Interpretation of DAO trends in 2022: DAO is also right

This research report published by the original BE Ventures, ice river Web3 laboratory is exclusively licensed and editing.

Author: BE Ventures Wang Jieqiao

Since the release of Bitcoin’s white paper in 2008, blockchain technology and some of the cypherpunk-attributed liberal thoughts carried by it have been developing in an unstoppable way:

  • The concept of smart contracts builds an endless stage of practice with the concept of decentralization and trustlessness;
  • DeFi absorbs and innovates the tools of traditional financial economy, laying the foundation for its subsequent seeding;
  • NFT uses cryptography to further connect virtual and reality;
  • Various Dapps carry countless imaginations and play a role in the application layer.

Their significance does not stop at the original Satoshi Nakamoto’s idea of ​​establishing a peer-to-peer electronic money payment system, but constantly penetrates into the economic/cultural/political and organizational forms of human society.

Of course, the development of social structure from the nomadic era in the primitive age to the gregarious settlement in the farming era, from the feudal city/hierarchy system to the modern state/company system, are inseparable from the establishment and improvement of the organizational structure, and the proposal of DAO seems to be To answer this question. This concept was first mentioned when Vitalik released the Ethereum white paper in 2014 and mentioned blockchain-based decentralized autonomous organizations (blockchain-based decentralized autonomous organizations). It is regarded as a spark that impacts and innovates the traditional organizational structure and even the structure of production relations.

If blockchain, smart contract, NFT, DeFi protocol and DApp are all tools, how does DAO use them to create new things and build forms? Why did it happen and how will it develop? If we are willing, how should we ride the tide of the times to join it? These are the questions that this article will try to answer one by one.

Meet DAO 

To truly understand what DAO is, in addition to the concepts mentioned in the preface, [Web3.0] and [Metaverse] are both inevitable topics. Web3.0 and Metaverse have accelerated the digitalization/virtualization and globalization process of today’s world. As an attempt to answer the question of how/in what role do we participate in this process, it is worth trying to define and describe it. what.

What is DAO?

Linda Xie of Scalar Capital, an investment institution, gave a good answer in her article “A Beginner’s Guide to DAOs”: Decentralized Autonomous Organization (DAO) is a group organized around tasks. A set of shared rules implemented on the blockchain is coordinated. In the definition, “decentralized” means that it is destined to be anti-monopoly and governed; “autonomous” is because it is based on smart contracts, which are essentially applications or programs running on public platforms; “area” “On the block chain” determines its transparency and openness; “around the task” means that the members of the organization will plan to achieve a specific purpose.

Coopahtroopa gave DAO a broader definition: DAO is a promise to share value with the community . What DAO seeks is:

1. Make members have the right to speak through governance.

2. Flat organizational structure to establish a smooth workflow.

3. Reasonable resource allocation to achieve common goals.

Some other general explanations:

1. DAO is an Internet community with shared missions/goals/concepts and financial accounts.

2. The organization basis of DAO is the code submitted to the public account book, not the article submitted to the judicial authority.

3. DAO allocates funds according to group priorities, encourages participation, and punishes anti-social behavior, bottom-up, flexible and loosely organized.

All in all, DAO is actually a blockchain-based Internet organization. This structure enjoys all the characteristics of blockchain, including transparency/decentralization/trustlessness, etc. At the same time, it also has the problem of organization, a structure with social attributes, including structure/leadership and governance/ means of production and production relations. It is naturally endowed with certain common goals or values, and is motivated by a consensus on the means of production.

In the end, whether it is a discord group with 10 members and 1 ETH, or a DeFi protocol with more than 10,000 token holders managing more than $1 billion in assets on the chain, the problems DAO hopes to solve are:
More and more supporters believe that DAO has the potential to reshape the way we work, make collective decisions, allocate resources and wealth, and solve some of the world’s biggest problems.

Similar concepts

Vitalik Buterin wrote an article about DAO and other confusing [incomplete term guide], including DAO (decentralized autonomous organization) / DACs (decentralized autonomous company) / DAs (decentralized application) / DOs (Decentralized Organization) / AA (Autonomous Agent). These concepts are distributed in the quadrant with the degree of automation and scope, and the presence or absence of internal funds, as shown in the figure:

Interpretation of DAO trends in 2022: DAO is also right

DAO = internal funds + core of automation + man-made methodology.

