In April 2016, crowdfunding reached 150 million U.S. dollars. The DAO, the first decentralized organization in history, appeared as an open source distributed software and launched a venture capital fund. But within 2 months, the company was hacked and dissolved. This failure did not extinguish the enthusiasm of future generations to explore. In recent years, the overseas DAO organization form has initially taken shape. As an innovation of corporate organizational form, DAO has received a lot of attention, but at the same time, there are endless doubts about its sustainability and safety. At the turning point when the giants are seeking to change, where does the DAO go?
“Disruptive forces “come on footsteps”.-Former Intel CEO Andy Grove
One, the definition of DAO
DAO stands for Decentralized Autonomous Corporations, which means decentralized autonomous organization in Chinese. To understand this concept, you need to analyze it from its three components.
Compared with the common forms of organization and management, DAO has obvious characteristics of decentralization. However, centralization and decentralization are not all-or-nothing. Many DAO organizations rely more or less on centralization to start or maintain, and they have not achieved absolute decentralization. Therefore, it is more accurate to understand from the perspective of degrees of freedom, that is, to show an organization with a clear decentralized scale.
Different from the traditional “top-down” management model, DAO’s “plane management” and “autonomy” attributes are more prominent. All token holders can participate in proposals and voting decisions. From the perspective of ownership, DAO belongs to all stakeholders such as investors, developers, users, suppliers, and partners. From this perspective, autonomy means that DAO belongs to everyone who can create value for it.
3. Organizations (Corporations)
Generally, DAO is regarded as a decentralized company. Of course, it is more business and practical to understand DAO from the company level, but we need to make it clear that DAO is not a specific organizational entity, but a general organizational form. DAO can be not only a company, but also any organization that requires human participation, such as cooperatives, network platforms, communities, etc.
2. DAO construction and ecology
To understand how to build a DAO, we need to understand the following five elements.
Catalytic figures : Every decentralized organization has the same pattern, that is, a catalytic figure makes a decentralized organization run, and then returns control of the organization to its members.
Belief : Not only freedom and trust, but the power that can hold a decentralized organization together is faith.
Platform : Centralized organizations rely on the Internet to provide a platform for their work.
Circle : A decentralized organization will form a unique circle and delegate power to all members. This circle is highly adaptable to innovative activities.
Fighter : Different from the organizer or contact person, Fighter is more like a salesperson, and will work full-time around current issues.
In this sense, the creation of DAO is not simply an improvement of the company system or the decentralization of company rights. Rather, it requires technical level as the basic condition, the pursuit and belief that emerged in a specific era, as well as the catalyst-like characters and maintenance fighters who help achieve change. Therefore, for each specific DAO, we can find the background story of a specific era from the dimensions of technology, culture, and history.
At present, various DAO organizations have initially emerged and have begun to expand at the ecosystem level. With reference to the article “DAO: Absorbing the Internet” (The Generalist), after filtering out organizations that have built a strong product team, DAO can be divided into the following 8 categories:
Agreement DAO: A company that is characterized by decentralization and operates by constructing and executing agreements
Social DAO: Based on common ideas, aiming to create a strong community
Invest in DAO: similar to a fund, deploy investment plans by gathering capital and investors
Funding DAO: Incentivize the development of projects other than pre-existing projects, aiming to build a broader ecosystem
Serving DAO: similar to a “talent aggregator”, bringing together human capital that can be used for certain projects
Media DAO: Collaborative production of public content, including subject categories and resource management, etc.
Creation DAO: similar to fan groups, working for organizations supporting idols, creators or artists
Collect DAO: Unite collectors around certain assets or collectibles, such as NFT
Third, the public and the core
With reference to “Human-Machine Platform: A Roadmap for Business Future Actions”, the book points out three groups of changing relationships in the digital economy era, namely, machines and people, platforms and products, and the public and the core. The emergence of artificial intelligence has freed our hands and opened the mode of automatic evolution, and has participated in the entire process of production, design, and decision-making. In terms of business model, products turning to platforms have also become a trend. Social, shopping, music, maps and other applications have become mainstream in the form of platforms and networks, and platform companies such as Amazon and Tencent have become giants “invisible”. And the next trend in the digital economy era is coming to us, that is, the masses and the core. Through a decentralized organizational model, the company belongs to every contributor.
The emergence of DAO also represents the transformation of the three groups of relationships between machines and people, platforms and products, and the public and the core. By writing code and automatically executing smart contracts, DAO has its own set of operating logic and automatic execution capabilities. Through the establishment of a platform model, DAO supports all participants to participate in decision-making and execution. But among them, the decentralized change is the most eye-catching.
The yearning for decentralization comes from the depths of our hearts. Humans’ yearning for freedom and democracy is innate. In the process of liberating from the shackles of nature, we have witnessed the rapid development of science and technology. The pursuit of equality and democracy has reduced race, The bondage brought by gender and class. Modern organizations represented by companies are often regarded as exploiters, and when more and more profits are concentrated in fewer and fewer large companies, a revolution in corporate organizational forms has begun.
