(The featured fashion image used in this article was provided by MaisonDAO, and created for Eliz Gener.)

Through the second half of 2022, The Digital Fashion Group is authoring a series of exclusive articles for The Interline, designed to help brand and retail businesses make sense of the possibilities in the space of Metaverse and Web3 fashion. In this third instalment, Leslie Holden, Co-Founder, interrogates in what ways DAO could re-imagine the fashion system.

I struggle with the concept of how a DAO can work in practice for a fashion brand, particularly one with a physical product. If everyone has a vote and there is no defined leadership, is it possible to build a clear creative direction for an organization?

A DAO is a decentralized autonomous organization, run on blockchain through a series of smart contracts. The DAO is constructed on an ethical transparent framework. The simplest version being one which invests in NFTs. Any member of a DAO can make a proposal, and all can vote. A vote counts more depending on the number of tokens the owner possesses. There is then a minimum buy-in, usually in cryptocurrency. 

In essence this construct is no different than having shareholders.

When the first DAO failed in June 2016, because a hacker found a loophole in the coding allowing him to remove funds, 18,000 cryptocurrency investors lost 11.5 million ethers (ETH), approximately US $50 million (Wang, 2019*).  The following two years saw very little action regarding DAOs, but 2019 saw a resurgence of interest in this system.

There is significant academic literature concerning the conceptualization of blockchain technology, however, there is very little addressing DAOs’ conceptualization and underlying theory building (Santana 2022**). 

Paula Maria Kilgarriff is a Web3 and Metaverse lecturer, and brand activation strategist in fashion retail:

“We will be using DAOs as consensus mechanisms, therefore, it can be seen as a form of on-demand fashion. Stakeholders will vote through a smart contract on what products and services are made by the fashion industry and in these ‘stakeholderships’ you will have the creatives. This will work well for designers setting up their own business or a collection using DAO.”

Paula Maria Kilgarriff

Kilgarriff continues to explain that a DAO is a type of IP and monetization opportunity for creatives. 

“Welcome to the creator economy, where staking is the new following. If I find a fashion designer that I think is hot and relates to my ethics and they have a DAO then I will invest in it and that’s how it works. I am happy to support digitally native Web3 fashion brands.”

Paula Maria Kilgarriff
HOL STUDIO and DQK3R courtesy of MaisonDAO

MaisonDAO is a decentralized digital fashion brand and ArtTech collective of twenty digital fashion studios. The mission of MaisonDAO is to help independent designers & brands to launch their collections in the Metaverse and considers itself an ecosystem for independent designers. Simon Mikolajczyk, Founder of MaisonDAO, started the company after researching for some years into how blockchain and AI can improve the fashion industry. 

Mikolajczyk believes, like Kilgarriff, that DAO in fashion is basically about on-demand. His underlying motive in starting MaisonDAO was to limit waste in the fashion industry. 

“With blockchain you can have more control over the system, more transparency. You can ask your community to vote on the designs you are considering producing and thanks to this you can programme better the amounts you need to manufacture. Supporting an on-demand method of manufacturing. From here you can create a tokenized loyalty program. If you give up control of some of your processes to your co-workers, your customers, your community, you can unleash creativity which was never there before.”

Simon Mikolajczyk, Founder of MaisonDAO

Mikolajczyk explains how DAO can change the fashion system because decentralization creates value as a brand through co-creation and collaboration. 

“All your community can have an impact on what you are doing, not all parts but some parts, some parts can be given to vote, which is very different than the current and traditional fashion system which is based on a top down and push approach. This is important for creatives because with this system it is possible to co-create with fans, but not only fans all the partners and all the stakeholders who are aligned on the goals. You are building consensus and thanks to this you have a collective vision. Not just the founders.” 

Simon Mikolajczyk, Founder of MaisonDAO

Kilgarriff does admit that giving everyone a vote can be heavily bureaucratic and time consuming to organise.

“Depending on the stake, each stakeholder has a different kind of voting mechanism; some stakeholders might have more voting mechanisms than others because they have different types of expertise. It’s complicated and messy. The nitty gritty goes down to coordination. Interoperability is important. Once you have identified a framework for the DAO, who has rights and why, it  then comes down to the amount of money they put up, the amount of community service, or the expertise they have? It will be messy, but technology will give us the efficiencies and the transparencies we need.”  

