DAO: a necessary component for Web3

In fact, the concept of Web3 became popular as early as 2017, but until now there is no very accurate definition to summarize it. The reason for summarizing is because it covers too many complex things, and it can even be considered that the components that promote the development of the Internet can be called Web3. Based on this, it is necessary for us to split the important components of Web3 and gain a more comprehensive insight into its internal composition, so this time we will focus on the current popular component of Web3 – DAO.

Compared with the traditional Internet field, Web3 users expect a deeper sense of participation and resonance at the psychological level, not just financial returns, which gave birth to the emergence of DAOs.

At different stages, DAOs have different manifestations. In the early days, it can be understood as “the gathering is full of stars, and the scattered is a fire”. Such an example can be explained by volunteers who are distributed in all corners of the world. Most of them are led by faith or spirit for one purpose. Many behaviors occur autonomously, and in this mode of operation, the consciousness of autonomy is formed, but it still requires the participation of certain people or institutions.It cannot form complete decentralization.

However, with the expansion of the native field of Web3, DAO also shows the potential to solve the problem of organizational structure, and many traditional operating models are transforming into a completely decentralized autonomous organization.

What is DAO?

DAO is the abbreviation of Decentralized Autonomous Organization (Decentralized Autonomous Organization), that is, an organization is a group of people and entities with a common goal or idea. DAOs should be decentralized, so there is no CEO or executive board responsible for decision-making; autonomy also means that reasonable governance rules need to be written into the smart contracts of the blockchain, and DAO members conduct matters that affect the DAO according to these rules. vote.

Combining with Buterin’s definition of the three dimensions of DAO, we can better understand: autonomy as the mainstay, rule of man as the supplement, and possession of internal assets. DAO is a unique, self-managing organization, run entirely by blockchain smart contracts. Smart contracts are the core of DAO. The contract defines the rules of the organization, manages the organization’s treasury, and has its own charter and procedural rules. Code replaces day-to-day operational management.

The advantage of DAO

The main advantage of DAOs is that, unlike traditional companies, blockchain technology provides DAOs with complete transparency. Through on-chain contracts, anyone can see and analyze all DAO actions and funds, and this transparency significantly reduces the risk of corruption, illegal activity, or fraud by preventing critical information from being censored.

Like NFTs, DAOs can also use smart contracts that trigger actions whenever certain predetermined conditions are met. For example, in the case of a DAO, a smart contract can ensure that proposals that receive a certain number of upvotes automatically take effect. And, unlike traditional organizations that operate from the top down, DAOs operate with a flat hierarchical structure that allows all members to have a say in key decisions affecting the wider group—rather than traditional organizations, where voice is limited to high-level hands. Therefore, at this stage, DAO is more attractive to ordinary users than traditional organizations, which is one of the reasons why many ordinary users are so keen to yearn for Web3.

The DAO represents a revolution in decentralization and a platform where everyone can co-build and prosper together in a transparent and efficient way. In order to let everyone have a better understanding of DAO, what I will bring to you next is when DAO originated and DAO has developed so far, and it has been extended to several types, so that everyone can have a deeper understanding of DAO.

The beginning of the DAO

The history of the DAO began in 2016, when Slock.it launched “The DAO” on Ethereum as a way to coordinate investment and governance of The DAO’s token pool. At the end of the 4-week sale, $150 million worth of ETH had been deposited into the vault in exchange for 1.2 billion tokens, each priced at $0.01 in ETH. Solidity, the language used by The DAO’s smart contracts, has only been around for a few months, lacking the documentation and tests required for production readiness.

On June 17, 2016, attackers used recursive calls to execute a “reentrancy vulnerability” and siphoned off 30% of the treasury funds. After the fact, the Ethereum community decided to hard fork from block 1,920,000 (a point before the hack). This is also a milestone hard fork event, and the two chains are divided into:

ETC (Original Chain): The proponents of ETC believe that the core of the blockchain is centralized, which means that it cannot be tampered with and interfered with, so even if a problem occurs, it should not be hard forked or rolled back.

ETH (new fork chain): Most people believe that ETH should continue to innovate on the original basis, and bad incidents like theft should be severely cracked down. The question of whether or not “manual intervention” will only allow more hackers to take advantage of it.

In addition, in January 2019, ETC suffered another double-spend attack (ie, 51% attack), and the living space was further compressed. This decentralized attempt to decentralize power has thus failed.

15 Types of DAOs

DAO: a necessary component for Web3

DAO has now moved to the center stage, and the types of DAOs have also expanded with the development of Web3. The information and DAO platform – Aragon has listed 15 types of DAOs before. I believe that after understanding these 15 types of DAOs, You will definitely have a deeper understanding of DAO yourself.

