Original link:

Original link:https://daobase.org/what-can-we-do-with-a-dao-in-2020/

Translated by: La

author:Philippe Honigman

Translated by: La

Translation Agency: DAOSquare

Translation Agency: DAOSquare

this is my yearEthCC's talk topics. Year after year, DAOs are getting more and more attention from the crypto community, but we are still far from the golden age. My goal is to update my thoughts on "how we think about DAOs now" and "how to use DAOs".

Like previous years, 2020 was dubbed "TheThe era of DAOs". However, most people who have heard the term have difficulty defining the concept. I tried thesomewhere elseProvides a definition of the term and clearly explains the associated narrative. Aragon recently solved the difficult problem of "defining what DAOs are" in a brilliant way. In this article, we just need to remember Vitalik buterin's original issue: DAOs areAn organization centered on autonomy and bounded by humans。

For decades, companies have seen autonomy as a way to increase the efficiency of their production processes and improve the quality of their production. When we think of automated factories, images of robotic arms working like magic bullets on production lines come to mind—or, to take the most familiar example: mobile robots in Amazon warehouses. Autonomous natural candidate processes are routine tasks that take little or no room to perform the task of "making decisions".

On the other hand, tasks related to the design, coordination, or optimization of such processing are considered to require people with soft skills, such as understanding complex situations and interpersonal communication skills. Thus, the core functions of organizations retain the unquestioned privileges of being human. This privilege is hardly threatened by strong AI that is far from coming.

The typology introduced by Vitalik turns this view on its head. He argues that the fringes of an efficient organization may still rely on human labor, but most of the complex coordination at the center of the organization can operate autonomously and reward workers using the organization's internal funds. According to this view, software offers a way to "replace traditional economic and social coordination mechanisms."

So what can we say about this concept today, after years of building and experimenting?autonomy”。

autonomy

DAOs are autonomous, i.e. not controlled by a third party. Thanks to the public blockchain networks they run on, DAOs can manipulate their own funds and distribute them according to self-enforcing, hard-to-break rules. That's why in 2016 TheDAO was presented as "unstoppable," a word that means no one can change its behavior, nor end the computer it's running on.

While the idea was very appealing at the time, it turned out that having a fully autonomous system run had many undesirable potential consequences. When TheDAO was hacked with a bug in the code, millions of dollars would be withdrawn from the vaults visibly, but no one could do anything about it. The system works the way it was programmed to do, and some say it's more likely to be attacked by the functionality of the system than by a hacker. If "coding is the law," so is the troublesome bug in TheDAO's codeAgreed to part of the agreement between the parties bound by TheDAO's smart contract。

secondary title

What have we learned?

Working with blockchain-based autonomous code quickly turned out to be problematic, and not just for DAOs. As individuals and organizations, we want to have recourse when things go wrong. If we make a mistake on a bank transfer, it means the bank will help recover and our money will be returned. When two companies disagree on the execution of the contract, they may defend it in court.

Compare that to when a person sends cryptocurrency to the wrong account, or when a bug locks up millions in wallets like Parity's mutisig contract. Without planning the methods ahead and implementing them in the code, there is no way to undo or undo those operations. And because it is impossible to guarantee that a complex string of code is completely free of any bugs and weaknesses, it is possible that even the most carefully guarded and edited code cannot protect its users.

"Forever" and "Censorship Resistance" are valuable for those who want to protect their assets and start independently from corrupt judges or failed states. Code autonomy is a way of setting up individual and collective agreements that cannot be interfered with by any third party, no matter how powerful or rich they are. But one point worth emphasizing is:The autonomy we really crave is for humanitysecondary title

Autonomy in 2020? Balanced Coding vs Community

cypherpunkcypherpunkThe absolute autonomy of appreciated coding is transferred to the relative autonomy of a combination of pure code and human choice.

andKIerosandAragonBe the first to provide decentralized arbitration services, which can make DAOs more flexible. for example,Aragon Agreements, allowing organizations to define human-readable protocols that can be enforced by a decentralized court of jurors when disputes arise.

Another way to protect people from the blind manipulation of autonomous rules is to provide them with a way toWays to get out of the system before being victimized. This is provided by Moloch DAOragequit mechanismThe idea behind it: Any investor in a DAO fund can withdraw their investment if they disagree with a decision voted in by a majority of members. To be fair, this protection was already present in The DAO in 2016, but ironically, it was flawed,The way it was implemented was for TheDAO to be hacked。 

Finally, we are seeing more and more concerns about the legal risks of DAO members, which can be addressed in a legal form such as wrapping the DAO. Now several jurisdictionsprovides this legitimate tool, then DAOs and its members can avoid the legal uncertainty that may create unlimited personal dependence. For example,dOrg, asBlockchain-Based Limited Liability Company registered with Vermontdeveloper partner company of , andLAO, a venture foundation organized as Delaware LLC.

decentralized

decentralized

Decentralization can be understood as the process of reducing or avoiding the concentration of power in an organization. In a decentralized structure, resources and decision-making rights cannot be obtained by a few people.

