Unless you’ve ever tried to navigate financial regulation or build a charity, it’s hard to understand the revolutionary nature of Decentralized Autonomous Organizations (DAOs). The latter can take years and involves recruiting trustees, choosing an organizational structure, writing management documents, and obtaining approval from the National Charity Commission, along with supporting documentation and proof of income. By contrast, a fully functioning Aragon DAO, with transparent treasuries and direct democracy for all members, is a sovereign digital jurisdiction that can fund projects in under 5 minutes. DAOs are not subsidized by the government like charities, but the possible increase in subsidies can be subtracted multiple times in time and administrative costs. When society grasps that self-organizing in this way will be much more efficient, we will see a Cambrian explosion of democratic activity that does to organization what the Internet did to communication.
The history of the DAO began in 2016, when Slock.it launched “TheDAO” on Ethereum as a way to coordinate investment and governance of TheDAO’s token pool. At the end of the 4-week sale, $150 million worth of ETH had been deposited in exchange for 1.2 billion tokens, each priced at $0.01 in ETH. Solidity — the language used by TheDAO’s smart contracts — is only a few months old and lacks the documentation and tests needed 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.
5 years since TheDAO hack, Solidity has accumulated decades of developer time and is used in millions of smart contracts, managing over $100 billion. At the protocol level, the complexity of this space has surpassed that of traditional finance, as some businesses, such as flash loans, are not comparable outside of decentralized finance (DeFi).DAOs are also superior in application and can be customized for various types of governance and voting. Any isomorphism between them is more likely to be driven by normative factors, such as well-established best practices for attracting liquidity and capital, rather than any legal imposition or technological constraints.
That said, DAO is still very early on the adoption curve — the equivalent of a 56k dial-up modem on the internet timeline.This is not just because of how unfamiliar cryptocurrencies are, and not just because of the complexity of the DAO framework, but in large part because the space is legally uncertain. Currently, jurisdictions such as Wyoming allow DAOs to register as LLCs, but founders still risk being reprimanded by securities laws if they promote tokens to unaccredited investors. But in theory, any DAO that succeeded in delegating all decision-making power to token holders would have the same status as Bitcoin or Ethereum: due to the lack of substantial control by any one person or company, currently not controlled by the U.S. SEC counts as securities. In addition to this indecision among developers in dealing with financial authorities, there are significant technical hurdles to overcome before transactions can be fully executed collectively and confidently go beyond the confines of securities laws.
Despite these uncertainties, the DAO space is developing at an incredible rate.
Developers are educated on remote collaboration through tools like Github, they are the most critical resource for building Web3 infrastructure, and as a result, developers are among the first to build as DAOs.
BadgerDAO is a community dedicated to bringing Bitcoin to DeFi, specifically offering BTC as collateral. Most of Bitcoin’s bridge into DeFi is centralized, so in the absence of a legal entity, BadgerDAO members collaborated to fund and build a synthetic tool called $DIGG that uses elastic supply to track Bitcoin’s price , to stick to the hook. They also built a yield aggregator called $SETT focused on wrapping $BTC assets. The governance of the DAO, including its treasury, is mediated by the $BADGER token: 10% of the tokens in circulation are required to participate in any vote, and after seven days a quorum of 50% is required.
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. The first round, GR10, has raised $1.1 million in community funding from about 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.
The interface between distributed ledgers and external data is a weakness of the DeFi stack, as the blockchain cannot directly query APIs. Instead, they must rely on third-party notary services called oracles to transfer data, with varying degrees of decentralization. To fully close this gap, API3 is building a multi-chain compatible network, governed by the Aragon DAO, to incentivize API operators to serve their own oracles. This is achieved through Airnode, a free and open source middleware that connects any web API directly to any blockchain application.
To join the DAO, Airnode runners can stake $API tokens into API3’s insurance contract. This generates weekly staking rewards that pool their operational risk with other DAO members and grant them voting rights.
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 unions, 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 is a huge asset class right now, and it will only get bigger as yields in traditional money markets fall. Attracting more capital pushes the art market to further reduce friction in buying and selling works. Now, the industry is starting to explore how decentralized currencies and organizations can accelerate progress. The most high-profile adopters so far have been auction houses Christie’s and Sotheby’s, both of which sell NFTs and offer some cryptocurrency payment options. DAOs have the potential to bring this trend to an end by vertically integrating the entire industry stack, from commissioning and curation to buying and ownership.
KnownOrigin is an NFT marketplace that tested the concept of an artistic DAO with OsakaDAO in 2019. As a decentralized collective of patrons, they raised $9 million, and they then acted as a gallery, selling everything for 56% of the profits. 5% of this money is returned to the artist (in addition to their original commission), and the rest remains in the DAO’s treasury at the discretion of the members.
