Can DAOs Save Politics?

17 min readMay 12, 2018

The rise and fall of a progressive political movement, and how Distributed Autonomous Organizations might have prevented the fall

This is a story of disintegration and demise of a progressive political movement I cared deeply about. The reason for its failure, and there is no other word to describe falling from incredible momentum in 2008 to where we ended in 2014, was infighting and conflicting interests of the movement’s leaders. We could have changed politics, and change the city we love, and we didn’t.

This is also a story about hope. Now that we have a technology, blockchain-enabled Distributed Autonomous Organizations (DAO), we may be able to fix many of the issues that hurt us back then.

I intend to outline the structure of the movement, its stab at what we called ‘internal democracy’, and touch on some of the key points that precipitated our fall. At each such point I am going to stop the narrative and apply DAO concepts to see if they might have helped. The last part of this post will summarize the insights gained from this exercise into a very first draft of a protocol, that may serve similar political groups in the future.

My main resource is the DAOStack white paper. I have also read the Wings white paper, and parts of the Colony and Aragon white papers. I found all four of them to be serious and impressive intellectual efforts to solve many of the problems of the kind we faced at City for All. I don’t think DAOs would have solved everything, but I’m confident the concept and the platforms would have helped.

The beginning: activist groups together

City for All was formed by two political parties, The Small Left and The Even Smaller Left* in late 2007 in Tel Aviv Yaffo, Israel. The founders aimed to bridge the poisonous gap between Israelis on national issues, by bringing us together around municipal goals. Some 10 activist groups from all over town joined in, aiming to work together and gain political power together, and affect policy from the inside.

We all agreed on five main objectives we wanted to achieve:

Better, cheaper education.
Reduced housing costs.
Better, as in way, way better, public transportation, which would reduce air pollution and save lives (according to some studies 1,100 people die every year from car pollution-related diseases in the greater Tel Aviv area.)
Funnel funds to neighborhoods in the south of the city, abandoned by the current municipal administration.
Better democratic processes within city hall, including participatory budget, and better (as in much, much better) transparency.

We had detailed plans how to achieve these goals, which are beyond the scope of this article.

In DAO Terminology: Agencies

In DAOStack terminology the two political parties and the groups of activists that joined in were Agencies. Each was a separate entity with its own set of goals and organizational culture.

Maybe the right way to go would be for each group to form a DAO Agency and have City for All become a DAO of agencies. In reality, City for All came together as one movement.

The Organizational Structure

A General Assembly meeting in 2008. At one point City for All had over 300 active members.

This was the organizational structure we agreed on:

Each of the original groups would become a Forum, free to decide on actions the forum would be involved in, and to add members to the forum, as well as to the movement.
Membership was based on non-financial contributions. You needed five actions to show for if you were to become a member. A meeting was considered an action. Leafleting was an action. Writing a blog post was an action. Working on creating a website for the movement was an action. By design it was easy to become a member, as we assumed that having hung out with us five times you would get our values and goals and become one of us.

There were two governing bodies, with a third one planned for after the elections. For the sake of brevity I’m simplifying many of the nuances:

The General Assembly included all the members of the movement and had a final say on all issues.
The Coordination Group was responsible for the day to day operations. Each forum sent two delegates to this group, while five seats were reserved for the founders.
The third governing body, the City Council Faction, was set to become operational after the elections. It would be made of our city council members and their replacements (we had a rotation agreement.) The idea was that the Coordination Group would bring information from the forums, which is to say from the actual people living in the city, while our city council representatives would translate this input into policies inside city hall. Together we would generate pressure, from inside and outside of city hall, to enact our policies.

DAOStack — Holographic Consensus

Looking back, this structure seems like a nascent attempt to create a Holographic Consensus, suggested by Matan Field from DAOStack as a potential solution for Scalability and Resilience, meant to enable large groups of people to work and decide together.

“Too much of the collective attention spent on each decision makes the system unscalable,” writes Field in the white paper, “while too little potentially makes it not resilient to faulty decisions, or not representative of the consensus.”

City for All aimed to solve these issues by having most decisions delegated to the forums, therefore allowing scalability. The coordinating group would then sort through the proposals and make informed decisions that would be aligned and accepted by a majority of the forums delegates, thus keeping the movement resilient.

Working together

For awhile it did work! It was clear to many in Tel Aviv-Jaffa that our agenda would improve quality of life in the city. The democratic vision was also captivating. I loved it. I joined meetings and leafleting actions and couldn’t wait to become a full member with the right to vote on all movement issues.