In the past, legal agreements have generally achieved decentralization, such as a cooperative decree or anti-monopoly law. Bitcoin-inspired DAOs and cryptonetworks have used a combination of economic rewards and programmable rules to accelerate decentralization.

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What have we learned?

It took a moment to understand and acknowledge: public blockchains are not as decentralized as they appear. Angela Walsh, for example, reminds us:Decentralization exists on a spectrum, this spectrum relies on the metrics used to measure decentralization, and even the largest permissionless cryptocurrencies tend to havegreat centralized power。

The same criticism can be directed at DAOs. Token distribution in many DAOs is so uneven that very few members can block or pass any proposals. In other cases, the personal influence of founders or key members is more important than the actual voting weight they have through tokens.

If decentralization is viewed as agradual process, then this is not necessarily a problem. While decentralization is lauded as a way to reduce inequality and ensure the accessibility of public goods, it is completely uncertified for launching a new project. In crypto, as elsewhere, nothing seems to beat a small team with a strong leader, or even a protocol precisely designed for decentralized cooperation (like:DAOstack’s Holographic Consensus) are incomparable.

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Centralization in 2020? More Options for Effective Decentralization

Decentralization is hard, but there are tons of ways to do it! Here are some interesting approaches we've seen recently.

Token-based voting is the main tool for collective decision-making in DAOs, as it is the easiest way to prevent Sybil attacks, namely multi-identity voting. Sybil attacks, which are pseudonymous in nature, have long been a headache in the cryptosphere. People do not need to verify their identity to participate in public encrypted networks like Bitcoin or Ethereum, they only need a pair of encryption keys, and anyone can create any number of keys for free. Token-based voting is an effective way to counter Sybil because tokens are cryptographic assets that cannot be created at will.

vote of faith

vote of faithsecond vote

second voteAlso a way to limit the "plutocracy of token-based voting", while still giving people with more skin in the game a way to express their preferences. Gitcoin has successfully experimented with funding public goods.

Another approach to decentralization relies on the decision-making power assigned to those who contribute to the network. Power asymmetries are less severe when DAO members' voting rights are based on their actual contributions and cannot be passed on to others. Various reputation systems are already designed for this purpose, such as DAOstack, Colony or SourceCred.

Recently, the same concept has appeared in the DeFi space, which is called "Easy Protocol for Future Governance(SAFG). Illustrated by Compound and its COMP token, this approach involves granting tokens with no economic rights to those participating in a decentralized network or protocol. Later, when the network becomes widely used, holding Pass holders can choose an economic model that adds economic rights and transferability to the pass.Assign decision rights to actual usersIt is to prevent rent-seeking and encourage the development of network decentralization. However, this must be handled carefully as it opens up new attack vectors for token holders who may try to game the system for their own benefit.

Drawing on political philosophy, Lawrence Lundy proposes that, as a cornerstone of modern democracy, decentralization should be applied to encrypted networks to prevent power being seized by specific categories of stakeholders. Token holders are responsible for "legislative power" by voting, executive power is delegated by the legislature to implement policies and operations, and judicial power is exercised by decentralized courts so that administrators cannot violate the DAO's intangible principle.

To date, the executive arm of most crypto projects is held by companies or foundations that have no fiduciary responsibilities to token holders. We are already seeing a trend towards more and more amalgamation between these institutions and token holders with voting rights. For example, the Aragon Association, is reviewing proposals put forward and voted upon by Aragon token holders. Thanks to decentralized courts, there is a judiciary. We see DAOs like Pocket Network bringing these three departments together, so that review and balancing can effectively protect the decentralized community.

Another way to decentralize is to give voice to groups of stakeholders with different interests. For example, the management of the Melon protocol relies on two main parties: the Melon Technical Council, which represents developers, and the Melon Exposed Businesses representatives, which represent users. Multi-stakeholder management is indeed a very promising approach to making collective legitimate decisions among large and diverse groups. John Light shared a detailed tutorial on how to create a multi-stakeholder DAO on Aragon.

organize

organize

DAO's"O"organize"organize". It is also the most deceiving. When one thinks of an organization, what a company looks like comes to mind. But it is hard to imagine a scenario where a company is decentralized and autonomous. The corporate structure is hierarchical—even cooperatives appoint managers. Companies trade with each other thanks to contractual relationships that rely heavily on legal rules, so they can hardly be considered autonomous.

Therefore, we still need to question DAOs as organizationalsecondary title。 

What have we learned?

