In this post, we’ll diagram the core operations and governance processes at CityDAO, based on the DAO’s available public documentation via their forums, Notion, blog posts, and so on.

We chose CityDAO for the second installment of our Diagramming DAOs series because they are the first DAO to tackle the problem of on-chain real estate and find traction.

On-chain real estate presents a host of unique problems. Not only must DAO members effectively coordinate within the DAO, they also must reckon with many IRL constraints like:

• Forming workable legal entities
• Traditional banking and fiat
• Zoning and building requirements

For Web 3 to succeed, it has to create structures to interface with the existing world. What better place to start than real estate?

At Sobol, we believe decentralization and Web 3 will likely play a major role in the way cities are built and run and IRL governance happens in the future. We’ve been excited to watch CityDAO progress and imagine that their future impact in regard to how “on-chain real estate” happens will be significant.

Full Disclosure: Sobol core team members Alex Wagner and Bryan Peters are both Citizen NFT holders. Bryan was also a Season 0 core-team member at CityDAO and holds a Founding Citizen NFT.

What Is CityDAO?

It all started with a tweet.

https://twitter.com/scottfits/status/1410724134468739076?s=20&t=VvRQUITrrurwLQU97lzE8w

In the simplest terms, CityDAO is the original “on-chain real estate” DAO.

CityDAO’s mission is to build an on-chain, community-governed, “network city” of the future.

From their recent Mirror post:

The CityDAO community is made up of ambitious and HIGHLY curious people exploring and building at the frontier of technology, governance experiments and physical land.

The vision of CityDAO is to build the city of the future on the Ethereum blockchain by experimenting with tokenizing land, rights, and governance. 🏙

Since the DAO’s launch in July of 2021, CityDAO is the first DAO to own land under Wyoming DAO LLC law. Known as “Parcel 0”, the 40 Acre piece of land will be owned and managed by the DAO, where parcels of the land are tied to NFTs, which are scheduled for launch in the Spring of 2022. These NFTs will be minted, purchased and sold as any other NFT.

Their most recent “CityDAO Roundup” post, gives a timeline of CityDAO’s journey so far.

At the time of this post, Citizen NFTs have been purchased by high-profile members of the Ethereum community, including Vitalik Buterin, Brian Armstrong, Mark Cuban, and Balaji Srinivasan. Citizen NFTs are used as forms of membership and governance in the DAO. Some in the CityDAO community have voiced the desire for a token, but none has been dropped yet.

CityDAO plans to go further, with the intent to support projects like:

• Shared ownership of land and assets
• Promoting Natural and Cultural Preservation
• Shared Housing and/or co-ops for the CityDAO community
• Reducing housing insecurity by providing underprivileged people the opportunity to join the CityDAO community

You can read this Overview to learn more about CityDAO.

Diagramming CityDAO

In diagramming CityDAO, we mapped three key processes of the DAO’s operations and governance:

1. Contributor Lifecycle – How do people join and contribute to the DAO?
2. Team Lifecycle – How do teams start, and contribute meaningfully to the DAO?
3. Governance – How does governance happen in the DAO?

We’ll go through each of these, section by section, with a flow diagram showing a general view how each of these processes work.

Contributor Lifecycle

From what we can see, CityDAO discovery seems to flow through either their Twitter account, their webpage, or word of mouth. Essentially, the Contributor Lifecycle begins in the CityDAO Discord server, where a new member can begin to engage with the community.

Newcomers are encouraged to introduce themselves and attend one of the weekly onboarding calls in the CityDAO server. Holding a Citizen NFT doesn’t guarantee a newcomer “contributor status”, though it does grant access to getting involved in governance. We’ll dive deeper on that topic in the “Governance” section of this post.

Once a new member has attended an onboarding call, newcomers should explore the CityDAO Discord server, and the Projects and Guilds channels they find interesting or feel their skills may fit. From there, it’s a matter of introducing yourself and indicating your desire to get involved!

As we’ve said before, the fastest path to being a DAO contributor is joining as many calls as you can and raising your hand.

https://twitter.com/TeamSobol/status/1502426678785716225?s=20&t=KHIaOnH-7mPPGDakY6Pm0Q

As far as joining a Guild, CityDAO’s v1 Charter states: * In order for a Citizen to join a guild, they must complete the specific onboarding procedures for that guild. They will then receive a non-transferrable NFT representing their **membership** in that Guild.*

It’s worth noting that at the time of this post, CityDAO is still working to implement NFT-based Guild membership.

Contributors can also access CityDAO’s bounty board, hosted on Dework. Bounties are typically paid out in Citizen NFTs and USDC.

Most bounties require an application, requesting the applicant indicate the estimated time required for the bounty, and a rationale for the request (e.g. skills and experience the applicant possesses, relevant to the bounty).

Team Lifecycle

In CityDAO, teams are formalized as Guilds, which serve a specific purpose or mandate that is aligned with the mission of CityDAO. Some Guilds serve core functions of the DAO (such as “mission”, operations, design, and so on) and are defined in the charter, while others serve a temporary function or purpose.

