Definition and operational architecture from Spice DAO to DAO
Last November, an online group called Spice DAO purchased a copy of the "director's bible," Alejandro Jodorowsky's Dune, a 1970s film adaptation that failed to be released. Dune, a film adaptation from the 1970s that became famous for its unsuccessful release, paid nearly $3 million at auction, roughly 100 times the book's estimated price. DAO stands for "decentralized autonomous organization," an increasingly popular term in the cryptocurrency world for a group of people who gather money to accomplish a specific task. They are the "digital flash mob with money," and members of FWB tell me that in recent months, DAOs have been able to rival NFT as the hottest blockchain technology concept. spice DAO has launched its own cryptocurrency token called Spice (a reference to the mysterious substance in the sci-fi world of Dune) and sold it, raising more than $700,000 to buy the book. book. The rest of the amount was covered by DAO co-founder Soban Saqib himself. The organization's plan is to produce its own version of the film, with token holders voting to make creative decisions. There's only one problem so far: owning a vintage art book is by no means the same as owning the intellectual property rights to Dune, and DAO members have no more license to make Jodorowsky's version of the movie than they do to make the next Marvel superhero movie.
Spice DAO's half-baked product is just one piece of evidence of the 'reckless behavior' of the cryptocurrency economy. Last November, an organization called ConstitutionDAO raised $47 million worth of cryptocurrency to bid on one of the thirteen surviving originals of the U.S. Constitution, then lost the auction to Citadel CEO Ken Griffin. other DAOs have announced plans to buy a golf course (LinksDAO) and An NBA team (Krause House DAO); one of them, CityDAO, has purchased land in Wyoming. But these sensational stories reflect only part of the burgeoning DAO phenomenon. By definition, a DAO is a simple business structure, similar to a limited liability company. They typically consist of a custom cryptocurrency as well as an online community space, such as a chat room on the Discord platform. The community will have internal discussions and then vote on decisions using tokens on apps like Snapshot, much like stuffing a piece of paper into a cardboard box and electing a class president. The more money you put in, the more pieces of paper you get. the promise of DAO is that an organization's decisions will be made by a broad group of members, rather than by an elite few on a company's board. In the Internet, this structure is more promising, creating an ecosystem for digital startups outside of Silicon Valley.
Risks and changes facing DAO
The history of DAO began in April 2016 when an organization called The DAO launched and raised about $150 million worth of Ether in exchange for a token called DAO. the DAO's goal is to act as an investment company that redistributes money to lucrative companies and projects, and the organization's token represents a vote on where to invest. Theoretically, profits would flow back to token holders, similar to stock dividends, but outside of regulated markets. However, in June 2016, hackers stole about a third of The Dao's funds, causing the DAO to collapse internally. The following year, the SEC issued an investigation that said tokens like The Dao should face the same regulatory requirements as securities.
Aaron Wright, a law professor and co-founder of Tribute Labs, Inc. told me, "A year and a half ago, I had the idea that we should relaunch DAOs in a way that complies with U.S. law. Tribute supports a network of DAOs, such as Flamingo, which collects NFT artwork, and Neon, which invests in metaspace assets, including digital fashion pieces and avatars. All members of Tribute's DAO network are accredited investors, and tokens can only be transferred to other members. in total, Tribute's network of DAOs has raised approximately $101 million in Ether. supporters of DAOs argue that such groups allow amateurs to participate in organized venture capital. We are witnessing the emergence of this hive mind, not the wisdom of crowds, but the wisdom of smaller, carefully curated groups of people in the game. He argues that DAO capital can replace tech venture capital firms, music executives or Hollywood producers to fund new projects, such as companies, albums or blockbusters."
Some independent DAO users are more interested in attracting digital workers with free time and energy than in attracting investors with excess capital. FWB, for example, is an online community powered by the eponymous cryptocurrency that functions similarly to a digital VIP lounge for creatives. In order to join, you must purchase tokens. Members chat on Discord, attend physical meetups, and work together on projects like a cryptocurrency ticketing app or a new drink. The result is a decentralized brand identity. Shareholders vote to approve a code of conduct, approve a monthly budget, and collaborate with other companies. Because the blockchain's records are transparent, the results of each vote are public. anwar, who heads up 'community and culture' at FWB, describes the group as an 'idea incubator' and that joining it is 'almost like joining a fraternity. If that sounds a bit vague, it may be the result of a decentralized mindset: it's hard to stick to a mission when no one person is making the decisions.
DAO's value creation and economic model
You can't create a DAO just to be a DAO. you need a DAO to do something," said Vitalik Buterin, co-founder of ethereum, in a recent interview.
But the ultimate achievement of DAOs like FWB is the community itself, which faces a number of challenges. sarah Moosvi is co-founder of aGENDAdao, an organization that supports transgender and non-binary digital artists who work with the blockchain. She told me that the decentralized model is in some ways "just as flawed" as the traditional corporate structure. In theory, workers don't have bosses, but the organization must still decide who gets rewarded for their work. In Moosvi's words, this is 'labor rights'. If rewards are achieved primarily through internal tokens, similar to company payment tokens, then it can only support those who do not need immediate financial compensation.
Several larger startups have begun experimenting with DAO governance. Last August, NFT marketplace SuperRare sent tokens to users based on the volume of their transactions on the platform. The tokens are used to select which users can open new storefronts on the platform. Other cryptocurrency companies such as cryptocurrency exchange Uniswap and Ethereum Name Service, which offers the domain .eth, have created their own governance tokens for users. From the user's perspective, Moosvi said, "By trading on your platform and letting you take a percentage of my activity, I expect to get something in return.
In theory, these governance tokens are not financial instruments like company stock, but that hasn't stopped many users from making a killing on the secondary market.
For now, DAO tokens have more symbolic significance than practical authority; most companies remain concerned about the transfer of digital assets. Some, however, are interested in translating the Internet utopianism of cryptocurrencies into the real world. Cabin, for example, is a DAO that began outside of Austin, Texas, to manage a set of houses. Jonathan Hillis, the organization's co-founder, previously quit his job at Instacart to build a house in the countryside. He brought some friends to live there, and they had the idea to start a residency program for other tech creators. hillis told me, "we didn't want to be a DAO, and DAO tools are the best tools to accomplish what we want to accomplish."
Cabin created a token, sold it to crowdfund a budget, and allowed holders to vote on who would receive residency. One participant, Julian Weisser, later helped create ConstitutionDAO in the lodge, and now about 280 holders can vote on Cabin's future. hillis describes Cabin as a "decentralized city" designed to build spaces around the world and connect them through digital tools. It now has subgroups of "guilds" responsible for various subdivisions of the task. Like many DAOs, Cabin still looks a bit like a fantasy, an emerging community looking for an outlet for exploding energy. using any technology, Hillis says, eventually the infrastructure becomes invisible. Ultimately, the DAO framework is more important than the work the organization actually does.
Original article by Kyle Chayka