In quieter corners DAOs are forging a new ecosystem for digital startups

https://www.newyorker.com/culture/infinite-scroll/the-promise-of-daos-the-latest-craze-in-crypto

by pseudolus • 4 years ago

99 129 4 years ago

tough• 4 years ago

I do believe DAO's are one of the best parts of crypto so far...

arcticbull9• 4 years ago

ConstitutionDAO was literally a kickstarter. They handed out tokens that gave you no rights, no ownership, no voting - no nothing. Just tokens of appreciation. The people who collected the crypto deposits would have been the sole beneficial owners the constitution. Just a donation.

Any DAO that wants to do anything of any meaningful complexity ends up registering as a Wyoming entity which isn't really any different than an LLC.

DAOs are an attempt to separate the crypto nouveau riche from their tokens.

You can achieve anything you want to from a DAO with a corporation plus a twitter poll or SurveyMonkey thing - except the issuance of unregistered blue-sky securities.

Anyways, what's going to get really interesting is when we inevitably have see some legal challenges around this. I strongly suspect we'll see some personal liability materialize and this is going to take a lot of the fun out of this new grift.

halpert4• 4 years ago

You can achieve anything you want to from a DAO with a corporation plus a twitter poll or SurveyMonkey thing.

How would accept money from thousands of people without being public? How would those ownership stakes be easily transferred?

berberous4• 4 years ago

This comment is no different than the following infamous comments

1. “No wireless. Less space than a Nomad. Lame”; from Slashdot, dismissing the new Apple iPod.

2. "For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software"; from HN, on the launch of Dropbox.

Yes, DAOs may be similar to corporations mixed with a SuveyMoney, and the above comments also have some truth to them. But all three entirely miss the forest for the trees, and miss that there are qualitative changes that make the impact of the new version much greater.

DAOs allow a disparate group of people to raise capital and execute towards a shared idea far faster and greater than was previously possible. That is a qualitative difference worth paying attention to.

And while you are correct that the legal frameworks backing DAOs currently have many problems, that is something that will change.

And for the HN skeptics, over 1,000 YC founders disagree with you: https://techcrunch.com/2022/01/24/hundreds-of-y-combinator-a...

ShamelessC9• 4 years ago

Apparently many ConstitutionDAO participants have been screwed because in order to get their money back they've had to pay transaction fees which exceed 200$. Quite the racket.

mountainriver• 4 years ago

Yeah I agree, overall I’m bearish on crypto, but DOAs are a really interesting idea.

Transparency is the next fight for the workers and ideas like this could prove very valuable

cuteboy19• 4 years ago

Most DAOs are indeed DOA

dang• 4 years ago

All: if commenting here, please respond to specific information in the article and avoid the generic yay and boo comments that have appeared here countless times already. They are boring.

Curiosity withers under repetition: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...

Diffs are what's interesting: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

https://news.ycombinator.com/newsguidelines.html

notpachet• 4 years ago

For people with skin in the game (read: all of us) -- it pays to be students of history. There is a rich tapestry of prior art available for us to study that can help us define the appropriate relationship between the public, with the government as our agent, and aggregations of capital as expressed through crypto. In particular I recommend reading about the early federal efforts to safeguard the public interest from rampant capitalistic excesses in the form of the Interstate Commerce Act of 1887, and its immediate fruits (the Sherman Act, etc).

Those efforts were largely focused on antitrust regulation, which is a different problem than the sorts of blue-sky securities problems that are more common in today's crypto space. But the reason I'm recommending reading about the earlier antitrust stuff, as opposed to the securities regulations that began to emerge a few decades later (which is more superficially topical), is that it marked the beginning of a phase transition in how the American public viewed the relationship between government and business. I think we're in the early part of another such phase transition today. Without the antitrust regulations that preceded them, subsequent securities regulations would likely have had a much steeper hill to climb in the court of public opinion.