Ethereum and DAO

Few people know that DAO is actually the reason why Ethereum was originally created. In the beginning, the co-founder of Ethereum, Vitalik Buterin, mentioned decentralized autonomous organizations in the introductory paragraph of the 2013 [Ethereum White Paper].

The DAO

The DAO was launched on April 30, 2016 and is an early Decentralized Autonomous Organization (DAO) and venture capital fund. 11,000 people invested 11.5 million ETH, which accounted for 14% of the total supply at the time, worth about 150 million U.S. dollars, and they planned to jointly invest in crypto projects.
Two weeks after the project’s crowdfunding campaign, TechCrunch wrote: “.”
However, in less than two months, the hacker attacked The DAO and withdrew 3.6 million ETH. At the time, this was about 50 million U.S. dollars. Today, if there is no fork, the ETH stolen by hackers from the DAO will be worth 14.4 billion U.S. dollars, making it one of the most expensive hacking attacks in history. After that, the Ethereum core team resolved the event that might lead to the collapse of Ethereum in a way that is still controversial today: a hard fork. Although the pockets of Ethereum and the fundraiser were kept, most people’s illusions about the DAO concept were extinguished by this.

Why DAO 

Because of The DAO incident, the development of DAO has entered an ice age. But its vitality is still bursting with new sparks because of its own narrative and characteristics.

The difference between DAO and traditional organizational structure

In the traditional corporate structure, organizational decisions are in the hands of very few people. There are shareholders, board of directors, CEO and other roles in a company, and there are often complex interest relationships between these roles. The members of the organization did not actually participate in its major decision-making and development process. Even in today’s affirmative organizations that advocate freedom and openness, centralization is still the mainstream.

As mentioned in the Understanding DAO section, DAO (Decentralized Autonomous Organization) is a decentralized autonomous organization that is not affected by any centralized body. It uses open source code programs to make decisions, and the organization’s financial records and programs are stored on the blockchain. One of its main benefits is that they are more transparent than traditional companies, because anyone can view all actions and funds in the DAO. This greatly reduces the risk of corruption and censorship. Shareholders of listed companies can only regularly understand the financial status of the organization. Since DAO’s balance sheet exists on the public blockchain, it is completely transparent at all times, including every transaction.

Interpretation of DAO trends in 2022: DAO is also right

The necessity of DAO 

DAO and blockchain

Although there are lingering shadows caused by technical problems under The DAO incident, blockchain technology is always decentralized but with the underlying narrative and fundamental guarantee. With the establishment of more and more ecology and projects in recent years, more and more open source and transparent code. Various technologies have been constantly scrutinized and polished in practice, which has already laid a good foundation for the above architecture.

DAO and DeFi (Decentralized Finance)

DeFi is equivalent to acting as the economic foundation of the chain. DAO and DeFi also have many intersections.

1) The establishment of economic foundation

In recent years, the rise of DeFi (decentralized finance) has provided the superstructure with a more complex open financial system and more diverse financial tools. At the same time, DeFi does not rely on banks or other traditional systems, making the process on the chain more convenient and safer. These infrastructures make it possible for community members to get corresponding considerable rewards for their contributions. This also inspires and attracts more outstanding talents to join the organization.

2) Innovation in incentive methods

Whether it’s the rewards and rewards for members’ contributions, or the way users get rewards by lending/pledge or other means to provide liquidity for the agreement, more and more DAOs are beginning to adopt fungible/non-fungible tokens. Economic stimulus is issued in the form, so that the team and members can enjoy the value of the token and other value-given multiple benefits.

3) Narrative transfer

Developers have gradually realized that they can attract funds to the new DeFi primitives through revenue farming. DeFi’s revenue aggregator Yearn Finance (YFI)’s “Fair Issuance” (where all Tokens are distributed to funding providers, and project developers do not have Tokens. )” The concept transfers the narrative from venture-funded projects to community-funded projects. Once YFI goes online and achieves rapid growth, many competitors will start “cloning” and “counterfeiting”, and promise to make improvements, but more importantly, the launch of a new DAO governance Token.

