Solana: The ideal soil for DAO and blockchain governance (part 1)

The development of human society is undergoing a great change in decentralization. Although it is impossible for human society to be completely decentralized, decentralization and centralization in our society will coexist in the future, and decentralization will occupy a certain proportion.

With Bitcoin as the representative of the encryption feature is one of the most important currency to the center. This means that they are not controlled by institutions such as the government or central banks. Inspired by the decentralized nature of cryptocurrency, developers have proposed a novel concept-Decentralized Autonomous Organization (DAO).

Smart contracts have become the core tool for DAO to mature. Just like Bitcoin triggered a traditional financial revolution, when the DAO is developed enough to replace traditional organizations, society will usher in major changes.

What is DAO?

What is DAO? Ethernet Square co-founder Vitalik Buterin in his 2014 book “DAOs, DACs, DAs and more: an incomplete term guide” pointed out: “the ideal of self-government organization center very easy to describe – it is a life An entity that exists autonomously on the Internet, but also particularly relies on individuals to perform certain tasks that robots cannot accomplish by themselves.”

Here, no one can decide anything freely, everything is public, and the relevant rules have been written into the DAO through code. As an Internet-native organization, DAO has the potential to completely change the way corporate governance works.

DAO is open source, and theoretically it is indestructible, all transactions are recorded on the blockchain. More importantly, DAO members are not bound by law, nor have they signed any formal legal contracts. For DAO members, the only applicable law is agreement or smart contract.

People are not forced to join the DAO, they can join it after they fully understand the rules. They don’t need to trust any agent on their behalf, they only need to trust the smart contract, and anyone can verify it through the code.

In DAO, maintaining network security and performing other tasks will be rewarded with native tokens. Therefore, blockchain and DAO reduce the cost of management with higher transparency. DAO regulates the behavior of all network participants and coordinates the interests of all stakeholders through the consensus rules bound to the native token.

Compared with traditional companies, DAO is a democratic organization. DAO’s financing is mainly carried out through the issuance of tokens. The governance of DAO is entirely based on the community, while the governance of traditional companies is mainly based on the CEO, the board of directors, and major investors. The operation of DAO is completely transparent, while the operation of traditional companies is private and opaque.

So why create a decentralized organization like DAO?

Developers firmly believe that DAO can eliminate problems such as human error or internal manipulation by delegating decision-making power to all members of the community and an automated execution system. Driven by the Ethereum smart contract, DAO has achieved a great transformation. It also allows investors to send money anonymously from anywhere in the world.

Although DAO has many inherent problems in terms of compliance and security, industry experts and investors still believe that DAO will sweep the blockchain field and may eventually replace traditional companies.

What are the categories of DAO

The Bitcoin network can be considered as the first truly decentralized and autonomous DAO, coordinated by a consensus protocol, and anyone can freely adopt it.

With the emergence of the Ethereum network, the concept of DAO has been upgraded from a blockchain protocol to a smart contract. In the past, a blockchain network and an anti-attack consensus protocol were needed to create a DAO, but smart contracts make it easy to create a DAO, requiring only a few lines of code.

Back in 2019, DAO ushered in a big explosion, with various new concepts emerging one after another. So far, the purpose and business model of different DAOs are also completely different. However, the concepts and theories of DAO itself are still evolving, so the current “DAO classification” method is not the only one.

According to the application scenario:

Investment DAO -with profitability as the main purpose. DAO members make collective decisions, invest together, and can allocate and transfer shares and other assets. For example, MetaCartel, DAOSquare, DuckDAO, etc.;

Funding DAO -can be used to automatically grant development funds based on set standards. For example, Moloch, etc.;

Protocol DAO —mainly token holders participate in protocol governance services, including governance content such as parameter adjustment and business decision-making. For example, MakerDAO, Compound, Uniswap, etc.;

Project DAO — Managed through decentralized governance, token holders can vote on the direction of the project, technical decisions, product forms, etc. For example, Badger DAO, etc.;

NFT DAO — The recent NFT boom has witnessed the prosperity of NFT DAO. In the year of exponential growth in the NFT market, DAO has played an indispensable role in it. For example, Flamingo, Metafactory, etc.;

According to the technical level:

