The world of blockchain and cryptocurrency can seem arcane and insular to people who aren’t embedded in it. Most people only heard about Bitcoin in any significant way during its dramatic price increases in late 2017, and terms such as proof of work, smart contracts, and even ICO are still obscure to many.
Mainstream news articles such as The New York Times’ “Everyone is Getting Hilariously Rich and You’re Not” portray the cryptocurrency world as an eccentric and isolated one that’s making a few rich but has little connection with most people's’ day-to-day lives.
Many crypto enthusiasts will argue that this is a misconception, pointing to innovative blockchain companies that seek to bring real change and improvement to a wide range of industries. Blockchain-based healthcare records, green energy investment systems, and identity management are just a few very real world areas in which blockchain companies are investigating, investing in, and re-shaping.
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DAOs (Decentralized Autonomous Organizations) might simultaneously be one of blockchain’s most insular concepts and one of its most promising ones when it comes to real-world applications. DAOStack is one company investigating ways to make DAOs accessible and useful to everyone, whether they’ve followed blockchain since its 2008 inception or just became interested in 2018.
What is a DAO? And What is Daostack?
A DAO is a blockchain-based system of agreements, enforced through smart contracts, in which human governance is replaced by automatic blockchain governance. Most organizations throughout human history have been kept operating through a series of agreements--e.g. an employee works in exchange for a salary.
Agreements are designed and enforced through a variety of third-party governance mechanisms--e.g. an employee who never receives recompense for work completed can sue in a court of law for violation of contract. These agreements and governance mechanisms are often deeply affected by human error, misinformation, bias, and contradicting incentives.
Arrangements that can be neatly described on paper are often much messier in real life for this reason. And the larger organizations get, the more complicated they can be to govern. Problems such as social loafing (a term for when group members work less hard than they would in an individual setting), incomplete communication, and clashing incentives can affect both very hierarchical groups such as corporations and ones that attempt to be democratic, such as local neighborhood government structures.
When contracts between parties in organizations are executed and enforced through blockchain smart contracts, however, there is little to no need for those third-party governance mechanisms, much as a Bitcoin transaction needs no third party authorization to be trusted. When governance can be carried out on the blockchain rather than through human enforcers, radically new kinds of organizational structures are possible. Even roles such as CEO or Human Resource Manager could be replaced by a collection of blockchain nodes acting collectively, with the entire system protected from the misbehavior of a lazy or bad actor node thanks to the automatization and immutability of blockchain smart contracts.
DAOs thus have radical potential to overhaul how the world currently thinks of organizations, replacing inherently hierarchical structures with entirely new and decentralized ones. But to fulfill their potential, DAOs will have to stop serving as curiosities and start being truly accessible to real-world tech and organizational needs.
Building DAOs for the Real World with DAOstack
DAOStack seeks to make DAO accessibility a reality. A self-described “Wordpress for DAOs,” DAOStack provides a comprehensive tool set for DAO designers to create DAOs and DApps, decentralized applications that organize and execute DAO governance modules. DAOStack will be an essential tool for anyone who wants to create real-world, fully functional DAOs.
Experienced Ethereum developers can build DAOs by directly accessing Arc, DAOstack’s library of smart contracts. Users who don’t know Solidity (Ethereum’s native code) can still access this library through Arc.js, a javascript library of elements and governance functionalities. Users can build their DApps modularly, connecting different governance entities to form unique DAO structures without having to build each element on the code or blockchain level.
Furthermore, users can access the ArcHives, a user-generated library of DApps, governance modules, and other resources to help network users benefit from their peers’ contributions. Alchemy, one of the first Dapps built with DAOstack, will be accessible to DAOstack users, providing a user-friendly interface for creating DAOs, allocating resources within them, and generating a DAO-specific token. Alchemy can provide a starting point for users looking to generate their own DAO.
DAO Applications
DAOstack suggested in a recent Medium post that DAOs could cover at least three major institutional behaviors: collaboration on an outcome, asset management, and curation. Most institutions, of course, will use a complex mixture of all three to accomplish their collective goals.
DAOstack isn’t just hypothesizing about how DAOs built on their platform could look. The first DAO created on DAOstack will be the Genesis DAO, a DAO that will govern the continued development of DAOstack features. The Genesis DAO will run on GEN tokens, which users will need to participate in the DAOstack ecosystem.
The Genesis DAO will be governed by a series of proposals in a queue. Instead of simply allotting the most voting power on proposals to the most prolific token holders (an arguably plutocratic practice), proposals will be created by anyone to be voted on by reputation-holding community members, who have earned their voting rights through their prior contributions to the platform.
The Genesis DAO demonstrates that DAOstack isn’t just talking the talk, but walking the walk by showing how a DAO could actually govern a complex social institution--their own. A diverse array of institutions could use DAOstack to build DAOs to meet their own needs.
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A custom-built DAO could manage, for example, a real estate investment firm. Token holders could vote on investment proposals and other initiatives, and users who prove themselves to be savvy investors could be rewarded with more tokens and/or higher voting privileges. A DAO could be used to manage a complex work project, rewarding users who make valuable contributions to the whole and allocating rewards on the basis of metrics ranking users’ value to the entire community. A curation-oriented DAO could organize entries democratically based on community votes.
This article appeared first on Cryptovest