In addition, as DAO manages more and more DeFi assets, and more and more community members participate in the governance of DeFi projects (even if most members participate in governance voting due to considerable incentives), it is foreseeable that there will be More DeFi products interact with DAO, and DAO will also become the guardian of DeFi products.

DAO Yo NFT (Non-Fungible Token)

NFT is an important part in the context of Metaverse, it is a claim and guarantee of ownership. DAO is on top of NFT—�?/font>

DAO �?WEB3.0

If you think that Web3 is the inevitable future, then DAO, as the primitive of its organizational construction and operation, is increasingly occupying the center of the future. For more information, please refer to messari’s 2021 annual summary report.

The development status of DAO 

After realizing the advantages of DAO and its inevitable, compared with traditional governance models and methods, what types of DAO has developed? How does he achieve decentralized governance? For these questions, I will connect some cases in a variety of classification methods and introduce them separately, hoping to provide readers with a more comprehensive perspective. For these questions, I will connect some cases in a variety of classification methods and introduce them separately, hoping to provide readers with a more comprehensive perspective.

Roughly classified

DAO, as an organizational governance paradigm for collective decision-making, is roughly represented in three forms: consensus at the protocol layer; decision-making at the application layer and middleware services.

  • Basic/protocol governance:

1) Governance takes place off-chain:

Bitcoin: A peer-to-peer payment system, the originator of blockchain consensus.

Ethereum: An open source public blockchain platform with smart contract functions.

2) Governance occurs on the chain:

Tezos: A Turing-complete smart contract blockchain where participants can directly control network rules.  

Polkadot: A scalable heterogeneous multi-chain system that verifies dynamic data structures through a relay-chain.

Cosmos: Known as the “Internet of Blockchains”, it aims to connect various blockchains.

  • Tool architecture layer:

Colony; Aragon; DAOstack; Snapshot 等;

  • Application layer:

theLAO; Moloch DAO; makerDAO; Compound etc. Continue to subdivide according to different application scenarios:

1) Investment Orientation-DAO financing to invest:

Moloch DAO /MetaCartel

BitDAO

theLAO

2) DeFi-oriented-burst of vitality:

makerDAO

Compound

Uniswap /Sushi

3) Service-oriented-DAO that provides certain specific services:

DaoHaus

ASB

Deep DAO

4) Cultural orientation-DAO formed due to various cultural models:

NFT/Collection/Culture/Game: Flamingo/PleasrDAO/BAYC

Media/platform: BanklessDAO /Mirror

5) Practical orientation-A DAO with specific functions/purposes as the center:

ConstitutionDAO

DAO initiated by various communities

Main case

  • Bitcoin: the first DAO

as stated before,. Although it is simple, straightforward, and even a little stupid, it cannot be changed and does not really do anything, but from the perspective of removing human management and laying down rules, Bitcoin has completed the most basic tasks.

  In the pre-Ethereum era, DAO was embodied as Bitcoin’s on-chain consensus and community governance. With the diversification of the underlying public chain, the implementation of DAO has also differentiated. The formulaic negotiation model of off-chain proposals represented by BIP has provided continuous support for network upgrades, but there are still disputes over development efficiency and on-chain execution. Later, the governance logic for automatic upgrades on chains such as decred and tezos appeared.

  • Moloch DAO: Sacrifice and Baptism

Moloch, the ancient literature mentions the god Moloch, often accompanied by records of burning children. For burning children, the traditional explanation is to burn the children as sacrifices alive in front of Moloch. However, some people think that this is not the case. It is a purification ritual performed with fire, which is of course more dangerous.

  It is an Ethereum fund plan. To join, you first need to provide a tribute (currently 10 ETH), and the voting consent of existing members is required to become a member of Moloch. It aims to provide financial support (crowdfunding) for Ethereum’s infrastructure projects. As of the time of writing this article, Moloch DAO’s contract has received 7,718 ETH and issued 5,556 ETH, and there are still 2,162 ETH in the union bank. However, most of the more than 5,000 ETH issued are not subsidies, and a considerable part of them are voluntary withdrawal of members.