Paula Maria Kilgarriff

Both Kilgarriff and Mikolajczyk are approaching DAO from a digital and in many ways a theoretical perspective. The concept of DAO as a promise of things to come. Lauren Kacher is a phygital fashion pioneer, the founder of ALTERRAGE DAO the first DAO-led fashion label, and a graduate of The Digital Fashion Group Academy. Her experience provides an excellent use case highlighting the complexities of building a DAO fashion brand. 

Hadeart, courtesy of MaisonDAO

The remainder of this article is given over to the in-depth conversation(s) we’ve had with Lauren. 

How are you designing your DAO and putting it into practice? 

We are the only fashion label that is developing in a DAO way. That’s difficult because a fashion brand needs cohesion between different departments. Things that work well for DAO are things that don’t require secrecy and can work independently, because that is the nature of decentralization. But the biggest change I’ve noticed  since developing a DAO collection is the understanding about how fast it can be implemented and realized. 

What are your pain points?

A DAO is super complex; it’s no longer about projects or fulfilling a strategy or a timeline, it is about putting people first before the profit and this is one of the main reasons it is so complicated. Traditionally, we are used to doing it the other way around and separating emotion from business. 

A DAO uses technology like Web3 and blockchain. That is also what makes it complex because the tech is still very new. Every day there are new DAPs (decentralised apps) and new tools, but there is not a standard for any of this yet. 

To have a decentralized approach is to add complexity: now you have more voices, with different opinions and interpretations of the DAO. And what is important, as in any business, is to create a strategy. 

In the beginning you still need some form of hierarchy, as without this people will have a hard time understanding how to take initiative and aligning on the actions they are going to take. In ALTERRAGE we have 4 appointed guides who help facilitate weekly meetings. The contributions from everyone are tracked until our launch and the work is fully on chain (blockchain). You still need leadership and processes, but a DAO allows for flexibility, throwing around ideas, and experimentation. The result is really creative… but it does take longer. 

How do you monetize people’s work? 

We need a balance between a core team who are consistently, with space for freelance and flexibility, and one-off projects. We are close to establishing our base for each of these working groups. In two weeks, we will start three different projects, and there will be a cohort of twenty spots available: people can join and through this get membership to the DAO which also gives  access to future projects and reputational badges proving knowledge in this new space. This is also on chain. 

Shocking Metals – Courtesy of ALTERRAGE and Matt Davies

Someone externally can propose a project to the DAO and that is then decided through voting.  But that’s  a whole other topic! It’s very complicated, especially since we operate a small (only seven) core team, with fifteen active members. The voting is done through Discord. If the majority approve a proposal, we start it, making sure we have the resources to do so.

Are the people working on a voluntary basis?

Yes, that is another difficulty balancing this with being able to pay people. DAOs are all paid in tokens, so it doesn’t equate to fiat. 

(Fiat money is a government-issued currency) 

In the current system you paid a salary but that doesn’t mean you are invested in the success of the company.  The opportunity with DAOs is to get that satisfaction of learning, having a piece of something you are building and that is basically calculated by the number of hours of successfully completed projects. So, when we do launch our token, we are tracking all the team members will get tokens. A token is like equity so it’s like ownership for those who are contributing and building. 

How do you make the members of your team take responsibility to do their job if they are receiving tokens and not fiat?

This is one of the most difficult things that we face relying on people, especially in the early stages. I realise that because we are going this way it will take a lot longer to make the revenue compared to a typical web company. I think it is important in a DAO to separate yourself from the entity. It’s now been a year since we started and we have all the same people, there is different levels of availability. But with the core team we have weekly meetings and that is very much people’s availability so it will take longer to achieve objectives. But we prefer to build this space without moving too fast. Even if we had all the financial resources we needed and we could hire a team, but we don’t want to risk the values we started with, and we need to make sure that base is set, then we will be ready to accelerate. I would say we are now close to having our structure set up and the next step will be releasing two collections as well as a Genesis NFT. That is basically our seed funding for the DAO to begin the treasury and from there we will be able to start issuing payments in our tokens to those people who are consistently contributing and if someone is not contributing then this will become evident in the workflow tool and they will not receive contribution points. We have a board that shows very transparently who does what and who is contributing. So, for us it’s about contribution and the transformation of mindset. It’s not about a consistent paycheck. It’s all about contribution and participation that comes through self-initiative and that leads to influence. ‘I feel empowered cause I am learning, growing, sharing and I have influence in the community I am creating in.’

