Decentralized Autonomous Organizations Overview
With the transparency and security blockchain can change even the way organization work. Lets research the phenomena of DAO, self managed organization, both exiting future opportunities and already existent challenges. We’ll talk about next topics:
What is DAO
A decentralized autonomous organization (DAO), sometimes labeled a decentralized autonomous corporation (DAC), is an organization that is run through rules encoded as computer programs called smart contracts. A DAO’s financial transaction record and program rules are maintained on a blockchain. There are several examples of this business model. The precise legal status of this type of business organization is unclear. © Wikipedia
Bitcoin was effectively the first DAO as it relies on and rewards the wide group of miners. Valuation of bitcoin is heavily dependent on the support of it’s users. It’s rudimental, still fully decentralized organization. More sophisticated visions of DAO assume hiring, marketing and R&D decisions made automatically by voting, with no CEO, Board or substitute. And any user is authorized to make their proposals and all the laws are preprogrammed.
DAO Case Studies
Most known DAO, “The DAO”
The DAO was a investor-directed venture capital fund, where holders of tokens (internal currency) decided where to put funds by voting. In May 2016, TechCrunch described The DAO as “a paradigm shift in the very idea of economic organization. … It offers complete transparency, total shareholder control, unprecedented flexibility, and autonomous governance.” It was built on the Ethereum platform.
It was the biggest ICO at time, but sadly spoiled by the hack during their campaign. Hackers managed to steal $50M out of $150M invested (full story), afterwards Ethereum was forked (cloned) to the state before the hack, and money were returned. The DAO was delisted and doesn’t operate now. While money were saved, such situation goes against the concept of DAO being “code is law”. Hack was allowed by the code and in this way “legit”. So it raised a big questions the viability of DAOs.
Dash
Dash (Digital Cash) is currently the 5th largest cryptocurrency. It’s managed as a DAO – anybody can suggest the change and open a budget request. It’s also structured a bit differently by using so-called “masternodes”, instead of a single website. Here’s how they explain it:
Its makeup is thus: the block reward is divvied up in three parts. The first 45 percent goes to Dash’s miners. Another 45 percent goes to its Masternodes. And 10 percent is set aside to fund whatever other jobs or expenditures the Dash network deems necessary.
With this 10 percent, Dash is able to hire — without grants, corporate sponsorships, or deep-pocketed foundations — its own developers, marketers, researchers, administrators, auditors, and anyone else the network might deem worthy to hire at any point in the future. Allocatable funds have been used not only to hire developers and designers, but also to purchase the domain Dash.org; to purchase a prototype of a vending machine that’s been used at conferences to showcase how Dash’s instant confirmations work; to purchase development hardware; to sponsor conferences; even to cover the attendance costs of people the network sends to conferences to give speeches.
Here’s some more from their forum
Software for DAO
Here’s the list of project that came close to realization of the DAO concepts in the code:
Future of DAOs
Possibly DAO model could be used to build a number of businesses. Maybe it will happen widely when tech and law are more mature. But it’s easy to imagine an Uber-like company, where drivers fund the app and operations through a DAO.
Blockchain allows more modern approaches like liquid democracy. In the original democracy people usually do not have enough info on the candidates and policies. But with liquid approach you can transfer your votes to somebody you can trust, like an expert, and allow them to decide. While you can easily change and regroup you preferences between several experts or vote on your own. Also rewards are instant and transparent. So it makes a better driver for organizations.
Current challenges lie of course in the existent legislation, which doesn’t protect or even contradicts DAOs. Also not everything’s clearly programmable and a lot of problems can arise on the scale, as with the DAO. Still I think we’ll see more DAO-like applications, probably used in well-organized parts of the business.
Please leave comments with questions and your thoughts on the topic.
