So, What is a DAO Anyhow?
I’ve recently started a research project based on the applications of a concept in the blockchain world known widely by its acronym of “DAO” — which stands for Decentralised Autonomous Organisation. But what does that actually mean?
As a starting point, this definition works well for me…
“An organization that runs autonomously, in a decentralized manner, that functions without the need for centralized parties to make decisions for the organization to grow, to be profitable, or *physically* exist.” (BlockChannel)
Reading back into the literature of the early 21st Century, we find Professor Yochai Benkler, among others, writing about a movement known as Commons-based Peer Production…
“Facilitated by the technical infrastructure of the Internet, the hallmark of this socio-technical system is collaboration among large groups of individuals, sometimes in the order of tens or even hundreds of thousands, who cooperate effectively to provide information, knowledge or cultural goods without relying on either market pricing or managerial hierarchies to coordinate their common enterprise.” (Benkler & Nissenbaum)
This evocative image from 2006 describes the process for the production and maintenance of Apache, Linux and Wikipedia (among many projects) and again explicitly calls out the lack of managerial hierarchies — there is no boss, but a decentralised group of cooperative parties working towards a common goal or purpose. What is important is that the tasks are modular, and can be easily integrated on completion. Its also useful if tasks are a range of different sizes, so that they appeal to contributors with different levels of motivation and expertise, ensuring that there is something available for anyone who wishes to contribute.
Vitalic Buterin offers in his 2014 piece “DAOs, DACs, DAs and More: An Incomplete Terminology Guide”…
“The ideal of a decentralized autonomous organization is easy to describe: it is an entity that lives on the internet and exists autonomously, but also heavily relies on hiring individuals to perform certain tasks that the automaton itself cannot do”. (Buterin)
The mix of hired human “individuals” and “the automaton” is intruiging — it doesn’t feel too far fetched that an organisation could actually comprise “hundreds of thousands” of data-producing IOT sensor devices, machine learning nodes and (hopefully) human agents collaborating as part of a decentralised group, working towards a common goal.
But, the secret sauce of DAOs, which takes us a step forward from the pioneering work of the early century, is that blockchain brings smart contracts — program code which can be used to automate the running of the organisation according to pre-defined rules and conditions.
The use of smart contracts and automated control needs to be explored carefully, as mis-steps may take us away from satisfying the motivations of contributors to some common’s creation projects — but for example, individual participants could be automatically paid based on their contributions — through a bounty perhaps, or based on the success of the organisation as a whole, through a revenue share — and this would be guaranteed by code, and not forgotten or overlooked. Alternatively, decisions on future directions and new goals for the organisation could be voted on and the next steps taken according to the will of the group — perhaps based on a weighted combination of opinions from human, AI and IOT sensor inputs! Hopefully this will mean that commons-based and other decentralised organisations will become more sustainable, with contributors rewarded for their work and the organisations able to adapt to changing circumstances in a timely and efficient manner, so that they can thrive now, whereas in the past they may have withered.
Fortunately tools are coming to the market imminently which will enable developers and researchers to build DAOs at a higher level than programming smart contracts directly, which is a tough task. This will let us experiment to discover the types of rules and governance policies that will work well when DAOs are first deployed, and enable best practise to be learned and shared. I’ve been following the progress of DAOStack, for example, which is geared towards supporting large-scale organisations — very much in Benkler’s mode of “hundreds of thousands” of contributors.
In conclusion, the starting point for my DAO journey is a view that a group of participants — be they people, AI or IOT sensors — can collaborate and work together towards a common goal — the purpose of their organisation, as they have done since the early days of the internet. Blockchain technology, and in particular, smart contracts, can allow the rules and policies of the organisation to be codified and executed automatically — with the potential to make the organisation more efficient and more robust. I’m looking forward to finding practical and compelling use cases for DAOs, and experimenting with implementation.
(Photo by Mike Kenneally on Unsplash, inspired by The Starfish and the Spider, a book I’m reading about leaderless organisations).
