Understanding Decentralized Autonomous Organizations
To understand the concept of a Decentralized Autonomous Organization (DAO), we must first understand the concept behind a Decentralized Organization. In traditional companies, big decisions are made by those at the head of the company. Think CEOs, owners, boards, stockholders — the big guys. In a Decentralized Organization, big decisions are made by those in lower levels of the company, such as mid-level management and leaders. The idea behind a Decentralized Organization is that a company can move more efficiently and grow faster whenever a decision does not have to be approved by someone at the top.
In a Decentralized Autonomous Organization (DAO), however, every component of the company, every person, and every piece of equipment operates autonomously without having to seek approval from someone or something above them. The ability for Decentralized Autonomous Organizations to operate in a truly autonomous capacity became possible with the advent of distributed ledger technology and native crypto economies. On a blockchain ecosystem, there is no inconsistency or questionable variability. Everything and everyone works together.
Imagine a beehive. In the hive, there are a number of different types of bees that each know what their job is and how to do it. Furthermore, it is in the natural makeup of the bee to know what their job is and how to do it. Before a pollinator goes to collect pollen, he doesn’t have to check with the queen. He just does it.
Decentralized Autonomous Organizations are very similar. In order to operate correctly, each component makes decisions based upon a predetermined formula or agreement. No one needs to check with a person above them before doing his or her job. They simply know what to do and get it done.
According to Barry Schwartz, author of Why We Work, “Effective organizations rely on self-managed teams and decentralized decision making.” Having multiple channels and processes that need to operate before action or decisions can be made slows down production and progress. Decentralized Autonomous Organizations are the way of the future for businesses. But creating a process and network for a DAO to work seamlessly takes a great amount of work and time. Successful Decentralized Organizations do not just appear overnight.
If you are interested in the concept of a Decentralized Autonomous Organization, there a few sub-concepts that we should explore. In this article, we will discuss DAO governance, DAO scalability, DAO resilience, and DAO effectiveness, and the context of the rLoop Network for each.
DAO Governance
In the past, company decisions could only be made through a series of individuals or one particular individual. This method left room for human error, bias, and misjudgment. It is time-inefficient in the process of making a decision. And it has a single sensitive point of failure. In a Decentralized Autonomous Organization, however, a series of smart-contract enforced rules and regulations are determined to govern the direction and progress of the company. These help to eliminate error, bias, and corrupt decision making that has plagued centralized companies. In order for Decentralized Autonomous Organizations to be effective, the encoded rules that govern them should be modular and flexible to fit new conditions, requirements, and expectations — this can also be governed by the DAO itself!
For rLoop, several types of proposals are submitted and vetted by the community — submitting concepts for adoption, asking for collaborators on a project, and asking for resources for a project, to name a few. Crowd-driven project concepts are developed and chosen for adoption by the organization, at which point work within that project can be opened to the community. Resources available to the organization are also managed by those who contribute value to the organization.
If governed correctly a DAO can take business and organizations to a level they have never seen before.
DAO Scalability
The concept of an organization governed by a system of smart-contract enforced rules sounds great, but can it work at any size? Scalability is the capacity of the organization to process a large number of decisions or actions in a period of time, and to increase this capacity as more collaborators enter the network. Imagine a town hall meeting with 10 people present — a lot can be discussed and decided in a short period of time. But what if there are 100 people with their hand up, wanting to provide input on the same subject? And what happens when it grows to 1,000 people? 100,000 people? We believe that with the right processes in place and careful adjustment of predetermined rules and regulations, a DAO can operate with the efficiency and agility of free markets while maintaining the ability to pursue projects with a startup mentality.
Our solution for the scalability challenge ties in closely with considerations for long-term resilience in the industry.
DAO Resilience
The resilience of a Decentralized Autonomous Organization relates to its tolerance towards faulty or malicious activity— whether that activity is intended to be fraudulent or due to poor design. The scarce resource within the rLoop Network is the collective attention and intelligence within our community, coupled with the ability for the organization to manage the human resources and knowledge within in a quick and efficient manner. If someone wants to engage this ecosystem of knowledge and expertise, they will require to pay a fee in tokens (RLP). Without a fee to engage this collective attention, the ecosystem is sensitive to spam and DDoS attack (for ex. from a threatened industry). In the same way that gas in Ethereum is used to acquire “work” from miners and secure the network from malicious code, RLP is used to acquire attention and intelligence from the rLoop Network and secure it from malicious activity.
RLP functions as a proposal fee — if you want to engage the ecosystem of attention and intelligence, you will need to pay a fee in the token. Without a fee, the collective attention (our scarce resource) is threatened. The token, then, is critical to resilience of the system.
DAO Effectiveness
As Decentralized Autonomous Organizations progress in the future, their effectiveness will be tested against many variabilities. Made possible by evolving technology, many experts believe that the Decentralized Autonomous Organization concept could be used to run tycoon companies.
We don’t know exactly how this innovation in organization will be utilized by new companies, or how existing companies will transition from their centralized method of business to some version of this more efficient model. At rLoop, we believe this model will allow an unlocking of previously untapped talent from around the globe, as well as opportunities that have previously been geographically localized. This will allow the community to harness the human capacity for innovation to realize brand new technologies and business models to solve some of the greatest challenges we face.
If you have questions, please leave them in the comments here or join us on our telegram channel. To learn more about rLoop visit our website here or watch some of our videos here.
