Who controls Ethereum, Part II: The DAO

Back in December I wrote an article about ownership and control of Ethereum, speculating on the byzantine and opaque corporate structures of the ethereum Foundation and ConsenSys LLC, and what that means for control of the protocol and platform. Sadly, there still hasn’t been any professional journalism on this subject, and nobody else publicly addressing the question (as far as I know). A couple of things changed since then:

  1. Vitalik Buterin published a summary of changes to the Ethereum Foundation’s corporate structure and expenses.
  2. The market capitalization of ETH with respect to BTC has risen 10x and it has become the second most valuable cryptocurrency.
  3. Gavin Wood left the Ethereum Foundation, founding ETHCORE.
  4. Joseph Lubin, founder of ConsenSys, said in a ConsenSys email “At Ethereum we had several conversations over the past year or so with some of the industry leading technologists who are contributing to the Hyperledger project.” [Representing ConsenSys or the Foundation? Hard to say!]
  5. The DAO, aka DAOhub, pioneered by @slock.it founder (and former Ethereum Chief Compliance Officer) Stephan Tual, now accounts for more than 13% of the total amount of ETH.
  6. Gavin Wood quit as a “curator” of The DAO.

Although much of the above is interesting from a telenovela perspective, for sake of argument only #2 and #5 above matter: we can’t really know how much ETH the Ethereum Foundation still controls, nor who controls other chunks of Ether from the pre-sale or subsequent mining, but we do know that a huge supply of ETH has been committed to The DAO. We don’t know how well The DAO will work in practice: it is an experiment (hell, it even had an off-by-one bug). But whoever best understands how The DAO works and can best motivate voters will best influence its investments, and that person is probably @slock.it’s Stephan Tual.

Regardless of how the opaque political and financial entanglements between unaccountable legal entities ultimately turn out, there is a new model for steering the direction of Ethereum. The DAO just raised the bar: entities that can’t meet that level of participation and transparency won’t be able to compete for investment. This brings us closer to having a platform that is managed in the interests of its users.

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