The New World Order: Part 2 of the Why DAOs series
This is Part 2 of the Why DAOs series, which lays out the master thesis for the utility of DAOs. Read Part 1, “DAO or DIE”, here. Part 1 establishes that many world problems result from coordination failures and lack of collaboration in international relations, and describes how a DAO could help prevent nuclear war. Part 2 expands on describing the power of international DAOs to remedy many more international coordination failures including the global climate crisis and the security dilemma.
International cooperation is hard to achieve. The global climate crisis is a global prisoner’s dilemma, where most nations are harmed by excess pollution, but are unable to stop. Nations are incentivized to create excess pollution since many of the negative effects are passed on to other countries.
Global climate accords made through the United Nations (U.N.) like the Paris Agreement are largely ineffective because they lack an enforcement mechanism. What’s more, the U.N. as a whole is unable to remedy contentious international issues, in part because any resolution that’s against the interests of a permanent security council member nation (The U.S., U.K., China, France, or Russia) can be unilaterally vetoed. In the case of climate change, both Russia and China are self-interested to continue lax pollution standards: China because highly pollutive manufacturing is the backbone of its economy, and Russia because its frigid climate makes it likely to benefit from climate change, at least in the near term. The U.N. has other branches aside from the security council, but they’re all incapable of enforcing international collaboration because they can only make nonbinding recommendations and can’t enforce any penalties.
So, if existing Non-Governmental Organizations (NGOs) like the U.N. are ineffective, what will work?
DAOs like KlimaDAO are already working on solutions to realign the economic incentives surrounding pollution to avoid the tragedy of the commons. As RSA from Bankless writes in Can crypto fix climate change, “Coupling the development of a carbon-backed currency with the powerful incentive mechanisms and approach to coordination pioneered by OlympusDAO, KlimaDAO aims to develop… [A] crypto-carbon economy, bridging Web3 with the real world and coordinating climate activism at an unprecedented scale.”
A global DAO could remedy many of the issues with the United Nations and lay the groundwork for more effective international collaboration on many issues including the security dilemma…
The DAO to enable international collaboration
This DAO, which acts as a decentralized counterpart to the U.N., avoids the problems of centralization by using on-chain governance. Crypto is an ideal tool for international collaboration because the blockchain isn’t controlled by any nation, or even group of nations, providing a truly neutral forum. International discourse for the DAO can’t be censored and is openly available for all to see, unlike the current system of secret meetings between world leaders being held behind closed doors.
To provide an effective enforcement mechanism, this hypothetical DAO is integrated into the international trade system on the blockchain so that tariffs are enforced by the DAO automatically. DAO members agree that all of their international trade transactions will be made transparently on the blockchain through the DAO-integrated decentralized international trade system. Crypto is already seeing huge usage as an international payment solution. When a nation violates agreements made through the DAO, the DAO uses its international trade integration on the blockchain to automatically impose the agreed upon tariffs on the nation which violated the agreements.
The DAO’s agreement framework is open, so any number of nations can enter an agreement with whatever terms they choose. As crypto further integrates with the world economy and internet systems, agreements will be more reliably enforced on the blockchain, and a wider variety of possible terms will be possible. The DAO can use a combined system of incentivized oracles and prediction markets to ensure off-chain compliance. This way, the DAO provides the guarantee of compliance which is currently lacking on the international stage, solving many coordination problems!
Nations can use the DAO to enter into commitments with one another that solve many international collaboration issues. For example, nations using the DAO to prevent the arms race described in the security dilemma enter an agreement through the DAO to not spend any more than 2% of national GDP on their military. These nations agree to collectively enforce heavy tariffs, both import and export, on trade with any nation that goes above this threshold. Export tariffs on products used for war (such as oil and steel) sent to the nation in violation of the agreement are raised especially high. With the globalization of trade, heavy tariffs from a wide block of nations would be economically crippling, and deter a nation from going above the 2% threshold and violating the agreement in the first place.
By integrating the DAO with each nation’s international trade system, the tariffs can be enforced automatically without any action required on the part of the nation, preventing the situation where nations go back on their commitment to impose such tariffs. The DAO nips the security dilemma in the bud, crippling the military potential of an aggressor before they have time to build their offensive capabilities.
The New World Order: International DAOs Are Inevitable
Crypto’s uncensorable global nature, where transactions can be made and on-chain agreements signed without regard for borders, is superior tech to existing global NGOs such as the U.N.
Similar to the invention of the internet, crypto is a significant upgrade to existing technology that is transforming the world. Increased crypto adoption is just as inevitable as the rise of the internet. Countries have discussed and sometimes implemented internet bans or overregulation, but these countries are being left behind. Similarly, countries which ban or overregulate crypto will be outcompeted in the global economy by nations with more freedom.
The New World Order brought about by crypto and DAOs will occur as the advantages of crypto and DAOs become apparent, bringing about global changes unseen since the advent of the internet.
DAOs are just now starting to demonstrate their coordination power. Constitution DAO has raised over $40 million from thousands of people all over the world to buy an original copy of the United States constitution at auction.
Although Constitution DAO was ultimately outbid, the experiment showed the coordinating power of DAOs to organize people behind a myriad of goals. The dawn of the DAO Age is beginning. Part 3 of the Why DAOs series, Power to the People, will take a look at how DAOs can give power to the people, counterbalancing the dominance of large corporations and the wealthy elite.
Looking to join a DAO? DXdao is the most decentralized DAO in existence, and anyone can join! To get started, simply join the Discord and introduce yourself. You get out of DAOs what you put into them.