This was early 2008. Satoshi Nakamoto was still working on the Bitcoin protocol. Nobody had heard about blockchains. We were going to do our democratic movement right because it made sense! Everyone was going to see it and join in. What could go wrong? (haha)

The First Hijacked Decision

As we got closer to election time, the media started paying attention and momentum was building. Winning, a fantasy merely several months before, suddenly seemed possible. We were super-excited and people from all over town were catching on. If we could enter the mayor’s chambers and symbolically sit next to each other on his chair — groups from the left, the right, the south of the city, the north, neocons and liberals and communists together — riding the unstoppable wave of our weirdly open, inclusive culture, we’d change politics in the city, maybe in the entire country. For real!

Suddenly, without a vote, and ignoring the beautiful structure we had built and depended on, Influencer #1* announced he was running for mayor. Oh, in the press conference he said that the movement’s General Assembly would have to elect him first but, well, he already announced it and the media reported it. Are we going to elect someone else internally, split the movement and blow everything up?

Influencer #1 hailed from the Even Smaller Left. He was and still is a member of the Israeli parliament. He was clearly the intellectual force behind the movement, the father of City for All. Our beautiful structure was his creation. If we were going to elect anyone to represent us against the Mayor, it would have to be him.

But once he acted alone many of the people from the Small Left — now once again a rival party — quit the movement.

Could DAO have helped?

Could we have avoided the hijacking of our first major decision by using a DAO? Let’s consider several protocol options.

Super majority for major decisions. We could have set up the movement to require a special majority for major decisions such as electing a candidate for mayor. But Influencer #1 won, internally, with 99% of the votes. No luck there.

Transparency. There was none. We didn’t know the announcement was coming until a few hours before the press conference. Transparency would surely be better in any DAO type structure. It would have made a difference.

Voting weighed by reputation. Influencer #1 and his block had most of it.

There was no penalty on Influencer #1 for making a major decision on his own. I think there should be, in a DAO.

Education. Some of us never even realize there was anything wrong with announcing without a vote. In a formally set up DAO surely all members would be aware of this fact.

The structure collapses

Elections are exciting when you’re in the game and fighting every day, believing you can win and make a difference. We marched on. Influencer #1, from the far left of Israeli politics, became a legitimate candidate for mayor in the country’s largest city. He did not secure a win, but sweeping 34% of the vote was earth shattering. He became a political celebrity.

City for All, now His movement, become the largest party in the city council, with 5 members out of 30 (tied with the mayor’s party.) In a fragmented council, this was great. We gained real power and had incredible momentum. The meetings right after the elections were euphoric. We needed larger and larger venues to host all the newcomers.

Then everything started falling apart. We did not know how to scale up. Without the tools that blockchain-enabled DAOs offer, the main influencers fractured our decentralized structure and eventually hollowed it out.

In a highly contentious and close vote, the General Assembly decided to dismantle the Coordination Group, and concentrate power at the hands of Influencer #1 and our council members. The forum delegates would now be part of the city council faction. It sounded okay in theory but looking deeper into the changed structure, several of us predicted that influencers #1, #2, #3, #4, #5, #6, #7, #8, and #9 — the former candidate, the council members and their replacement in the rotation agreement — would consolidate power and win every vote, discouraging others from believing their votes would count.

Sadly, it turned out we were correct. In the following years Influencer #1 and the council members won every major decision. The forums lost power and membership kept dropping.

(Again I’m making a long story too short. We achieved a lot. Some people still believe the city’s agenda changed for the better, thanks to City for All. But the graph of our influence over time was trending down.)

A DAO would have prevented this

Had we organized formally in a DAO, could we have prevented the structure from collapsing?

I think we could.

Cancelling one of the governing bodies would surely have been defined as a major decision, requiring a supermajority, in the neighborhood of say, 75%. The vote to pass the decision was closer to 51:49. It would not have passed! The structure would have remained and with it the connection to our power source: people in the city.

Proposals. Voting in the city council faction, from after the election until Influencer #1 resigned in early 2013, was dominated by him and his block. He would open the meetings, then had the council members update us on their actions in city hall, having us vote only on the issues he wanted us to vote. By the time other people’s proposals were brought up, nobody could be bothered to listen, let alone start an initiative or change the movement’s course.

DAOStack has an elaborate system in place for issuing proposals and for proposals to bubble up and gain attention. The process happens outside of the formal meetings and takes place over a period of time. This would have allowed an opposition to get behind such proposal together and push it up. It might not have passed, but a deserving proposal would have gained momentum and support much faster than it did in reality.

