Editor's Note: This article comes fromEthereum enthusiastEditor's Note: This article comes fromMediumEthereum enthusiast

Organizations may come in countless sizes and shapes. Blockchains allow radical and novel organizational experiments. We've seen the explosion (and bust, for now) of ICOs. For most people, rethinking how projects are born and exist in the long run is a magical thing. ICOs are just a starting point, the tip of the iceberg of things to come. In this article, I will provide detailed reflections on Moloch DAOs. It is a new form of organization (proposed by Ameen Soleimani, Arjun Bhuptani, James Young, Layne Haber and Rahul Sethuram) that blurs and redefines the very nature of the company.

Moloch DAO

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- "Moloch means someone or something that requires a great sacrifice from you" -

• Imagine a company with the following characteristics:

• Owning equity in a company means only two permissions:

Can vote for additional shares

Can destroy their own equity and at the same time obtain the right to use part of the capital (Translator's Note: Technical details are described later)

Unlike traditional organizations, in this organization, equity does not mean that you can continue to control and manage the capital of the organization. On the contrary, there is only one way to obtain the right to use the organization's capital, which is to destroy one's own equity and the corresponding authority to vote for additional shares.

In other words, if you own 10% of the organization, and you destroy that 10%, you get 10% of the capital the organization now owns. There is no other way to distribute and manage resources owned by an organization. Unless you relinquish your right to vote in the new share issue, you don't get access to the capital. There are no employers and no employees, and no one can decide where an organization's money is spent.

That's the whole point of Moloch DAO: an imaginative organizational design with the primary purpose of pooling resources more efficiently to provide development bounties for Ethereum.

The first version of Moloch DAO will be released soon, and I will keep an eye on it.

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encourage cooperation

An organizational form is efficient only if the cost of using it as a tool to coordinate cooperation is less than the value created by the collaboration itself. In other words, an organization will continue to grow only if this condition is met: the value of collaboration is greater than the cost of collaboration.

I discussed this notion in a previous blog post. By reducing coordination costs through smart contracts, we can create collaboration mechanisms that were not possible before. See Rhymes of History: Comparing Blockchain Tokens and the Web Using Fitness Functions.

Moloch DAO incentivizes collaboration by breaking down traditional divisions of corporate departments, and also provides more incentives for those who don't agree with each other to leave. The latter is actually very important, because it ensures that the benefits of the organization's core shareholders are more guaranteed.

The core assumption of Moloch DAO is: reducing the steps and processes of capital management and facilitating the exit of participants can reduce the cost of collaboration. The tradeoff is that the organization may be more rigid and the control over resources less granular.

Disrupt traditional corporate models

In the traditional investment model, investors can obtain partial control of the company by providing capital, and the scope of control (the scope of voting) depends on the company's founding model. Such a model would allow organizations to be more resilient and have more granular control over resources. For example, in a traditional organization, you can hire people who are responsible for allocating capital.

Moloch DAO removes many of the deliberative processes that are common in organizations. There is no voting process for hiring staff, nor for deciding how resources are used. There are only votes to issue new shares.

If someone wants to participate, they "gift" the organization in exchange for new voting rights (which are also non-transferable). This proposal is then subject to a vote of existing voting rights holders. The ratio of exchange is also completely free, any number of gifts (as long as it is an ERC20 token) (it does not matter if the number is 0) can be exchanged for any number of voting rights.

Motivate participants to leave

The doors of the Moloch DAO are always open, and whenever there is a vote, shareholders can opt out (“ragequit”), converting non-transferable voting rights into transferable “trophy tokens.” If you burn your loot tokens, you can exit the organization with a portion of all the organization's resources ("vaults").

I've also written before about the benefits of providing exodus benefits to organizations:

Allowing early participants to get a certain amount of benefits when they leave can not only reward those who think that the scenery elsewhere is better, but also strengthen the consensus of existing members on value (imagine: "Everyone who has no faith is gone, So I can trust the remaining members even more").

People are good at solving the problems they face when there is no way out. When there are no other options, it is easier to believe that your current situation is not too bad.

Conversely, if people have many options, those who have not quit will also feel that quitting is a better thing. This is even more pronounced in countries that are in recession. As those who would like to immigrate gradually leave, those who stay are voluntarily stating that they will not leave. This will strengthen the cohesion of the group. This can also be seen in partnerships, where if one person has a choice but does not go, the event itself sends a strong signal to the partners. —— "Break the boat: Encouraging tokenized forks"

(Side note: This might explain why selfish mining is profitable, but Bitcoin miners don't because it's their reputation. Ironically, partial centralization of mining hardware actually There are benefits too : ). )

Because you need to apply to get voting rights, if you opt out to get loot tokens, by the time you want to join (to get new voting rights), you have to prove that you did something valuable with the capital you took away. contribute. The importance of this is that we can guarantee that whoever gains access to the capital will move towards the common goals of the current Moloch DAO.

Inferences about Moloch DAO

why?

Assuming that Moloch DAO's treasury has no external income, a Moloch DAO must aim at one goal if it wants to successfully capture value: to attract members who will make good use of capital and achieve common goals.

why?

Because attracting new members is profitable, increases the capital of the organization, and brings benefits to current shareholders. When users exit with capital, they either take their own share of profits and never return, or take resources to achieve the common goal of the organization. In the case of Moloch DAO, this passing goal is to build Ethereum ecology.

Members who leave temporarily need to use resources wisely to return to the organization, and even get a discount (in exchange for gifts and voting rights) for doing well.

It essentially asks the question: Can an organization grow efficiently just by handpicking its members? In other words, the effect of fund allocation is determined by the reputation and ability of multiple members. The ability to allocate funds becomes a combination of all actors and their individual interests, rather than being bound by the interests of a few.

If the organization grows and more people participate and take risks, they also need to ensure that new members really want to provide value, the organization can make additional rules, such as increasing the amount of gifts required to obtain voting privileges (eventually it must be) .

These rules create a clear focus and consensus.

Another way to understand it is to think of it as a manual token bonding curve (Translator's Note: A minting mechanism, the amount of resources required to mint tokens will change as the token supply increases, and This price is predetermined, hence the name curve).

See Tokens 2.0: Bonding Curves in Curated Markets.

In essence, Moloch DAO is similar to a token bonding curve, and every purchase must be reviewed by current token holders.

to imagine

You can send an IOU (IOU) as a gift. For example, I could create 10 "Simon's Hour" (SMH) tokens and treat it as a gift. If someone exits with the capital of the organization, they may get 1SMH; if I still accept the IOU, wouldn't it have value?

in conclusion

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in conclusion

Moloch DAOs are a novel way of getting people organized around common goals by using smart contracts to create clear rules governing membership. This form sacrifices flexibility in resource management, and its members can easily withdraw, but it reduces coordination costs. Our hypothesis here is that this trade-off makes it possible to reliably pool and manage funds. I really believe so, at least it is worth looking forward to!