Obviously we aren't going to be able to just copy+paste yesterday's regulations onto every newly emerging trend. But I think we can definitely draw lessons from how earlier types of regulations emerged and the ways that the government's relationship with capital interests was adjusted over time.

There were also downsides to the new regulations (like the coopting of the definition of "trust" to include unions as a means of curtailing the power of labor). Those are valuable lessons, too.

I say this as someone who is relatively pessimistic about the value that these new crypto constructs are going to be able to provide over the long term, but I'd make the same argument to crypto optimists, as well.

Apologies to the non-US folks; other countries have their own regulatory histories, some of which were well ahead of the times compared to America. But I'm less familiar with those.

toolz3• 4 years ago

These kinds of recommendations and thoughts are extremely important moving forward. I do not believe the agency of government will be able to keep up with the speed of progress and it will become increasingly important for us to take lessons learned throughout history and apply them at an individual level. I'm very biased towards crypto as I see the increasing failures of government action leading to massive wealth inequality. If you have any specific resources you'd recommend on reading up on the commerce clause I'd be interested in reading up on them. My bias is unlikely to reveal anything favorable of the for that act, as I'm already quite averse to the overreach the government has taken with that policy used as its launching point.

ShamelessC9• 4 years ago

Wealth inequality is traditionally exacerbated by lack of government regulation. Further, I don't actually see cryptocurrencies actively trying to attack the problem of wealth inequality. Rather, they are staunch proponents of free markets which, left unchecked, result in massive wealth inequality.

Food for thought.

rmbyrro10• 4 years ago

Producing wealth inequality is the goal of most - if not all - governments nowadays (no external source, my own guessing).

This is no failure. It's designed for that.

tata712• 4 years ago

Someone looking to compare the cryptocurrency space to history may do better comparing it to currencies that existed under the US State Dollar system.

freemint3• 4 years ago

DAOs are unable to perform any interesting calculation due to excessive cost of computation. It can't even solve a Linear Program to distribute resources effectiently (let alone actual scheduling which requires mixed integer problems which often take many core hours on actual CPUs). Any function a DAO can perform a notary can perform cheaper, including running votes.

rmbyrro10• 4 years ago

A notary can be bribed. You can theoretically corrupt a blockchain, but it's harder than one notary.

Aside, notaries where I come from are extremely expensive and inefficient. I'd choose a blockchain in a split second if I could, for anything requiring human notaries now.

danvayn• 4 years ago

Not to mention that the blockchain we're talking about is supposed to get a lot more performant very soon.

_vertigo• 4 years ago

Notaries can be bribed, sure, but smart contracts can and will have bugs.

freemint3• 4 years ago

Notaries are liable with their property for negligence. Notaries are also ensured. You can actually recover damages when a notary did it.

bsedlm2• 4 years ago

I agree with this statement, people downvoting parent are almost certainly living in not-very corrupt countries.

Grimburger2• 4 years ago

The only DAO I've participated in was Bisq and it works just fine going on years now, resources get allocated for development and ops, plus the work done on marketing, documentation, etc. This is all paid for by trading fees on the exchange. Some people turn up and do dev work for one round, others participate for years.

Not sure what your threshold is for "interesting calculations" but running an entire tech business for years on end with no central governance or traditional corporate structure seems incredible to me. You can participate too if you wish, maybe try drive it into the ground for fun? Or maybe run a seed server with decent uptime and get paid for it instead?

Rather than theoretical putdowns based on some strange misconceptions of how this stuff works under the hood, that's a real life counter example.

https://bisq.network/dao/

andrepd• 4 years ago

I don't get it. What does that DAO do exactly? They talk about distributing revenue, but revenue for what?

freemint3• 4 years ago

I also struggle with Bisq what is supposed to do.

In an email, Bisq told Decrypt the platform doesn't use smart contracts "at least not in a commonly understood sense of Ethereum smart contracts."

The mechanism seems to be let's do all computation of the chains.

bsedlm2• 4 years ago

Any function a DAO can perform a notary can perform cheaper, including running votes.