PleasrDAO was originally a Telegram group established to buy NFTs from a foundation called x*y=k created by an artist called plpleasr. The piece eventually sold for 310 ETH ($525,000) and seeded a DAO that now holds some of the most iconic NFTs in cryptocurrencies.
As the DAO user experience improves – especially with the emergence of “no-code” solutions – a growing community of non-developers will start to collaborate and pool their resources into DAOs as they provide when dealing with money management Guaranteed trust. Before DAOs, collectives were limited to a single jurisdiction if they wanted to avoid currency conversion costs, and expensive legal frameworks if they wanted to avoid fragile informal agreements. Many viable projects simply won’t get off the ground because of the friction involved. Worldwide, this amounts to a huge waste of potential. Thankfully, this is starting to change, and traditionally under-resourced or under-represented communities are being heard on merit rather than privilege.
Zebpay – DAO for women
eToro’s 2021 study found that women make up only 20 percent of users on its platform, and other companies report similarly low levels of female participation. To help address this disparity, Zebpay has launched a DAO led by women, powered by Aragon. New members are admitted by majority agreement, and any vote must reach a 60% consensus to pass. The DAO is currently working on a project to help Indian women build solar panels to mine Bitcoin as a pathway to 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.
Community collectives are one area of organization where the DAO’s structure is particularly volatile. DisCO is a “distributed cooperative organization” that differs from the cool, transactional nature of many DAOs, uses an open corporate governance model to coordinate common-oriented work, and is rooted in feminist economics. Their social and environmental causes are akin to public/private partnerships in which nurturing the shared commons is as important as economic production.
Once social networks become too popular, they tend to dissipate and lose their purpose. For example, after Facebook lost its credit feature to Instagram, it quickly became a platform for petitions and special interest groups. This tendency to preach is being catered to by a new generation of Web3 social networks that combine social groups with special interests and aggregate interests in the field. As a result, social relationships have 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 gated Discord groups. Aragon recently partnered with the Witnet decentralized oracle to provide DAOs with emoji-only off-chain voting via Discord.
In the early days of the Internet, there was “Second Life”: an online virtual world with its own local currency and real estate. Second Life’s “virtual tokens” were in many ways a conceptual precursor to cryptocurrencies, and history has now gone full circle with Web3’s own virtual world.
Decentraland claims to be the first fully decentralized Metaverse that lost the private keys to its founding smart contracts.The rest of the existing smart contracts are controlled through the DAO and Decentraland’s assets. $MANA is Decentraland’s native governance, and token holders can vote on issues such as security committee membership, development grants, land and property policies, what wearables are allowed in Decentraland, and moderation of content.
Asset management is perhaps the most crypto-native use case for a DAO: it also promises the largest distribution of capital. The efficiencies gained by DeFi’s low-friction architecture translate into relatively high interest rates for stakeholders and investors looking to gain on capital. Once Ethereum switches to proof-of-stake by the end of 2021, the economic efficiency of the entire network will be greatly improved, and there will no longer be a need to fund proof-of-work mining and hardware arms races, so it is expected that its relative yield will improve further. In fact, as marginal revenue approaches marginal cost, staking Ethereum may converge to the DeFi “base rate” for the entire crypto-economy.
In theory, decisions about where to allocate funds can be made more informed by the DAO, as collective wisdom and “wisdom of the crowd” emerge when aggregating the experiences and insights of multiple independent agents.
Another key point of DAOs from an asset management perspective is their transparency in the use of funds. Using a DAO allows all stakeholders to track spending and holds 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.
Chamath Palihapitiya called the Reddit group r/WallStreetBets “the world’s largest hedge fund” after members of the group found that NYSE: GME’s short interest outweighed the stock’s float, boosting the price from $18 to $340, Force professionals to cover their shorts.
DecentralizeWSB is a nascent attempt to structure the r/WallStreetBets movement into a DAO where investment strategies can be voted on and executed. About 20,000 signers have signed up so far.
PieDAO provides cryptocurrency asset management in the form of index trackers and yield “PieVaults”. The composition of the safe is entirely determined by $DOUGH holders, who also earn a portion of the fees generated by the platform.PieDAO also introduces the concept of “meta-governance,” whereby any governance tokens held in PieVault will be automatically delegated to PieDAO, giving $DOUGH holders the right to vote in the protocol’s governance decisions. This equates to the ability of individual ETF holders to vote on their composition, plus internal decisions on their underlying securities.
The DAO is primarily a grassroots disruptor, and BitDAO recently raised a massive $230 million from investors including Peter Thiel, Pantera Capital, and Dragonfly Capital. BitDAO token holders will vote on where their funds are invested, making it one of the largest DAOs in the world by assets under management.
The advantages of asset management under the DAO structure also apply to venture capital.
Much like a small home office, AngelDAO consists of four equally-voting founders who pool their skills to identify and manage investment opportunities in distributed systems and decentralized finance. Because their administrative burden is limited to the DAO and their own personal finances, founders have more time to provide technical, marketing, and community support for the projects they invest in.