Developer DAO

Developers are educated on remote collaboration through tools such as Github, and they are the most critical resource for building Web3 infrastructure, so it is not enough for developers to be the first to build themselves as DAOs. Among them are BadgerDAO, Gitcoin and API3. Here we will choose the most representative Gitcoin to explain.

Gitcoin is an ecosystem of developers and contributors who all collaborate in the form of DAOs to build a decentralized network. They have distributed $22.8 million to more than 1,600 Web3 projects since 2018, a 300% increase in the first quarter of this year compared to the previous quarter. Aragon is currently sponsoring the new dGov category of its Gitcoin Grants Program, offering matching funds of 50,000 DAI over two rounds. In the first round, GR10 has raised $1.1 million in community funding from around 300,000 unique contributions, all approved by the Gitcoin community through off-chain voting. Some of the funded projects include research into “commitment voting” by the RMIT Blockchain Innovation Centre, and The Wellbeing Protocol, an open source financial and governance tool for low socioeconomic communities.

Worker DAO

Most workers no longer expect a job for life, and salaried positions are increasingly being replaced by freelance contracts.DAOs can fill the void left by the eclipse of traditional guilds, as the legal and practical barriers to joining cannot affect decentralized autonomous organizations.

Raid Guild and dOrg reference this ancient collective tradition of workers in their Web3-focused design and development agency. Through shared resources and selective recruitment, they are also able to fund common commodities and set global standards for work in their fields.

Art Collection DAO

Art is a huge asset class right now, and it’s only going to get bigger as yields in traditional money markets fall. Attracting more capital pushes the art market to further reduce the friction of buying and selling works, and now the industry as a whole is beginning to explore how decentralized currencies and organizations can accelerate progress. The most high-profile adopters so far are Christie’s and Sotheby’s, both of which sell NFTs and offer some crypto payment options. DAOs have the potential to drive this trend towards an end result by vertically integrating the entire industry stack, from commissioning and governance to buying and ownership.

Among them, the most representative DAOs in the art collection DAO are Known Origin and Pleasr DAO.

Community DAO

As the DAO user experience improves – especially if “no-code” solutions emerge – more and more non-developer communities will start collaborating and pooling their resources as DAOs as they provide trust in handling money management ensure. Before DAOs, collectives were confined to a single jurisdiction if they wanted to avoid currency exchange costs, and to expensive legal frameworks if they wanted to avoid fragile informal agreements. Because of the friction involved, many viable projects simply don’t get off the ground. Multiplied around the world, this amounts to a huge waste of potential. Thankfully, this is starting to change, and communities that have traditionally been underresourced or underrepresented are making their voices heard based on merit rather than privilege.

Among them, the most representative DAOs of community DAOs are Zebpay – Women’s DAO and DisCO. eToro’s 2021 study found that female users make up only 20 percent of its platform, and other companies report similarly low levels of female participation. To help address this gap, Zabpay has launched a female-led DAO, powered by Aragon. New members are accepted only by majority agreement, and any vote must reach a 60% consensus to pass. The DAO is currently working on a project to help rural women in India mine BTC by building solar panels to achieve economic independence and empowerment. Creating such a permissionless decision-making platform helps women bypass unfair traditional systems and compete for capital and influence on a level playing field.

Social Media DAO

Once social networking becomes too popular, it dissipates and loses its meaning. For example, after Facebook lost its credibility feature to Instagram, it quickly became a platform for petitions and special interest groups. The new generation of Web3 social networks caters to this advocacy trend, combining social groups with specific interests and general interest in the field. The result is that social relationships become more purposeful in nature based on the unified mission of each DAO.

Technology integration has also become tighter. To filter out tepid members, FWB (Friends with Benefits) uses a token to allow access to its thresholded Discord groups. Aragon recently partnered with the Witnet decentralized oracle to provide DAOs with off-chain “optimistic” voting using only emoji reactions via Discord.

Metaverse/Virtual World DAO

In the early days of the Internet, there was “Second Life”, an online virtual world with national currency and real estate.Second Life’s “Linden Dollar” was in many ways a conceptual precursor to cryptocurrencies, and now history has completed a cycle with the emergence of Web3’s own virtual world.

One of the most prominent of these was one of last year’s big hits, Decentraland, which claimed to be the first fully decentralized Metaverse that discarded the private keys to its founding smart contracts. The rest of the existing smart contracts are controlled by The DAO as well as Decentraland’s assets. $MANA is Decentraland’s native governance, and token holders can vote on issues such as Security Council membership, development grants, land and heritage policies, what types of wearables are allowed in Decentraland, and content moderation.