  • MakerDAO /Compound: DeFi and DAO begin to merge

If blockchain technology and governance are only concentrated in the fanaticism of encryption enthusiasts and geeks, then governance can only be the self-entertainment of a few people. The real involvement of a wide range of users in governance often starts from the application layer. makerDAO is not only the originator of DeFi, but also the beginning of the practicality of DAO. This kind of application layer protocol directly facing end users makes people truly feel the rights they enjoy as currency holders.

The off-chain discussion is conducted through the forum. If these issues are supported by the majority of people in the forum, you can vote on the chain, and the result of the vote will be written. Voting is based on MRK, and each user holding the token can participate in governance. In the MakerDAO forum, the reputation system of the user account will indirectly affect voting.

at the same time,

In June 2020, its core developers decentralized their rights and transferred the operation and ownership of their network to the community. Unlike the previous DAO, the Compound Governance DAO gives community members control over the agreement and reserve assets that are generated by charging borrowers and lenders for revenue. Compound proposed a novel Token distribution model, which aims to stimulate the capital growth of the chain protocol and provide users with a more suitable loan price. In this model, users who provide liquidity for the agreement or create a loan relationship through the agreement will continue to receive the native Token (COMP) from Compound as a reward. This allows every user of Compound to become a direct stakeholder, which allows many users to become active contributors and voters in the community.

These financial incentives play a vital role in controlling key parameters such as margin requirements and interest rates. Compound’s Token distribution method makes us seem to see the realization of the dream of decentralization, that is, the control of protocols (and cash flow). Since the compound agreement has billions of dollars in assets and pledged assets that need to be governed, a new type of community-native DAO has emerged. Participants have clear reasons to use their time, assets, and votes in the governance of the online community. Because only the growth and development of online communities are related to their personal interests.

  • BanklessDAO: A valuable sample of decentralized collaboration

BanklessDAO originated from Bankless, a media founded in 2019. It was originally a newsletter that tracks the dynamics of the encryption industry. Although the proposal to launch Bankless DAO was initiated under the initiative of Bankless media, Bankless DAO is a product of community consensus. It has no legal entities in the traditional business society and is completely independent of Bankless media operations. There is no overlap between the two at the business level and the legal level.

Participating in collaborations and conferences needs to become a member, and the condition is to hold a certain number of BANK tokens. However, this is more voluntary, and there is also a dedicated channel for applying for a special pass on the server. If you introduce yourself and the direction of interest in that channel, you can easily apply for a guest pass, unlocking all kinds of speeches and participation in collaboration. Features.

Moreover, BanklessDAO has its complete economic performance and organizational structure. The former is reflected in the management and use of its internal fiscal funds relying on the joint promotion of the fiscal union, appropriation committee, and multi-signature group; and the organization (Treasury Guild) is roughly equivalent to the CFO + finance department of a traditional organization, which does both financial planning and arrangement. Financial supervision and basic accounting work. Compared to the randomness of other unions, everything here is very serious, and most union members do have considerable financial management skills.

  • ConstitutionDAO: Inheritance of DAO spirit

Constitution DAO. . It began with the auction of one of the only 13 official versions of the US Constitution on November 14, 2021. In order to bid for a copy of the U.S. Constitution, people in the cryptocurrency industry established the DAO organization ConstitutionDAO to raise funds by issuing $PEOPLE tokens with 1 ETH: 1 million $PEOPLE. According to official statistics, 17,437 users participated in the donation.

Although after the auction failed, users who made donations could redeem ETH in a fixed proportion, but a large amount of $PEOPLE remained as a token and consensus symbol. And because it was minted from ETH that participated in the auction and donated, and can always be burned to exchange for ETH, $PEOPLE, like Bitcoin, has the characteristics of deflation.

problem 

Undoubtedly, DAO’s decentralized governance model does have advantages over traditional governance models in terms of governance democratization. DAO can also maximize the participation of stakeholders in the decision-making process and realize the transparency of governance that traditional governance models have always kept secret . However, it is in its early stages of development, but DAO still has the following problems and challenges:

1) Centralization and decentralization: the trade-off between on-chain and off-chain

Communication and decision-making efficiency: The democratization of the decision-making process inevitably brings about the lack of decision-making efficiency. When all the minute decisions need to go through the voting process to make a decision, the communication cost increases sharply, and the progress may not be as expected.