Consensus layer DAO — The consensus layer contains consensus algorithms and consensus mechanisms, allowing highly decentralized nodes to efficiently reach consensus in the blockchain network. Among them, the Bitcoin network has shown that tokens can be used to guide the economic behavior of network nodes. In addition, there are Ethereum, Dash, Polkadot, etc.;

Application layer DAO —The application layer has various application scenarios and cases, and is a product that users can really use directly. For example, MakerDAO, Moloch, Aave, etc.;

Middleware DAO —mainly a decentralized infrastructure that supports operations and collaboration, and provides tools for governance. For example, Aragon, Moloch, MetisDAO, etc.;

DAO ecology and development on Solana

Since the failure of the “The DAO” project in 2016, many once smashing “new stars” have been born in the DAO field, such as MakerDAO, Aragon, MolochDAO, etc., all of which are based on the Ethereum ecosystem.

However, although we have witnessed the maturity and growth of the Ethereum ecosystem, it is too early to put it into operation on a large scale and it will take more time to develop.

As the Solana ecosystem matures, we have clearly discovered that DAO can further grow on the basis of Solana.

At present, many well-known blockchain projects have fully introduced decentralized governance mechanisms, especially projects in the DeFi field. The following is the Solana blockchain project using the core mechanism of DAO:

Solstarter

Solstarter not only aims to become the top publishing platform on Solana, but also provides more features shortly after its launch. These are practical features that have not been seen on other publishing platforms before.

Solstarter’s goal is to establish a DAO for any governance decisions regarding token mechanisms, potential buybacks, and ecosystem spending. Solstarter plans to launch DAO in the third quarter of this year, which will give more power to the community and achieve a more decentralized system.

ICHI

ICHI is a self-maintained, community-managed infrastructure that enables any cryptocurrency community to create and manage their own, non-custodial oneToken (a stable currency worth $1).

ICHI introduces an innovative DAO-like governance model for the overall decision-making of the entire platform development, incentivizing the adoption and encouraging its members to make a real commitment to the ICHI community.

Squads

With Squads, users can easily deploy DAO on Solana within minutes. Squads is taking a path to democratize DAOs so that small teams can use them. This is achieved through the scalability of the Solana blockchain.

Voting consensus is a key part of any DAO solution. The DAO deployed through Squad uses smart contracts to determine the voting consensus among members. Squad generates a unique equity token among its members, which can be used for voting or selling and trading.

Lido

Lido DAO is a decentralized autonomous organization that manages the liquidity pledge agreement by determining key parameters (such as setting fees, assigning node operators and oracles, etc.) through the voting rights of governance token (DPG) holders.

Chorus One, a professional service provider for PoS nodes, proposed to Lido DAO to provide staking services for Solana, and the vote has been passed. The liquidity pledge agreement “Lido for Solana” governed by Lido DAO allows the token stSOL to be obtained through Lido pledge of SOL , so as to introduce liquidity into Solana and integrate stSOL into the Solana DeFi ecosystem and other areas.

Hiro

Hiro’s LaunchDAO is a DAO composed of consumers, which is open to retail DeFi investors for passive risk investment. Creators can show a roadmap of their innovative ideas, show scalability, and proof of self-investment.

By reaching the DAO voting threshold, the creators persuaded people to vote for the project to enter the next stage of the HIRO Launch Chamber. Hiro puts the goal in front of creators and also shows market interest to risk-averse investors, excellent projects will be guided to success.

Concluding remarks

From the above example, it is obvious that many blockchain projects built with the concept of decentralization are moving towards the ideal path of achieving complete decentralization.

In addition, it is important to note that the more community members a DAO has, the more decentralized it becomes. This is why many blockchain projects allow the project to be centralized to a certain extent before realizing the characteristics of a mature DAO at the initial development stage of the project.

DAO still represents a new form that may change corporate governance. More and more organizations may adopt DAO technology to automate and democratize their business. The goal of establishing a transparent, decentralized, and autonomous organization is becoming closer and closer.

We believe that the DAO era has come. Solana will become an ideal soil for DAO and blockchain governance based on its scalability, interoperability, and operability.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/solana-the-ideal-soil-for-dao-and-blockchain-governance-part-1/
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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