Asset Management DAO

Asset management is probably the DAO’s most native crypto use case: it also promises the largest distribution of assets.The efficiencies gained by DeFi’s low-friction architecture translate into relatively high interest rates for stakeholders and investors looking to get a yield on their capital. Once Ethereum switches to Proof-of-Stake by the end of 2021, the entire network will become more cost-effective and no longer need to fund proof-of-work mining and hardware arms races, so one can expect further improvements in its relative offering. In fact, as marginal revenue approaches marginal cost, it is likely that staked Ethereum will converge to the DeFi “benchmark rate” for the entire crypto-economy.

In theory, DAOs can make more informed decisions about where to allocate funds because of the collective intelligence and “swarm intelligence” that emerges when aggregating the experience and insights of multiple independent agents.

Another key point about DAOs from an asset management perspective is their transparency in the use of funds. Using a DAO allows all stakeholders to track spending and hold the DAO accountable. This can be seen in the use of the Aragon Association’s Budget DAO, which is used for day-to-day transactions to provide all stakeholders with visibility into the use of funds.

The representative DAOs are: Decentralize WSB, Pie DAO and Bit DAO. Bit DAO recently raised a massive $230 million from investors including Peter Thiel, Pantera Capital, and Dragonfly Capital. $Bit DAO Token holders will vote on where their funds are invested, making it one of the largest DAOs in the world in terms of assets under management.

Venture Capital DAO

The advantages of asset management under the DAO structure also apply to venture capital. Representative DAOs are: Metacartel Ventures, Angel DAO and Duck DAO.

The Venture DAO, a sub-DAO of the Meta Cartel ecosystem, differentiates itself from traditional VC firms by offering relatively small funding rounds for crypto-native projects, but building a strong user community with substantial additional support . Currently, Venture DAO straddles the crypto and VC worlds by wrapping its Ethereum smart contracts in a Delaware LLC, which does limit its ability to admit new members without permission. Instead, membership has the ability to unilaterally “exit” the full share of the DAO’s assets at any time. So far, they have raised seed and Series A rounds for 20 projects including Rarible, Zapper, and Pool Together.

Insurance DAO

Fundamentally, DAOs are about centralizing risk and reward and taking advantage of the stability that comes with this economy of scale. No industry understands this better than insurance, so it is natural to expect that companies managing risk will start exploring how DAOs can buffer their risk exposure.

Among the insurance DAOs represented is UnoRe, which is working with Aragon to develop a reputation-based DAO to manage a reinsurance system through which insurers cede a portion of their risk portfolio to other parties to reduce the amount of Possibility of paying huge debts. Reinsurance is a huge asset class, but it has historically been difficult for anyone but the biggest investors to acquire.

Uno Re’s broader vision is to create a platform for innovative insurance products, provide a risk pool for retail investors, enable traders to buy and sell risk instruments, and ultimately create a marketplace for freelance actuaries.

Trust Fund DAO

Trust funds have historically been offered only to those who have the resources to establish and manage complex legal structures. Now, though, DAOs can act as virtual trust funds that only require an Ethereum address to launch. This easy access opens financial doors to younger generations who don’t have the same opportunities or instincts to save as older generations. Additionally, DeFi’s high yields should help them reclaim a fairer percentage of society’s total investable assets.

Trusts aren’t just for parents who want to keep money for their kids: Gamers on Twitch or YouTube stars can have full-fledged careers even before they reach adolescence, so kids protecting their wealth will increasingly use DAOs. As with traditional finance, the question of who to trust with administrator rights in a virtual world still applies, but if a dispute arises, arbitration on a platform like Aragon Court is faster and cheaper than any similar family law case.

Company/Project Fundraising DAO

A DAO meets all the requirements of a purposeful organization including: engaged leadership, integrated goals, clear communication, aligned incentives, empowered employees, established core values, performance metrics, and beliefs.DAOs can even enable KPI options to incentivize performance. Aragon Client already includes a module for raising funds that enables crowdfunding to transcend any geographic or legal barriers, and as the world moves towards a more purposeful economy, this combination of human and technological factors is critical for raising and A particularly effective motivator for deploying funds.

The Vita DAO is one such decentralized collective focused on longevity research, and they set out to redraw the broken incentive structure of the pharmaceutical industry by democratizing access and ownership of intellectual property.