VentureDAO, a sub-DAO of the MetaCartel ecosystem, differentiates itself from traditional venture capital firms by offering relatively small funding rounds for cryptocurrency-native projects, but with a lot of additional support to build a strong user community. Currently, VentureDAO straddles the world of cryptocurrency and venture capital by wrapping its Ethereum smart contracts in a Delaware LLC, which does limit its ability to admit new members unconditionally. Instead, membership is determined by the ability to unilaterally “exit in anger” with access to the DAO’s full share of assets at any time. So far, they have raised seed and Series A rounds for 20 projects, including Rarible, Zapper, and PoolTogether.
DuckDAO went a step further and built a complete ecosystem of yield farming and NFTs around their incubator service, and leveraged the resources of its ~25,000 members to support ~50 investments.
Fundamentally, DAOs are about pooling 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.
UnoRe is working with Aragon to develop a reputation-based DAO to manage a reinsurance system where insurers cede a portion of their risk portfolio to other parties to reduce the likelihood of having to pay large debts due to claims.Reinsurance is a huge asset class, but has historically been hard to come by for all but the largest investors.
Uno Re’s broader vision is to create a platform for innovative insurance products, provide retail investors access to risk pools, enable traders to buy and sell risk instruments, and ultimately create a marketplace for freelance actuaries.
Trust funds have historically been created only for those who have the resources to establish and manage complex legal structures. But now, the DAO can operate as a virtual trust fund that only requires an Ethereum address to get started. This easy access opens financial doors to younger generations who don’t have the opportunity or instinct to save like older generations. Additionally, DeFi’s superior yields should help them get a fairer proportion of total socially investable assets.
Trust funds aren’t just about parents who want to set aside money for their kids: gamers on Twitch or stars on YouTube can have full-fledged careers before they hit puberty, so kids protecting their wealth will be increasingly normal for DAOs use of . In a virtual world, the question of who owns governance still applies to traditional finance.
The DAO meets all the requirements of a purposeful organization as identified by EY Ireland: engaged leadership, integrated purpose, clear communication, consistent motivation, empowered employees, established core values, performance indicators and beliefs. DAOs can even use KPI options to incentivize performance. Aragon Client already includes a fundraising module that enables crowdfunding to transcend any geographic or legal barriers, and, as the world moves toward a more purposeful economy, this combination of human and technological factors is essential for raising and deploying capital. A particularly powerful dynamic.
DAOs are particularly useful in areas where current incentive models are actively running counter to societal goals. The best example of this is the field of intellectual property (IP), which is a veritable “dark forest” of discordant incentives.Invention companies often find themselves challenged by professional “patent magnates” who have registered numerous patents for the sole purpose of enforcing unwarranted claims, even though they have not used the patented technology themselves. An unusual fact in the pharmaceutical industry is that because natural products cannot be patented, researchers are incentivized to focus their efforts on creating new compounds rather than discovering naturally occurring ones.
VitaDAO is one such decentralized collective focused on longevity research, and they are beginning to redefine the broken incentive structure of the pharmaceutical industry through the democratized access and ownership of intellectual property.
Human Capital Contract
In the history of the internet, there have been various attempts to tokenize human capital. In 2013, startup Upstart allowed students to sell a portion of their future earnings in exchange for capital investment. In cryptocurrencies, Ben Gravis was the first to tokenize himself on the Zap protocol, and in other projects, we’ve seen a gradual move towards something that might look like an index of shares of human potential.
Brooklyn Nets point guard Spencer Dinwiddie, the first athlete to tokenize himself on Ethereum, pioneered the space. The NBA ruled that his actual contract could not be transferred to any third party, so he issued a Professional Athlete Equity Token (PAInT) backed by the assets of a newly created 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 find their value on the open market. As the concept matures, we may see a migration from centralized services to a more liquid, permissionless marketplace where anyone can issue their own tokens, not just athletes and celebrities.
fan ownership _
Fan ownership of sports clubs is established, and fan bases are growing in strength, as evidenced by the recent European Premier League. Networks around the world can collaborate as DAOs, funding promising players in exchange for a share of their future earnings. If fan-owned clubs take on this responsibility themselves, they can vertically integrate the entire stack of scouts, agents, coaches and managers, all funded and managed from one DAO.
The model could potentially be extended to all industries: music fans would become owners of record labels and vote on new disciples, patrons of the arts would host biennials, and theatre company DAO would vote on new productions.
The industry most disrupted by the Internet is publishing. However, Web3 is proving that there is more disruption on the way. Steemit was one of the first projects to use its own tokens to reward contributors. 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, the genesis of a fully decentralized media organization.
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. From city voting initiatives to even a national system such as the Estonian DAO. 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.
In contrast to traditional politics, DAOs typically focus on a single 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. 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.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/one-article-to-understand-15-dao-classifications-and-their-utility/
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.