When discussing the difference between a centralized organization and a decentralized organization, the book “Starfish Organization” gives a subtle example. “At first glance, spiders and starfish look very similar, with several legs growing from the central body. But the two are completely different: if you cut off the spider’s head, the spider is dead; but if you cut the starfish in half , You will see two starfish.”
Comparing decentralized organizations to starfish, we can see the characteristics that distinguish DAO organizations from traditional enterprises:
Compared with traditional enterprises, DAO has stronger cohesion. Relying on the borderless cooperation of the network to break the limitations of time and space, the DAO organization has a wider network and vision; the enterprise exists in the form of open software, and the transparency of the organization ensures that there is no internal fraud in the enterprise, and the trust within the organization is greatly improved; participation; The hierarchical organizational model in which the owner has ownership makes everyone the owner of the company. This organizational form linked to their own interests can stimulate the enthusiasm of the participants; the participants are the nodes of the enterprise organization and are in the incentive mechanism of the token. Under the circumstances, they are more willing to play to their own advantages, which brings strong synergies.
Another obvious advantage is low cost. The new fund-raising mechanism, that is, the mechanism of token issuance, has the advantages of fast and accurate fundraising. The investor-owner model attracts a large number of investors who recognize projects; the mechanism of token operation also supports trustless fund management, which means Trust costs are greatly reduced; the organization’s governance, incentives, and profit distribution mechanisms are all distributed in accordance with the algorithmic ownership, and the rules are placed on the chain through the blockchain. This ensures internal fair competition and reduces the time and time for traditional enterprises to distribute profits. The cost of money.
4. Hacking, decentralization and democracy
When it comes to a decentralized, free, code-executed DAO organization, people always feel anxious and uneasy. Indeed, while the corporate organization is still expanding and growing, the DAO organizational form has flaws that cannot be ignored.
The failure of The DAO is still vivid. After hackers stole one-third of its Ethereum , it chose to use the Ethereum hard fork to end. What’s interesting is that hackers commit crimes “openly and legally”, that is, in a transparent mode of operation, they take funds through loopholes in the code contract. Nowadays, The DAO’s declaration is still lingering, “This entity does not exist anywhere, and at the same time it is everywhere, and acts in accordance with the unshakable iron will of the unchangeable code”. Ironically, the hacker did not violate this iron will, but the “hard fork” approach violated the rules of its operation.
DAO uses programming algorithms and smart contracts as the logic and rules for its company’s operation, but no matter how predictable, a complete set of algorithms and a perfect contract does not exist, and algorithms and contracts without emotion are more likely to become hackers. The target of the attack. The paradox of “imperfect contract” makes how to solve the hacker risk a problem that the DAO model must overcome.
Decentralization is the most innovative breakthrough of the DAO, but the realization of decentralization seems to conflict with the human nature of controlling and intervening. The ideal model of token governance is also questioned in reality. On the one hand, the essence of DAO cannot get rid of the shareholder system, that is, major shareholders have a higher right to speak. DAO investors can form an advantage over others by purchasing tokens, thereby enjoying greater benefits in the process of organizational development. The right to speak, from this perspective, decentralization is difficult to achieve.
On the other hand, taking The DAO as an example, the way it was founded and ended is full of contradictions. It stands out in history under the banner of decentralization, but adopts the “centralized model” that humans are best at when faced with hacker attacks. end. To achieve absolute decentralization, we seem to lack courage.
“The group only knows simple and extreme feelings; all kinds of opinions, ideas and beliefs provided to them, they either accept them in their entirety, or reject them altogether. They regard them as absolute truth or absolute fallacy.”
The essence of DAO is a group composed of many individuals. Before discussing the various drawbacks of undemocratic corporate system, please ask yourself, is the decision made by a democratic group necessarily good? The fact is that individuals in a group will show a clear herd mentality. What’s more, morality and law often lose their ability to restrain individuals in fanatical group activities.
From the democratic group to the mob, the confusion of most people is not uncommon in history. When the ideals of democracy are propagated paranoidly and arbitrarily, the rabble will disrupt the existing order. Therefore, the pursuit of democracy needs to be based on reality. How to find the best balance between democracy and autocracy is more meaningful than pure idealism.
Hackers, interventions, and paranoia, after all these flaws have been exposed, there are still countless people who continue to make efforts to create an equal organizational form. And what kind of form the DAO will take in the future, this question is more realistic today. In the era of digital economy, blockchain has become an indispensable underlying technology foundation. NFT, as a digital form of token, is being widely accepted and discussed, and the world of the meta universe is expanding. And DAO, as a decentralized organization that relies on network and digital development, inevitably has too much imagination.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-revolution-of-dao-the-masses-and-the-core/
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