TheDAO's founders claim that it is a decentralized fund, controlled by a group of investors, without any corporate structure in the traditional sense: no shareholders, no executives, no management. A corporation is sometimes defined as a collection of contracts between various parties (shareholders, directors, employees, customers, suppliers, etc.). TheDAO is precisely an attempt to eliminate the legal fiction of a corporate personality and maintain only a contractual relationship between the two parties, expressed and executed as a smart contract running on a public blockchain.

From this perspective, DAOs can replace corporations by "disintermediating". One could argue that this makes them more like corporate "ghosts" than a new form of enterprise. Rather than thinking of DAOs as autonomous corporations, we can say that autonomous and self-governing marketplaces remove the need for certain intermediaries. Another way to say it is to think of DAOs asorganized economy, instead ofautonomous organization。

Regardless, we are still in the early days of DAOs. Over the past few years, we’ve seen DAO experiments range from teams of a few people to protocols used by tens of thousands of people. Some DAOs even include artifacts (such as artwork) or natural objects (such as forests). Therefore, we should keep a very open mind when considering what type of organization a DAO could be.

Currently, the two main types of DAOs are protocols and collections. Protocol DAOs enable stakeholders to make collective decisions on key parameters of cryptonetworks based on open protocols: blockchain protocols like Tezos or Decred, financial protocols like Compound, DeversiFi or Maker.

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The DAOs of 2020? It's nothing but a process of constant change

Decentralized Autonomous Organization"Decentralized Autonomous Organization". DAOs are not fully decentralized, have moderate autonomy, and are difficult to compare with traditional organizations.

In 2020, it's time to acknowledge the fact that most DAOs are actually affiliated with corporations or foundations. In most cases, this is not a problem, but a necessity.DAOs are not an incremental process of constant change. possible"DAOization"Organizations, companies, marketplaces, and protocols, that is, use blockchain technology to turn these entities into transparent, rent-free networks owned by their members.

There is now ample evidence that,Decentralization can be gradually introduced. Melon started out as a company, and once their protocol went into production,It's integrated into the DAO. DeversiFi started out as a spin-off of centralized exchanges and is making big strides toward "DAO fully manages DEX"Going in that direction. This venture-backed startup"Compound"managemanageToken, whose protocol has managed hundreds of millions of dollars.

It is worth noting that this path can go both ways. The story of MakerDAO is one such exception: as one of the first DAOs, with a strong ethos of decentralization, it has experienced many twists and turns,Take back from last year founderToken, to arranging the "give the community full power over the protocol"new plan. Another persuasive case is Justin Sun's TronAcquired Stemit, which is worth noting that it stores STEEM tokens in a centralized exchange, and finally the community will ownas a new blockchain called Hive。

DAOs are like a living entity, one that can even die. In early 2020,DigixDAO Announces Its Dissolution. Its members face an arbitrage between the value creation potential of the project and the 366,000 ETH raised in the first token sale in 2016. DAO membersdecided to burn theirTokento get a share of the treasuryin conclusion

in conclusion

So, what can we do with DAOs in 2020? It's not prime time yet. I don't think we're about to see mass adoption of DAOs. DAOs are still an odd name, a nebulous concept known only to a small group of people, even compared to the number of people interested in cryptocurrencies and blockchain technology.

This seems paradoxical. Many people today are interested in self-organizing, collective and cooperative enterprises. Many appreciate the shortcomings of free markets and political institutions in confronting the many social and environmental challenges of our time. One might think that a technology designed to help communities govern themselves, make decisions, produce and share value with each other would generate more public interest.

encryption"encryption"By itself becoming mainstream, Daos is poised to succeed. DAOs generally suffer the same thing as Dapps: the user experience is unbearable for those unfamiliar with crypto. I appreciate the efforts of Aragon, Colony, Abridged, etc. to make this look better, faster, and simpler. We're just not on par with Web2 applications yet. As long as this is the case, there will be only a few people willing to use DAOs.

no problem. Now is a lucky time to experiment, test, and learn. It's time to create and innovate. If you're ready to join a crypto team (and I hope most of you reading this are), then today's DAO technology is good enough for you.

If you start a project, consider using connected curves to raise funds, open proposals to promote initiative, use token and reputation-weighted voting rights to make decisions, and introduce new members jointly and publicly.

If you are making a software product or financial service, consider creating an open network of users, developers, and investors, and design a token system that serves them: to make your voice heard, to share They contribute to the value created.

Bonus points for considering externalities as well. The environment and society in general is something we all benefit from and depend oninvisible contributor. DAOs help createinclusive economy。 

When the time of DAOs finally arrives, it will be because they serve the public good, not the limited interests of the crypto community.

Thanks to Luke Duncan, Jordan Ellis, Griff Green, Hammad, Jack Laing, Auryn MacMillan, Kirstin Maulding, Ori Shimony.