To create a Guild, a citizen must issue a Guild Proposal. Once the Guild Proposal passes the “discussion phase” in the CityDAO forum, it can be put up for a vote to be ratified via a Snapshot proposal. You can get an idea of the process by looking at this forum proposal for the recently-formed Events Guild, and the Snapshot vote that followed.

To pass, the Snapshot vote needs a simple majority. As you can see from the Snapshot vote for Events Guild, the proposal is pasted into the vote instance for easy reference.

Once a Guild has completed its mandate, or otherwise deemed no longer required, any member of that Guild, or any Citizen of the DAO, may initiate a vote to terminate the Guild (see Section 4.2.3 in the CityDAO Charter).

To aid in the coordination of Guilds, CityDAO uses “Relational Agreements”(Section 2.2). Relational Agreements may take a number forms, but often they establish:

• Personal commitment to the Guild and/or projects
• Role accountabilities for project facilitators and project participants
• Reputational score. CityDAO seeks to create an algorithmic reputational system to build trust among members and better coordinate projects in the DAO

Governance

CityDAO governance flow can involve up to five stages:

1. The idea: taking the form of either a CityDAO Improvement Proposal (CIP) or a Guild Improvement Proposal (GIP)
2. Presentation of proposal, to the Guild if it’s a GIP and on the Forum if it’s a CIP
3. Discussion and revisions to the GIP/CIP
4. Snapshot vote
5. Funding distribution (if necessary)

As you can see in the diagram above, the governance flows for the CIP and GIP are very similar. GIPs are handled within the Guild, and only Guild members may vote on a GIP. CIPs, on the other hand, are open to discussion and voting DAO-wide.

CityDAO governance participation is based on ownership of Citizen NFTs, which are supply-limited and can be freely purchased or sold. The Citizen NFT mint ended in 2021, but Citizen NFTs are still available for secondary purchase on Rarible.

CityDAO created 10,051 Citizenship NFTs to form governance participation in CityDAO:

• One “Founding Citizen”
• 50 “First Citizens”
• 10,000 “Citizens”

Possession of any of these NFTs grants the right to vote at the DAO level, where 1 NFT = 1 vote.

From the CityDAO Charter:

The DAO has the ability to:

• Veto any decision made by any Guild.
• Amend the CityDAO Constitution, Operating Agreement, Charter or other DAO level documents.
• Make decisions that involve forming, restructuring or terminating a Guild.
• Make decisions that involve the multisig signers or treasuries/wallets.

Basically, a CityDAO member(read: Citizen NFT holder) can participate in all Snapshot votes in the DAO. The Snapshot votes which will typically relate to the DAO-level functions listed above.

What may be most interesting about CityDAO’s governance is that they must reckon with additional entities that are outside of the DAO, namely local, state and federal governments, and state-run agencies. Navigating building codes, legal structures, local laws, and so on adds significant complexity to the CityDAO project.

As they say, if it was easy, every DAO would do it :)

Additionally, CityDAO defines its stakeholders as: Citizens, Guilds, the Public (“New individuals who come to learn about and interact with CityDAO every day”), Partners (other DAOs/Web 3 projects, and potential investors), Government, and Vendors.

CityDAO realizes that it’s ecosystem is larger than just their DAO, or even Web 3. The CityDAO ecosystem encompasses the land that they’ve purchased in Wyoming, and reckoning with the agencies, bureaucracies, and communities that live there.

Conclusion: What Can Other DAOs Learn From CityDAO?

CityDAO has gone through numerous iterations, since they started in July 2021. They’ve dealt with and overcome roadblocks such as getting delisted on OpenSea, and dissolving the core team and replacing them with a 20-member CityDAO Council in late 2021. Slowly but surely they have built the out the project, grown the treasury, and and found high-profile, very liquid champions.

Lessons learned from diagramming CityDAO:

• Dream big – Building a Web 3 city in Wyoming on tokenized land is no small feat. Some would argue that these kinds of big societal problems are exactly what DAOs should be tackling.
• Listen to your community – Empower them to make decisions by voting in the DAO and putting forth proposals
• Refactor as needed – As your DAO grows, you may need to scrap your governance model, and start over. Sometimes, redesigning your governance from first principles can grant you more effective coordination in the long term
• Go slow – Some decisions can’t be unmade, especially when it comes to buying land and building on it. See this piece on how Amazon divides decision making between “Type 1 decisions”(fast/reversible) and “Type 2 decisions”(slow/irreversible).

Going Deeper

You can view the Whimsical instance with all of the diagrams from this piece here.

To go deeper down the rabbit hole with regard to on-chain real estate, we recommend reading Vitalik’s “Crypto Cities” piece, as well as his “Bulldozer vs. Vetocracy” piece.

For staying up to date with CityDAO, you can check out their Mirror page, subscribe to their newsletter, and join their Discord server 🌃

To learn more about what we are doing at Sobol, you can join our server here, and you can follow us on Twitter at @teamSobol.

Special thanks to Sobol Contributor Team Member @Rowan_n0 for co-authoring the piece and creating the diagrams. Thanks as always to Sobol co-founder @bPetes for co-editing the piece.