Risk prediction and control: Because the foundation of autonomy lies in the preparation and formulation of smart contracts, DAO relies heavily on the formulation of early rules and the prediction and emergency response to risks, and it will inevitably fall into a centralization trap.

2) Profit-driven and community structure: DAO has a low concentration of interests and a loose organizational structure. Therefore, the DAO still risks eventually falling into the mob politics of “Spartan democracy.” In addition, excessive reliance on material incentives to attract more community members to participate in governance (especially in DeFi-type DAOs) is actually preventing them from participating in random voting. Most people just vote for incentives, so giving incentives to vote actually reduces governance efficiency and makes it more difficult for proposals to pass.

3) Compromise and voter indifference: Just like the recent incidents in SUSHI, if there are vested interest groups in the organization and they have a certain right to speak and proportion of power, then democratic governance will exist in name only. At the same time, there is also insufficient voter participation.

4) Signal-to-noise ratio: The low barriers to entry lead to large differences in professionalism, behavior patterns, and communication among members. A large amount of information may overwhelm those truly valuable voices.

Ideas and examples

1) Progressive decentralization. A governance framework proposed for the problem of centralization and decentralization takes decentralization as a three-step process to solve, and its goal is to “build a sustainable, compliant, and community-owned product”:

Product-market fit: The early stage should be the same as the early stage of any start-up company: a small dedicated team that puts all energy into construction, learning and iteration until it finds a product suitable for the product market and explores the values ​​and goals of the real team .

Community Participation: Once a company has achieved product and market fit, it should begin to try to get more stakeholders to participate more directly. You can consider how to use fees and tokens to incentivize continuous contributions to increase community participation and loyalty.

Enough decentralization: After the team successfully completes the first two steps, they can distribute tokens to the wider community. This is an alternative to traditional IPOs, SPACs or acquisitions. It is called “exiting the community” and is the point where the project or company becomes a DAO. Complete the formulation of various rules and the control of direction by triggering smart contracts.

2) Multi-dimensional governance. A possible example is that the triggering of rules in smart contracts depends not only on the opinions expressed by members, but also on future market conditions, specific realizations at a certain time, or the intersection of time and space.

3) Meta-governance. In the article “When we talk about blockchain governance, what are we talking about?” pointed out that general governance includes three levels of rules, namely:

Rules of operation. Refers to the rules that affect daily decision-making, on the chain, mainly for its functionality. For example, what level is the stable fee rate of makerDAO maintained, the gas upper limit of Ethereum, and so on.

Collective selection rules. Refers to the rules used when formulating operating rules, on the chain, mainly for its governance. For example, when makerDAO wants to change the stable rate, what rules does it rely on? What does Ethereum rely on when it wants to change the gas upper limit.

Constitutional choice rules. Meta-governance refers to the rules used to determine who is qualified to formulate rules affecting collective selection. On the chain, the design of this level is still not sound. For example, Ethereum uses full voting to determine the handling of the DAO event. Although in terms of mechanism, the blockchain can choose to hard fork to avoid this problem, but the importance of this rule (meta-governance) still cannot be ignored.

4) The advantage of anonymity. For the problem of complicity, perhaps it can be done with the help of on-chain or off-chain applications for identity verification and privacy protection. Verify identity to achieve one person, one vote, and anonymity to eliminate celebrity effects.

Dive in !

This paragraph mainly discusses some basic methodology, that is, how to join the wave of the DAO era.

Choose DAO 

Before choosing or joining a DAO, it is important to understand your role and purpose. This will help you find an organization that you are willing to invest time or money in and bring you back in the future.

Some reference suggestions and standards

  • Beware of the decentralization trap: Although DAO is different from the traditional corporate structure in all aspects, don’t blindly think that differentiation and blind decentralization are good. Regardless of whether it is a bottom-up or top-down composition, whether it is loose or strict, pay attention to its degree of community participation and discussion, as well as its ability to deal with risks.
  • Understanding the vision and values of the project : is the only way to improve initiative and confidence in the project.
  • Focus on innovation: Capital tends to reward projects that are willing and able to innovate more.