Predictions. From 2009 onwards I made numerous proposals to channel resources in reconnecting with our activist roots in the city, by paying one of us (not me) to organize leafleting and voter registration actions. Influencer #1 rejected all of these proposals. It is still a mystery to me why. One of us suggested that he wanted to keep power concentrated in his hands. If the movement grew he would have to deal with competing interests. If the movement was small, he could keep full control. I cannot say that this is indeed what happened. Maybe he simply believed that his way was the right way.

After a while I predicted that if we didn’t invest in reconnecting with voters now, in those years between election cycles, we would have a member of parliament from the Small Left run on the strength of our agenda in the next election cycle, while City for All would collapse. In 2013 my prediction came true to the dot.

Would things go differently had we used prediction markets?

Regarding ongoing proposals, it would have been foolish to stake anything against Influencer #1. He had the power. He could decide which proposals came to a vote and which ones would pass. Predicting against him was a losing strategy.

But over the long term, using prediction markets with financial incentives could have changed our course of action and saved the movement. Anyone with eyes in their head could see that we were attracting less and less members, enjoying less and less energy and that we were leaving our territory wide open for others to invade. It made too much sense to hire a community organizer. If we had used the number of members attending actions as a measure for success, and set a three or six months timer, the outcome would have showed a steady decline. The next time a similar proposal landed on our desk people would put money on the outcome, and the game would be either pay the people who stake money on the membership continuing to go down, or hire a community organizer and watch as we change course and become stronger again.

I think this is a pretty great use case for Futarchy. I wish we had this tool back in 2009.

The Final Vote

Kiryat Sefer Garden, built thanks to City for All’s influence, smack in the heart of the busiest area of city center. The original plan was to build another highrise and parking lot.

In the runup to the 2013 elections we elected Influencer #2 to become our candidate for mayor. But the Left’s candidate was now from another party, and our new candidate was marginalized. We dropped from five council members to three. Not bad, 10% of the council still, but not quite what we had dreamt of.

A few months later our internal tensions boiled down to a vote on whether or not to join the mayor’s coalition. During the campaign we vouched never to do it; the mayor was virtually opposed to anything we suggested. But now Influencer #2, the new chairman, wanted to take us in. Personally I couldn’t stomach it, and neither did many of my friends, as well as the previous Influencer #1.

It seemed almost inevitable that the new chairman would have a majority in the General Assembly, not least because his administration had the final word on the list of eligible voters. There was one excel file, on one laptop. His laptop. Theoretically he could have done whatever he wanted, including adding or removing names to the list.

The vote was a strong Yes to joining the coalition. The new Influencer #1 consolidated power. Once he led the party into the coalition, most of the No voters left the movement. Cue the end.

How to do it better

City for All created an impressive structure to regulate its decentralized ambitions. But it proved impossible to enforce. Whenever our concepts faced a challenge, and there were many, power hunger gained the upper hand and the system collapsed.

Thanks for developed DAO protocols we now have better tools. I created a short list that aims to understand if these tools can help us do better the next time around.

The next step in this process would be to formalize a protocol, and find the right group of people to embrace it as a governing system. Formalizing this Political DAO Protocol would be the goal of a future post.

Initial Structure

Each of our forums should have been a formal Agency. It looked like an unnecessary overhead when the movement had 20–30 people, but later, when it reached several hundred, it would have allowed us to continue functioning together and to grow.

A DAO of agencies, as envisioned by DAOStack and other DAO protocols, would have allowed more people to participate in the voting process and retain a sense of ownership. It would have also created several centers of power, with tension between them, making the centralization of power much harder.

Schemes and Global Constraints

DAOStack calls for setting schemes and global constraints on the system so that events and actions must comply with predefined rules if they are to become operational.

Supermajority for certain decisions would surely have to be one such rule. Becoming the movement’s candidate for mayor cannot be down to a simple majority vote, at least not in the first round of voting. Changing the organizational structure, the protocol itself, is another decision that should require a supermajority. Rules to govern fundraising, how much we can raise and from whom, should also be in place. As should many others.

Could we codify values? Decide, for example, that the DAO would never vote against public transportation? Probably not. The game of politics is too complex to set rigid rules against compromising, settling for a less-than-perfect solution, or changing circumstance in the outside world.

Transparency

The blockchain is a winning tool for ensuring transparency. I don’t believe all decisions should be transparent (like tactical moves that should not be leaked to opponents), but as a general rule, transparency of decision-making and voting is extremely important.

Proposals

DAOStack white paper outlines a system for proposals to bubble up the attention ladder. By itself it doesn’t guarantee good decisions but, as discussed above, it should allow good proposals from the smaller Agencies to get recognized and gain steam more easily.

In a competitive environment, the wording of proposals often pushes for a certain outcome, presumably that which favors the largest block. A well-meaning organization would have to develop fair wording sensibilities. Current research by academia and industry in the area of fake news, bias and persuasion could help.