Human Capital Contract DAO

In the history of the Internet, people have tried many times to tokenize human capital. In 2013, startup Upstart allowed students to sell a portion of their future earnings in exchange for capital investment. In the cryptocurrency space, Ben Gravis was the first to tokenize himself on the Zap protocol, and among other projects, we’ve seen a gradual move toward what might look like an index of human potential shares.

Brooklyn Nets point guard Spencer Dinwiddie pioneered the field by being the first athlete to tokenize himself on Ethereum. The NBA ruled that his actual contract could not be transferred to any third party, so he issued the Professional Athlete Benefit Token (PAInT) backed by the assets of a newly formed LLC. Only 9 of the 90 tokens were sold, but his experience laid the groundwork for him to create Calaxy: a platform for creators to issue tokens in their own name and discover their value on the open market. As the concept matures, we are likely to see a shift from centralized services to more liquid, permissionless marketplaces where anyone can issue their own tokens, not just athletes and celebrities.

Fan Economy DAO

Fan ownership in sports clubs is well established and the power of fans is growing, as recent news from the European Premier League attests. Talent scouting networks around the world can work together as DAOs to fund promising players in exchange for a share of their future earnings. If fan-owned clubs take on this responsibility themselves, they can vertically integrate entire scouts, agents, coaches, and managers, all funded and managed by one DAO—the ultimate “fantasy league.”

This model could expand to all industries: music lovers would become record label owners and vote for new disciples, art patrons would host biennials, and theatre company DAO would vote for new productions.

Freeholder/Co-Living/Nomad Community DAO

Separate families living in a single building or apartment complex often operate insurance or “sinking” funds to mitigate any joint liability. As LLCs or trusts that require quarterly reporting, these are often very unwieldy structures and can incur substantial compliance costs. DAOs offer a more collegial alternative to pooling funds — even earning interest — while waiting to be used for any contingencies. This feature can also be extended to digital nomadic communities like Permatek, where members will stay for a season before moving on and passing their membership tokens to the next guest.

Media/Entertainment DAO

The industry most affected by the Internet is publishing. However, there are more disruptions in the Web3 proof pipeline.Steemit was one of the first projects to reward contributors with its own token. Satellite went a step further and introduced on-chain publishing, where articles and comments are signed by the wallet to verify the author. Mirror is another platform that now offers collaborative publishing, which sounds like the origins of a fully decentralized media organization.

Political DAO

With debt/asset ratios over 400% in some U.S. states and civic institutions around the world grappling with limited resources, mandated assemblies and community groups are starting to take the lead. This could be anything from community litter pick-up groups, to neighborhood safety, city voting initiatives, or even a national system like DAO in Estonia. A DAO like this could operate on a one-person-one-vote basis, with non-transferable tokens denoting membership, allowing for the flow of new residents.

On the downside, Davidson and Rees-Mogg warn in The Sovereign Individual that the demise of the government could increase the “return of violence” in the short term, requiring communities to address safety and security concerns.Previously, in the words of Thomas Piketty, the bipolar confrontation between collectivism and individualism tended to inhibit progress, but on the plus side, DAOs offer a way to combine individual innovation with collective action.

From a broader perspective, the DAO is effectively the epitome of a political party with integrated finances and directly responsible civil service. Signal platforms like Aragon Voice enable policymakers to conduct quick polls of community sentiment in an efficient and transparent manner before devoting significant resources to preparing for a vote, preventing damaging policy mistakes.

In contrast to traditional politics, DAOs typically focus on one vertical and seek to build expertise in that area, rather than trying to manage multiple domains. DAOs are also largely meritocratic, are globally diverse, and operate more complex voting systems. They were the petri dishes that encouraged governance when Aragon was founded. Decades and gallons of ink were used to perfect the art of congress, but not many were satisfied. Web3 is a grassroots movement that opted out of ideological competition and built an entirely new system from scratch. Cold politics makes cold voters, but in DAOs, voters get immediate, tangible results from their participation. This becomes a virtuous cycle, and when people see their voices heard, they are more motivated to contribute further.

An increasingly diverse DAO can become the organizational structure of Web3, reshaping the way we govern, invest, work, and create, while also expecting to see dramatic changes in the type, quantity, and quality of DAOs.

The above is the whole content of this issue. Interested players are welcome to add WeChat Metaverse Lab assistant for further consultation. Users are welcome to like and forward more. In addition, users who are keen to explore and learn Metaverse and Web3 projects are also welcome to add WeChat Metaverse Lab Assistant, and enter the community to communicate with many encryption enthusiasts.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/dao-a-necessary-component-for-web3/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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