Once upon a time in DAO — Moloch DAO
💡 This is a made-easy article written in the form of a folktale, please refer to this link if you’re interested in the official introduction to MolochDAO! Want to know more about DAOs? I recommend this reading. The following story is based on this reflection video of MolochDAO Summoner(the first contributor?).
A long, long time ago — MolochDAO
Hello everyone! Today I want to share an old folk tale starring DAOs.
A long long time ago, the first ever DAO, “The DAO” was born. Well actually on the 30th of April 2016 to be accurate. Just two months into its launch 3.6million ethers, worth $70million at the time, was hacked. It was there that “The DAO” was met with an unfortunate death and our old, fragile tale ended.
~THE END~
But there were those who knew the story couldn’t just end there. The DAO hack happened on his first week working at Consensus, and the world had proclaimed death to DAO (much like how Bitcoin has died hundreds of times). Yet in the midst of chaos, our protagonist knew DAOS were too good to “die”.
If you’re interested 👇
The DAO and The DAO Hack to Ethereum and Ethereum Classic
The DAO is an investment (crowdfunding) DAO that launched in April 2016, when Ethereum was only a year old (born July 2015). Holding The DAO tokens allowed you to indirectly invest in projects with a bright and shining future on Ethereum! $TheDAO token signified stake-based ownership of the DAO treasury and gave voting rights to decide where to allocate those funds.
With the help of FOMO, The DAO launched successfully, raising $150 million worth of Ether in Ether market prices at the time. 3 months later, The DAO’s smart contract was hacked. As of 17th of June 2016, approximately 100 Ethers were leaving the Treasury every second. White hackers gathered urgently and attacked the Treasury the same way the hackers stole funds in the Treasury and moved the remaining amount to a safe place.
This was still in the early stages for not only The DAO but also Ethereum, and consequently the concerns of the Ethereum community’s became very apparent. There were voices that proposed a hard fork🍴 in order to turn back records to before The DAO hack. However, these opinions clashed as some argued that all transactions related to The DAO should be rolled back through a hard fork and lost Ethereum should be returned to The DAO investors, while others believed intentionally intervening and changing the history of the chain would damage Ethereum’s decentralization and therefore should be left as is.
Eventually, the Ethereum community voted with 5.5% of the Ether volume in participation, and a hard fork was decided. The chain that rolled back to before The DAO incident at block 192,000 is Ethereym (even now The DAO investors can return The DAO tokens in exchange for Ether), and the chain that did not erase The DAO hack from its history book is Ethereum Classic. Simply said, the Ethereum as you know it is a new hard forked chain.
Our protagonist had always been interested in coordination failure (much like the prisoner’s dilemma — inability to collaborate or cooperate). For him, Ethereum was a tool for improved collaboration. Then one day, perhaps with the play of fate, his eyes fell upon a reading known as the Meditations on Moloch.
Moloch was a god who received child sacrifices as an offering, and was used as a symbol of coordination failure in the post. People had to sacrifice what was most precious to them, their very own children, and yet no one thought to join their efforts and destroy Moloch. An absurd system had continued because of their inability to coordinate.
As he read this post, he realized that what was important was not “Us vs Them” but rather “Us vs Our own inability to coordinate”. And that is how he began his very own DAO in an effort to “Slay Moloch”.
Still suffering from the shock of the hacking incident and in an effort to avoid problems with regulation, our protagonist began a Grants DAO (DAO that raises funds and allocates grants/scholarships) and proceeded to revive two features from The DAO that was no longer active (though $TheDAO token still holds value!). The first was an exit function later named “Rage Quit” and the second, “Grace Period” which allowed time between passing of proposals and actual execution.
Then before you knew it…Et voilà! He wrote up a code and launched MolochDAO at 2019 ETH Denver. So began MolochDAO with 20 or so people who committed 100 ether (worth about $120 each at the time). But even between them there was someone who couldn’t sign up because he didn’t have 100 ethers. He later created his own DAO known as MetaCartel, one of the OG DAOs in the space. Some of his friends in the MolochDAO also helped him build this new DAO. MolochDAO had been busy shilling on its own but now, thanks to the mate who didn’t have 100 ethers and MetaCartel, DAO became a sort of movement. Since then, MolochDAO has prospered, given birth to many DAO descendents (forks) and is living happily ever after.
Now let’s fast-forward to the present. MolochDAO has become a framework for DAOs, and you can launch your own MolochDAO on a DAO launchpad called UberHaus (that is also a DAO), alongside the 833 moloch-style DAOs that have launched thus far. I think one reason MolochDAO is so popular, out of the many other reasons, is thanks to its unique implementation of membership/governance and the function of “rage quit” (You can explore features by each version of the MolochDAO here).
MolochDAO’s membership is permissioned and non-transferrable much like Soul-bound. Its governance assumes one share to equal to one vote. In order to obtain a share, one must upload a proposal saying “I want to work with you!” and this proposal must be accepted by the existing members. There are two methods to obtaining membership — blood equity that is bought for a required sum of money or sweat equity that is earned through hard work (contribution). The funds raised by bloody equity go to the DAO Treasury, and grants are given with these funds. Its non-transferable permission-based system differs drastically from other DAOs who vote with governance tokens(coin voting), and thanks to such functions it remains relative free from the problem of plutocracy.
Another feature is “Rage Quit”. Most of MolochDAO’s proposals are not executed immediately but go through a grace period, even after they are passed by a majority vote. During this period, members who oppose the proposal can burn their share, and receive funds equivalent to their share of the Treasury and leave the DAO. This feature is called Rage Quit (RQ). Thanks to RQ, DAO members are always guaranteed a right to economic exit. This has made it possible to gather resources together and manage them publicly, all the while guaranteeing individual ownership.
In MolochDAO, proposals are passed with just one vote in favor of it. If there are people who oppose, they can leave with RQ, so non-participants are also considered affirmative votes. Moreover since there is no quorum nor any need for all DAO members to participate in the proposal, there is less governance fatigue. And in retrospect, it has its strengths in that after the process of RQ, the members who are left can avidly pursue their common mission (iterative mission-alignment).
In fact DAOs existed before The DAO(Colony since 2014), and some survived even after The DAO hack(Aragon since 2016). Moreover, apart from MolochDAO, there are various DAO frameworks such as Tribute, Kali, Gardens. There are also primitive tools that any DAO can use regardless of their framework. The “trendy” combination nowadays is managing the DAO treasury through a multi-sig by using platforms such as Gnosis Safe , and managing official decision records through Snapshot. New interesting tools such as Zodiac that are expansion packs of Gnosis are also being made! (Apparently now through this expansion pack we can start Gnosis transactions with Discord votes!) Aren’t you excited to see how the future will rewrite the the stories of our past?
Where will blockchain be used? The answers are limitless. From a Defi approach it can be programmable money lego, and from a NFT perspective it could be used for tangible items in the metaverse. Today it contained the potential of DAOs and “Trustless Coordination”.
Questions or feedback are always welcomed!
Reference
The DAO Hack
MolochDAO
- DAOhaus mirror
- Reflections on the DAO movement by Ameen Soleimani
- Other videos from MCON 2021
- MEDITATIONS ON MOLOCH
- Zodiac from Gnosis Guild mirror
- TributeDAO
Special thanks to s3unha for throwing all the links
written by twinFin translated by Esther Kim
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