What are subDAOs?

SubDAOs, or "child Safes," are smaller groups within the larger DAO. SubDAOs give these groups the freedom to operate independently with their own treasury, while still operating as agents of the DAO and benefiting from its protection. For the parent DAO, subDAOs offer a way to protect treasury funds from centralization risk via clawbacks and other governance controls. It’s the perfect blend of autonomy and accountability.

How subDAOs Work

SubDAOs function as Safes with their own governance model, such as a multisig or ERC-20/NFT voting system. Here’s a quick breakdown:

1. Creation Process: The parent DAO must approve the proposal for a subDAO, deploying the child Safe only after receiving the green light.
2. Funding and Treasury: Once funded by the parent DAO, subDAOs manage their own treasury.
3. Governance Flexibility: SubDAOs can adopt a governance model bespoke to their needs, allowing them to make decisions independently without overburdening the parent DAO with extra proposals.

Challenges with subDAOs

In the past, delegating authority to subDAOs meant that token holders would have to give up some control, introducing risk and centralized points of failure. Not to mention that this also puts the subDAO team in jeopardy from a legal liability perspective. Decent set out to address this by giving DAOs enough control over subDAOs to protect their treasury and interests.

Finding the Right Balance

DAOs need to balance protecting their treasury with giving subDAOs enough freedom to operate efficiently. Too much oversight from the parent DAO can slow things down, while too little oversight can put the larger organization at risk and undermine decentralization. It’s a delicate balance and one we’ve thought a lot about.

How Decent Handles subDAO Accountability

With built-in tools like proposal approval, freezing, and clawbacks, Decent makes it easy for DAOs to create agile subDAOs that remain accountable to the parent DAO. Here’s how these features keep subDAOs aligned with the larger DAO.

Proposal Approval

The process begins with a proposal to launch a new child Safe. A subDAO can implement governance through various ways including multi-sig, ERC-20 token, or even an NFT collection. Once proposed, the parent DAO reviews and decides to approve or reject, ensuring alignment before deployment.

Freezing

The parent DAO can freeze a child Safe, stopping it from executing any proposals. The freezing process is customizable—voting requirements, duration, and more are flexible.

Clawbacks

If needed, a clawback can return all subDAO funds back to the parent DAO, ensuring treasure funds are safe.

Examples of subDAOs

The beauty of the subDAO model is its flexibility. SubDAOs can be used to structure working groups, like departments or workstreams, or represent collective ownership of an asset within a broader portfolio through individual tokenization. Decent makes it easy for DAOs to adopt this structure without extra developer support.

Here are some examples of how DAOs can use Decent’s subDAO feature:

• Service DAOs: SubDAOs can become individual project teams, each with their own budget and revenue-sharing models, so they can run efficiently without needing constant approval from the parent DAO.
• Venture DAOs: SubDAOs can be created to handle specific investments or strategies, keeping each one focused and easy to manage.
• Grant-Giving DAOs: In DAOs that use their treasury to award grants, the subDAO structure can be utilized to manage seasonal grant funding and administration.
• Collective Ownership DAOs: Because subDAOs allow groups to individually tokenize the group’s shared assets, they’re perfect for DAOs dealing with the collective ownership of assets like token portfolios, fractionalized real-world assets, and IP.

The Big Picture

SubDAOs offer the flexibility DAOs need to grow and adapt, without losing sight of the bigger picture. With Decent, DAOs can easily create and manage subDAOs that are flexible, secure, and tailored to their unique needs. Ready to empower your team, streamline decision-making, and scale responsibly?

Learn More

Want to learn more? Check out our documentation on subDAOs for all the details on how to set them up in the Decent app.

About Decent DAO

We’re Decent.

We are committed to proving that DAOs are the most effective vehicles for maximizing stakeholder alignment and envision a future where DAOs govern our most vital institutions.

We play long-term games with long-term people. Decent is built with partners like Safe, OpenZeppelin, Hats Protocol, and Sablier. Decent is audited by Halborn and backed by some of the most prolific investors in web3.

To learn more, visit our DAO on the Decent app and follow us on X, Warpcast, and Mirror.