Voting and Reputation

City for All had one granularity for voting. Members can vote. Non members cannot. Under all DAO protocols I am familiar with, voting is weighed by reputation. I would adopt this idea wholeheartedly and I believe it can strengthen contributors’ sense of ownership, and since contributors have the strongest interest in making the DAO successful, the probability of good decisions increases.

It would also serve as an important mechanism to defend the movement from hostile takeovers. With City for All, people could get five actions to their name and have a full vote. It was easy for hostile groups to add eligible voters and change the rules in their favor. Our final vote, which precipitated the movement’s disintegration, may have been compromised in this way, with people coming out of nowhere suddenly eligible to vote. In a reputation-based system, their votes would have less sway.

Reputation-based voting would not be easy to set up fairly. It’s probably for a reason that the various DAO operating systems have different versions of reputation protocol recommendations. One system, for example, has reputation decay over time on an hourly basis, to discourage good behavior only when it is beneficial for accumulating reputation. Great idea. But do we really want people checking their reputation 10 times a day to see if it’s gone up or down?

Gaining and losing reputation is an area I would leave wide open for changes by the DAO participants.

Predictions Markets / Futarchy

Perhaps the most radical and intriguing concept in all of the DAO space is the use of Futarchy and prediction markets. People can stake their own money, not on the proposal itself but on the outcome of the proposal. For example, if we decide to replace the movement’s chairman, would we get more or less seats at the next city council? Would the movement grow and become stronger?

The assumption goes that using the intelligence of the crowd, incentivised by financial gains, would improve decision-making over time. I believe this is still in the experimental stage and yet to be proven. One thing to pay attention to, once again, is the wording of prediction and the criteria for success, for which an organization would have to develop pertinent sensibilities

The temptation of outside rewards

So far we have a 3-tier process. Proposals bubble up to promote meritocracy, votes are weighed by reputation to reward contributions to the DAO and improve decisions, and prediction markets serve to improve decisions even further, in a natural selection-like process.

I believe we need a fourth tier. A way to deal with the DAO’s strongest influencers tempted by rewards from outside the system. In other words, how do you prevent an influencer, or a group of influencers from using their power outside the DAO to hijack the DAO process? There are real incentives to gain power outside the DAO. In our case it was political power. In other cases it would be money, or influence, or anything else that people may want and the DAO doesn’t provide.

All the three major City for All decisions outlined above failed on this problem. In the first example, Influencer #1 hijacked a decision because he had power outside of our governance model and used it to call a press conference and gain more power. In the second example he may, or may not have had an interest to suppress the movement’s growth for the benefit of his own national party. The third example is the most blatant, with the new Influencer #1 taking us into the coalition, where he would gain both money and political power that were not available inside the democratic process.

Adoption Risks

Would people still be able to function as free, happy-go-lucky beings with all this technological overhead and meticulous process? To answer this question, I keep the window open in my study and look outside at the storm of laws, regulations, city bylaws, norms and ideologies. DAOs cannot possibly make things worse, and if they promote cooperation, and therefore fairness it could make them better.
As the process of decision-making becomes more elaborate, the DAO’s reaction time becomes longer, while its ability to respond quickly to crisis diminishes. During the second election cycle, in 2013, I was the movement’s campaign manager and as election day drew closer and closer we needed to make decisions on a minute-by minute basis. It would be impossible to run a campaign using DAO voting.

Final thoughts, or did we venture the impossible?

The level of difficulty of what we tried to do in City for All was very high. We went up against a strong mayor, with city hall’s power behind him. Our different political groups had different political cultures. Identity politics clashed with class politics. Idealism was pitted against power hunger in each one of us, as was the desire to make the city better, against the need to make a living.

In Jordan Greenhall’s terminology we had an idea of abundance, a city that provides for all its residents, and we crashed against the wall of the scarcity culture, insisting that a city can only give to the few, namely the affluent.

And we almost made it. We were this close in 2008, and we had a wide open door from 2009 to 2011 to go out there and build on our momentum. Our next stab should follow the DAO way. I’m confident that we’ll do better. Maybe even climb the mountain and create a city for all.

* I did not use the names of the political parties involved, or the names of the story’s heroes. They are wonderful people and I am highlighting their decisions that I find tricky, with no other reason than to demonstrate the DAO concepts and how they can help.

Resources

Photo credits

Tel Aviv Yaffo skyline by Naomi Ben Shahar

City for All general assembly by Eyal Eithcowich

Kiryat Sefer Park by Shelley Dvir

Language editing: Noam Benishie