint additional tokens to grant the incoming member the voting power and eventually the total supply get increased.
You can decide how many additional tokens should other members have by putting proposal in DAO whether to decide if the next member shouldn’t have much governance (depending on various factors) so he/she should receive less than 1000 or if he/she should have more governance - then they will receive more than 1000 because they invested million buck in to the project (so, the factor of deciding how many tokens the additional member should have will depend on the position of that member in the DAO).
After this, we reach to the final step – Voting rules
Support: This basically means, if you are going to put up a proposal then this support needed to be reached for it to pass. Let say, here I select 51% support at least 51% need to say yes to my proposal. Let say, in my team there are 5 members, and I put a proposal, my proposal will only pass only if I get 3/5 votes as yes to my proposal.
Quorum: This is about minimum percentage of squad members to participate in proposal. It basically means that, at least 50% of the governance needs to participate in that vote.
The Support is based on the tokens and Quorum which is based on the people in squad.
Let me give a small scenario, to wrap your head about this – Let say there is like 10 people in your squad, and you own 90% of the governance and remaining 9 people in your squad owns like the rest 10% of governance. So, if you vote, the support shall pass because it is bigger than 50% or 70% but for the Quorum the proposal shall not pass because since you are only 1/10th who voted and rest did not, the overall proposal will not pass because the rest did not vote.
So, it creates an absolute equal governance even if any of the member has higher number of tokens than others in the squad.
At the final stage, you can review the whole thing and process your team and put on proposals, make decisions etc.
Each squad has a built-in Vault which allows you to deposit fungible tokens or NFTs to diversify them by swapping directly from Squad’s interface (Currently the diversification is only swapping, the team of Squads is looking out to add more into this).
Proposal
Once deployed, you can create proposals and change Support and Quorum for each proposal. Add description and type of vote to single or multiple options.
You can view everything on voting details in voting tab, about members in members tab.
Once proposal get done, to create just approve the transaction.
You can also view your DAOs Vault, on how much treasury does DAO holds and enable way to send or deposit assets into your Vault.
Competitors
Let’s look at the competitive landscape and what pros and cons does Squads have compared to its competitors. I have tried using competitors of Squad like Realms and Grape Network. Here out my thoughts on why I personally find Squads a better option.
Realms –
Like Squads you can create DAO on Realms. Realms has Realms explorer which is the oldest one and has most of the functionality but difficult to use it.
Realms today is used by many DAOs currently, better user experiences than Realms explorer. In Realms today you can create both multisig DAO and bespoke DAO (an advanced option to create customized DAO based on individual requirements, token setup and community etc).
Realms are also working on new alternative that they are working on called Nation, using the same SPL governance. It is a new front-end Realms have been developing for SPL governance. In Realms you get the governance tokens in your wallet which then you deposit into the DAO and then you will have voting power or governance power within DAO.
Whereas in Squads, it is stored in the program itself that Squads deploy for you, or DAO and you don’t get tokens in your wallet. It is logical or link between the two.
The con about Squads compared to Realms is that it’s only questionnaire type of voting (currently) where members can vote on questionnaire, but it is not executing any instructions within the proposal as opposed to Realms.
The other pro about Squads is that it is more refined and has easy to user friendly interface than Realms.
Squads don't support voting with governance tokens - but I don’t necessarily see any pro or con here because Squads have their own unique approach compared to Realms in governance tokens.
And the pro is all of the proposals are saved and stored on-chain, you can see all of the casted ones inside the "Transactions" tab in multisig or "Voting" tab in Teams as well as access the details for each one of them.
The con for Squads is that, on Realms you can create customized DAOs based on the interests or based on specific necessity of DAO members or community, where as Squads currently does not provide that level of customization as Realms does.
Grape
Grape is also another competitor which has built its own massive community and entering into the space of providing framework like Squads. Grape has its own protocol token $GRAPE. The main advantage for Squad is the user interface as it' looks completely well refined than any other protocol in this DAO framework space. In Grape, there are 3 different way to create proposals - Non-funding (proposal doesn’t require funds), Funding (proposal that reallocates funds and requires change in governance structure) and Governance (proposal that changes the governance structure of the DAO or subDAO).
The process of Grape is bit complex and difficult to understand whereas Squads have the upper hand in simplifying the process for DAOs and again I want to be biased on their user interface providing one of the best in this space.
Conclusion
Squads is pretty primitive DAO framework. It is really good platform or dApp (Decentralized Application) for on-chain decision making, instead of using Discord voting. It’s a lot simpler to add people here and make decision on-chain that actually remain on-chain. More than a Discord emoji, this protocol is lot safer. Above everything, the UI of Squads is USP in its whole competitive landscape.
Even though this is an early stage product and potentially can have less features, but this product is completely polished. Exciting times are ahead for Squads as they look to create differentiated long term value for DAO creators, managers and anyone who are into DAOs. Will definitely be watching and participating closely!
I joined Squads Discord channel and members in it are very responsive to any doubts or technical issues you face reach out to their Discord. I also have attended a kind of intro to Squads workshop. Dmitry had provided valuable insights explaining in simpler language. Also, checkout their Twitter for more latest updates on Squads.
References
https://squads.medium.com/
https://squads.so/
https://app.squads.so/
https://squads.gitbook.io/squads/