Crypto is inventing a new way to organize people, work and money: decentralized autonomous organizations, or DAOs.
DAOs have cash – a recent Consensys report used data from Open-Orgs to estimate that DAOs have more than $14B in their collective treasuries – but they don’t have great methods for paying people in crypto-native ways.
Enter Utopia, a payroll and expense management system built to integrate directly with multisig crypto wallets, making it easier for the large DAOs to pay their chief contributors. Utopia is coming out of its closed beta today, opening up its tools to DAOs who want to get beyond Google Sheets as a way to manage who needs to get paid what, and who needs to be repaid for covering which expenses.
“Paying people regardless of the kind of DAO you are is still a pain when you hit a degree of scale,” Kaito Cunningham, Utopia’s CEO and co-founder said. “Paying and retaining core contributors is going to be one of the most important metrics.”
Utopia raised $1.5M in a round announced in October, led by Kindred Ventures.
This theme of business solutions for DAOs looks to be a big one this year. Also recently launched, Syndicate aims to make it easy for people to make crypto investment clubs together. Look for many other crypto-native back-office products to come together as DAOs take on more responsibilities.
Utopia has had more than 30 DAOs using its product in its first few months of life, many of them eager to nudge the team to roll out further features that their contributors are asking for. One such DAO is Friends With Benefits (FWB), a social club for people in crypto that has $18M in assets in its treasury.
“The future of web3 is reimagining how you do everything,” Patti Hauseman, operations lead for FWB, told The Defiant in an interview.
Up to now, though, a lot of them haven’t so much had time to reimagine as they’ve had to keep things in order with the digital equivalent of duct tape and scissors. “There’s no really good way to collect payments that are different currencies for different things across 10 teams in a Google Sheet,” Hauseman said.
“So far it has been really great. It has been really nice not going round collecting people’s wallets,” Hauseman said.
According to Cunningham, the payments it manages are tend to be a mix of stablecoins and DAOs’ native tokens. Utopia doesn’t touch fiat.
Utopia’s next big feature, coming soon, is the ability to pay employees in a way that’s compliant with traditional payroll. So then employees can have tax withholdings and start earning healthcare and other benefits.
For Hauseman, FWB has reached the point where more and more of its contributors want to get official with the analog world. Until there’s a legal way for insurance companies and bankers to recognize DAOs, they need traditional organizations who can act as their employers
I understand in the DAO space it’s important for workers to have indepdence, but it’s also important for workers to be able to things like get a mortgage and have health insurance and all the things people do in real life,” Hauseman said.
At the heart Utopia is a wrapper around a Gnosis Safe. But there are things blockchains, for all their transparency, don’t handle well. For example, Cunningham said, each gas payment and reimbursement may all have a permanent record on Ethereum, but that’s not necessarily data that’s rich enough for bookkeepers.
“We tag all the payments that are done on-chain to have a great operational history perspective,” Cunningham said. That’s happening in a centralized way for now, but that could all change as the product evolves.
Utopia is also working on a feature to allow team leads to make payments within their part of the budget, without having access to all the funds.
They may soon also have a way to skip the reimbursement process on gas costs entirely. They are working on a feature where the DAO can pay to run transactions directly, so that cost never has to leave the employee’s personal wallet.
Interested DAOs have an incentive to get in on the ground floor because the product is free to use for now.
Cunningham said that while the business model is not defined yet, they don’t expect to start charging DAOs a fee to use the core product.
“We’re not big fans of an extractive take rate,” Cunningham said. They have a lot of ideas, but they think they might be able to make it profitable by offering DeFi services atop DAO payrolls.
“There are a lot of things that we’re thinking of,” Cunningham said.