Join DAO 

If you still have doubts about DAO or the crypto world, you might as well start a new journey with experiential learning. Rabbithole is one of the most exciting trends at the forefront of the cryptocurrency field: “learn to earn” .

It will provide some basic tasks to help users quickly understand and familiarize themselves with the world, and get token rewards.

Jump into the rabbit hole

Let yourself have an [Ethereum Wallet] address, and then jump into the rabbit hole!

Everyone is an enabler

 DAO is similar to current Internet products in a way-user stickiness is the most powerful weapon. When each user joins the organization, the common belief, construction model, governance method, achievement and stability of the organization are also consolidated and exercised again and again. For individuals, only by transforming from bystanders, speculators, and investors to builders, can they truly enjoy the dividends of the industry and bring unexpected results.

Create DAO 

As a community builder, or someone who intends to accomplish certain goals in the form of DAO, the following content needs continuous polishing and thinking.

Ideological preparation: establish the values, vision and goal pursuit of the organization or community.

Tools and services

In terms of tools, learn about Aragon/colony/moloch and other tools for creating DAOs. It is recommended to use the most powerful and fast [Aragon] currently.

Several key governance areas

  • Collective asset management: Formulate the system and rules on fundraising-distribution-management. It even considers the question of how the internal economic system of the organization will achieve a positive cycle if it develops and grows in the future.
  • Risk management: As DAO’s assets are usually risky assets, it is particularly important to manage their currency risks to protect the source of funds for future business. Some DeFi and NFT DAO’s vaults have hundreds of millions or even billions of dollars in assets. These assets are used to fund development and audits, provide insurance protection for underlying agreements, and spend on user growth and acquisitions.
  • Asset curation: Asset curation is generally carried out in NFT collection DAO, such as PleasrDAO. These DAOs also naturally act as art and cultural curators, and the DAO governance token is used to vote on the increase or decrease of curatorial assets. The quality of assets measured by Token distribution, liquidity, difficulty in price manipulation, and historical transaction volume is of great importance to DAO. Most of these DAOs use governance tokens as implicit or explicit insurance funds to be able to repay borrowers in the event of adverse events. Therefore, for them, it is very important for them to be cautious in selecting assets and set reasonable parameters for them.
  • Incentive methods: Reasonable incentive methods can help organizations quickly and firmly gather talents and become a key factor in DAO governance. Because in the absence of financial incentives, members of the network have no reason to invest time, money and energy into the network, and there is no reason to vote on the proposals for improvement measures in the DAO, and no one cares whether these proposals are Can continue to develop and achieve success.

Financial incentive: Refers to the remuneration paid for the labor of the members.

Growth incentives: value dividends obtained from holding the Token of the community.

Encapsulated farming: the income earned by participating in community-related affairs and activities.

Retrospective airdrop: In order to spread awareness, establish ownership, or retroactively reward early users.

After considering the above issues, how to operate a DAO is another larger topic, which mainly involves the use of governance tools, splitting smaller subgroups, and recruiting specific employees.

Judging from its essence, the governance of DAO is actually to figure out who is involved in governance, what is governed, and the rules used by governance. Drawing up these specific details according to the organization’s goals and specific rules is particularly important for the governance of the DAO.

Summarize 

DAO’s source of competitive advantage

In the long run, in order to realize Vitalik’s vision of no manager in the company, DAO needs to have a competitive advantage over other forms of organization and governance. So let us analyze the advantages and disadvantages of DAO based on the theory mentioned in Hamilton Helmer’s “Seven Powers: Business Strategy Foundations”.

Scale effect: That is, a company whose unit cost decreases as output increases. In theory, this enables organizations to reduce the cost of each new unit they produce or new users they accept. The DAO structure can also reduce labor costs by paying for many services on demand. Compared with traditional organizations, it has fewer frictions, but lacks inherent strength and advantages.

Network effect: As new users join the network, the value of the service to each user will increase. For DAO, the user is the owner, and every time other people join the DAO and/or use the agreement, the user’s token will theoretically become more valuable. In addition, as DAO becomes stronger, more people build on it, which makes it stronger and attracts more people.