However the DAO can the notary's job more transparently and without corruption (real oversight of their activities is cheaper... heck, it's possible)

mupuff1234• 4 years ago

Sounds like the main thing they're selling is exclusivity.

vmception3• 4 years ago

Exclusivity

Entertainment

Community

And a fungible bearer asset that neither company shares or a PostGresQL spreadsheet could accomplish

01acheru3• 4 years ago

I wanted to build a joke NFT project with some friends, just to take a closer look at crypto since I never developed on it.

I need to say that there is some solid tech in that space but there are still some fundamental problems to be solved, structural problems, and I'm not seeing a solution. But we are not here to talk about it...

Reading about DAOs is funny because I really understand them now, after talking with those friends of mine who know nothing about tech and should have handled other parts of the project. I understand their meaning: 99% of the time they are a clever way of fooling people.

There is a lot of enthusiasm around crypto lately and some smart people, overhearing a lot of stuff (and fluff) they don't understand simply try to jump into the bandwagon. They are smart people in their lives but without tech knowledge they become the bigger fools when entering the crypto sphere.

But when you fool a smart person he will try to fall on his feet, he will never admit he got fooled so now he needs to fool someone else so to exit the game with lesser losses, or even gains if he's really smart... it's a weird variant of a Ponzi scheme and also an incredible social experiment.

My two cents.

edit: some language errors

tata712• 4 years ago

Replace "DAOs" with "companies",

and "crypto" with "startups".

ytpete• 4 years ago

One big difference is that your random uncle or sister-in-law can't just read about some trending startup and then semi-blindly invest a chunk of their life savings into it.

Financial regulations prevent the average nonexpert from making those kinds of risky investments in relatively unregulated companies - you have to qualify as an "accredited investor" (i.e. either someone with deep pockets or expertise in financial markets). Publicly traded companies and investment funds are open to anyone, but in exchange they're subject to all sorts of regulations about transparency and accounting rules to make it "safer" for the average Joe to invest in.

DAOs feel like they are really hoping to create an end run around all those financial protection laws.

orzig• 4 years ago

I read the article twice: what are the quieter corners the headline promises? Almost all the examples were still pooling money to buy a thing, with two of those things being a single piece of real estate. And Friends with Benefits seems like a nice social group. Both great for those involved, but hardly a revolution

I am very interested in alternative coordination mechanisms, so I was really looking forward to the practical applications of the DAO mechanism outside of crypto-for-crypto, but still am not really seeing it. What am I missing?

magicjosh10• 4 years ago

haha now that you pointed it out, "quiet corners" are in the sub-headline and opening but...not the article itself. Most of the examples are loud -- like SPICE and Constitution.

I too am interested in alternative coordination mechanisms. I recommend hopping on the discord channels for these different projects and seeing what you can find. I've personally looked at Constitution, SPICE, and ENS. I would recommend diving into ENS, it's credible and they're working to manage development and budget. Journalists simply don't have the tools or support to dig into the level of detail that you probably want.

There's also some group in Colorado I forget the name of, they weren't in the article though. They bought up an acre of land and are trying to manage it as a group?

Let me know what you find!

dmitriid14• 4 years ago

I recommend hopping on the discord channels for these different projects

Yup. "Just do your reasearch". "Just hop onto the literally thousands of Discord channels inundated by random talk and you will definitely see the light!"

You'd think that by this time there would be something coherent coming out of these Discords, but no.

Let me know what you find!

You're the one suggesting to dive in and finding something. You've also said you've already dived in. Apparently, you've found nothing.

moltar• 4 years ago

I’m interested in launching a DAO to create B2B SaaS products. If you are interested in the same, let’s chat!

vmception3• 4 years ago

The best thing about these are the rapid iterations towards something better for all participants.

Many of these DAOs have components to them that people now understand werent good to participate in, and people are more discerning towards certain behaviors and features. For example, rebasing with high APYs should be for entertainment purposes only. But DAOs dont need that, and many just advertising liquidity bootstrapping events, without the rebasing component now.

