Decentralized Autonomous Organizations

This is just a short text I wrote for the challenge from early 2020. It was limited to 500 words and had some characteristics to fulfill. I did not pass to the second round. there were > 100 submissions it seems, but I though I would share it nonetheless.

Life unfolds. Nature evolves. Humans create. Societies are organisations of humans living in nature, they embody these principles, they unfold, evolve and create.

Through historic records we got to know many different organizing structures for human organisations: clans, villages, city states, monarchies, nations…These structures reflect at each point in time the world views, the morals and beliefs of the humans of which they are constituted.

We count the 21st century. Internet, cryptography, connectivity and ubiquity are characteristics of modernity which are idiosyncratic of our contemporary civilisation, essential elements of it, without which we can’t fathom our daily lives.

However, our organisations are still built around structures which were conceived of hundreds of years ago, a time of steam power, telegraph, patrons and even slavery.

It’s not a question if these structures can be redesigned. Because they will, emerging from minds embedded in the fabric of present-day, it is as inevitable as the toppling of monarchs when their time had come. History text books will in retrospective compress these decades of uncertain experimentation as a time of transition.

A major aspect of the interconnected digital age is that human coordination is no longer limited in space. People can organize around projects, themes, causes, ideals or whatever catches their attention, by coming together and populating virtual spaces. Such collectives can be the wealth creators of the future. Participants in these groups will be rewarded for their participation. Digital tools make it transparent to quantify, register and value individual contributions and compensate members, which will become self-reliant independent contributors. Traditional roles like CxO will vanish. Work will be allocated based on interests and skills. People’s motivations rather than their location will determine more significantly how they make a living.

These ideas are epitomized by the DAO concept. The pioneers in this space have identified the potential to make these visions real and have spearheaded first implementations. However, more experimentation is needed to mature these initial attempts. Legal considerations are to be probed further, notwithstanding new juridical constructs will follow suit. More importantly, challenges to DAOs come from governance and coordination points of view – from human and social aspects. Writing rules which define the behavior of an organization in the form of software is relatively easy, but dealing with human interactions and dynamics is much more complex, because these are not determined by mathematical calculations but by individual motives. Thus, different types of DAOs will be devised, with different flavors, configurations, rules, and use cases, comparable to different business types today.

The coming years will see a blossoming exploration of the convergence of DAO principles with social facets and a refinement of the technology. How do participants build up trust? What models work best in rewarding participation? Which governance approaches are best suited to work on this technology stack of decentralisation and cryptography? What approaches to coordinate contributors will prevail?

When participating in DAOs will become as easy as using email and their added value tangible for people’s lives, their success will be unstoppable.

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