Reverse positioning: That is, the newcomer adopts a new and excellent business model. Although it causes damage to the existing business, the incumbent will not imitate this model. DAO can build a powerful moat against its existing counterparts just by its nature.

Switching cost : the value loss expected by the customer due to the replacement of suppliers for additional purchases. This is a tricky question. On the one hand, DAO members will incur switching costs, because if they switch to a competing DAO, the tokens they own in a DAO may become less valuable, but as the SushiSwap example emphasizes, based on the blockchain The protocol can be forked into a new, very similar protocol compatible with the existing protocol. Although this scores low as a moat, the low conversion cost is part of the beauty of the DAO: it creates a Darwinian dynamic in which agreements are constantly competing to keep its stakeholders happy and well compensated.

Brand effect: that is, objectively the same product has the lasting attributes of higher value, and the product is derived from the seller’s historical information. If you consider Bitcoin as a DAO, look at the contributions of its believers and holders.

Limited resources: that is, to obtain coveted assets that can independently increase value on attractive conditions.

The power of the process: that is, a fixed company organization program and activity set to achieve lower costs and create better products. As far as a single DAO is concerned, due to the loose structure of governance processes and personnel, this ability is its weakness, and these programs and activity sets can be modified at any time based on votes, making DAOs slightly inefficient in terms of efficiency. But for the entire ecology, constant trial and error and innovation can often produce unexpected results.

In short, by providing economic incentives to DAO users, contributors, and the wider stakeholder ecosystem, and allowing these stakeholders to have a say in the governance of the DAO, the DAO has the opportunity to build an incredibly strong moat. In the above-mentioned theories embodied in the competitiveness of traditional enterprises, DAO has the most powerful network effect-once DAO reaches the speed of escape, it is difficult to slow down or ban it, especially considering that community governance means that it should be able to be considered by the community Adapt and develop long-term value in a way that can create maximum benefits.

Prophecy and mission 

Generally speaking, the development of DAO is still in the early stage of exploration. It is still far from Fukuyama’s assertion in “The End of History” that democracy will “become the ultimate form of governance in the world.”

Francis Fukuyama reveals the essential source of the birth of order in contemporary civilization in the book “The Great Break”: “It is no longer considered to be the top-down grant and acceptance of political or religious hierarchical authority, but is considered to be based on scattered individuals. The result of self-organization on the previous page.” In a self-organizing blockchain world with no authority, no coercive force, the exploration and construction of order may be the most interesting and important intellectual development.

Since the first day of the birth of the blockchain, all contributors have been sending ideas to a basic question, which is also the question of the world’s encrypted organization: “How will the dispersed individuals in the information vacuum environment be formed? Unify the goal and work together to achieve this goal in collaboration?”. In the real world, we created the discipline of sociology to answer this question. In the encrypted world, organizational relationships are defined as consensus by code. The unique product that this blockchain originally bred has also received a name full of Oriental Zen flavor: DAO. After 13 years of growth to the present, it is still very new and gives a hippie feel. One possible answer is that it seems unreasonable to hand over ownership and control of the project or company to the community. However, as long as you understand and think about DAO a little deeper, you will find that stakeholder ownership is a natural state of things, and we did not have the technology or model to coordinate such widely distributed governance and ownership.

Outlook 

With the development and maturity of DAO, more and more traditional/encrypted investment institutions have joined this wave of paradigm shifts in modern social organizational structures and social forms. I think that in the future trend, DAO will gradually break the shackles of traditional and encryption industry concepts, so that more young people will join in, builders who are good at and willing to accept new things will get the dividends of the industry; DAO will bear stronger Early value discovery function, gathering larger-scale basic funds and uniting the most active and enthusiastic practitioners and promoters of ecological development; while playing a role in more tracks and fields, constantly exploring localization issues in the governance model; industry Type key indicators will be established, and new organizations that surpass traditional Internet giants will emerge. DAO, as a governance exploration of new organizational relationships and social structures, will surely inject continuous momentum into the development of Web3.0 and even the Metaverse.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/interpretation-of-dao-trends-in-2022-dao-is-also-right/
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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