Is the creative vision/direction with the entire team or with you?

It’s with me. Although it’s a fairly democratic process, there still needs to be some kind of leadership. We are a fashion label, we are not a marketplace. There is still a constraint, and a brief. I give the direction on the seasonal inspiration; for example our LTL collection (Larger Than Life) is inspired by e-waste, and how you can take this concept and interpret it artistically and authentically. But it’s still very collaborative with the designers. For LTL, we gave designers in our DAO the opportunity to contribute. They could apply to be part of the team with a mood board, for example, and we voted on their mood. 

Courtesy of ALTERRAGE

Through collaboration we let people enter our ecosystem on a revenue share basis. We are finding a place to grow as a company in this very new way. I struggle with launching a brand and taking it in this direction. I have been doing this for about a year, and I feel it’s slow, but it will be so diverse and so collaborative and unique once it really gets moving, so we must persevere.

What has been your biggest personal success to date with this project?

I have grown so much as a communicator, and it has changed my perspective on starting a brand and how to measure success. My team has stuck by me for a year now. Like me, they have the desire to learn and do something that hasn’t been done before in fashion. 

Finally, where is the consumer in the structure of a DAO?

No company is currently truly decentralized because smart contracts just don’t fully work yet. It’s about how you organize people together in a decentralized way, coming on chain, through human consensus. The voting leads to more conversations that bring the team to another level of development. 

In the current fast fashion system, it’s all about the product and getting it out to the consumer as soon as possible. But with DAO it’s not so much about the product but more about the community. The best lesson I have learned is to keep it simple. But that’s very hard for me to do.

ALTERRAGE DAO is the first of its kind, and as a use case it is still being developed, with the potential still being explored. With the possibility of more fashion design labels turning towards adopting or adapting a DAO structure, the concept will evolve in both form and function. DAOs create and foster creative communities. But there are many obstacles that make a true DAO difficult to achieve. Lauren explained the technologies for smart contracts, and self-governing fully automated voting protocol systems are still developing. A DAO fashion brand is clearly not appropriate for all and is still very much a niche concept for a community of co-creators. Lauren was also clear in her experience that a DAO fashion brand requires a level of creative leadership to ensure vision and direction. 

In this article I set out to understand more about DAOs in general and specifically in what ways voting can work for a fashion brand with a physical product. In conclusion I would say it is still early days. A DAO is complicated and although fundamentally inclusive the terminology and protocol can be confusing. At the end of the day a DAO is simply a set of rules and tools for self-organisation. ALTERRAGE and MaisonDAO are both founded on the concept of values, purpose and community which are at the end of the day the key pillars for any successful brand.  

*Wang et al 2019 S. Wang, W. Ding, J. Li, Y. Yuan, L. Ouyang, F. Wang
Decentralized autonomous organizations: concept, model, and applications
Institute of Electrical and Electronics Engineers (IEEE)Transactions on Computational Social Systems, 6 (5) (2019), 
**C.Santana  L.Albareda
Blockchain and the emergence of Decentralized Autonomous Organizations (DAOs): An integrative model and research agenda, 
Technological Forecasting and Social Change, Volume 182, (2022)

To produce this exclusive series for The InterlineThe Digital Fashion Group has interviewed several key players in Metaverse and Web3 fashion, questioning this acceleration and specifically what it means for the future of the industry.

Look for new instalments in the series soon, tackling the following components of one of the fashion industry’s hottest topics:

  • Article 03: What are the opportunities to seek in NFTs for the fashion industry?
  • Article 04: How can the fashion industry build a team for the Metaverse?
  • Article 05: What are the challenges and solutions for the fashion and the tech industry working together for the future of fashion?