While the protocol-owned-liquidity desire and implementation stays. People find it much better to trade liquidity for discounted tokens, than to risk having an illiquid asset, or find it better than renting liquidity with farming.

These evolutions occur in weeks and are immediately applicable each time.

iskander3• 4 years ago

DAOs are a bit fluid, even evasive, in definition but there are plenty out there (e.g. VitaDAO) which essentially function as an alternative organizational structure to traditional corporations. To function outside the crypto space (or really legally at all), they have to at least create shell LLCs which are governed by DAO decisions. Very few DAOs seem to get that far and instead choose to operate in the greyzone. As the space matures, I think we'll start to see a few large corporations which use on-chain voting in place of shareholding meetings. Whether this will otherwise cause any meaningful differences in how companies operate remains to be seen.

magicjosh10• 4 years ago

Thanks that's helpful context. So what you're saying is ultimately DAOs are about governance of traditional entities. So if there isn't a traditional entity at the top yet, it needs to be on the roadmap or the whole thing is a bunch of puffery.

I've seen a bunch of DAO concepts that are fundamentally "hey let's make currencies and securities". It's like "uh, remember all the ICO stuff? that didn't work".

Excited to see examples of DAOs that do connect to augment traditional governance structures.

iskander3• 4 years ago

I think a few DAOs are so divorced from physical concerns that they can remain on the internet and direct resources there without needing a corporate shell.

But, as soon as money flows into the real world, they will need to figure out how to create and interface with traditional entities, or...like you said, it's very ICO-like.

brightstep• 4 years ago

Why would a large corporation replace a shareholder meeting with a public on-chain vote? What is the incentive, what is the benefit to them?

iskander3• 4 years ago

It's not just the voting mechanism, it's also the crowd-raised treasury and culture of dev-centric leadership and internet community governance. People seem to like pooling money in this way, even if it seems silly you probably can't stop them from wedding this model to LLCs and stepping more solidly into the legal framework of corporations.

magicjosh10• 4 years ago

I'm hungry for more analysis of DAOs. This article covers a nice set of ones including a few I hadn't heard of.

For anyone who gets interested in one of these concepts, I recommend finding the group's Discord and popping in to ask a few questions yourself.

However the depth of the article wasn't satisfying. Regarding SPICE DAO: > "The group’s plan was to produce its own version of the film, with creative decisions voted on by the token’s holders."

From having dug into the SPICE DAO's Discord, I'm surprised this is what the journalist led with. It's an intellectually dishonest take on what the group was trying to do. Having poked around a bit, the people leading the DAO clearly understand intellectual property and were buying the book as something of a parallel project to getting licenses. But there seems to be a big push to paint them as complete idiots. Not sure why though. Maybe they are complete idiots, but not from what I've seen.

From my limited experiences with DAOs, they're not a magical solution to anything, and it will take time to figure out exactly what they're useful for. Nonprofits, hackerspaces, and corporations are all entities that work on mass coordination of incentives, resources, and labor. It's all hard work. DAOs may offer a new toolkit for this type of coordination, but they're unlikely to be a panacea. I am deeply curious to learn which problems this toolkit turns out to solve.

Edit: oh check out Orange DAO, mentioned elsewhere in this thread

dmitriid14• 4 years ago

For anyone who gets interested in one of these concepts, I recommend finding the group's Discord and popping in to ask a few questions yourself.

Yup. "Just join the thousands of Discord channels".

How about: these scams and borderline scams actually produce some coherent information and put it up on their sites, and not expect every person to seek out their Discord channels and ask them questions?

But there seems to be a big push to paint them as complete idiots. Not sure why though.

Because of what they actually do and say outside the Discords. If they weren't idiots, they would actually have a proper explanation of what it is they are trying to do, and actual roadmap on how to get there, and why they needed to blow 3 million dollars on a book if they want to "produce an original series".

oh check out Orange DAO, mentioned elsewhere in this thread

And how exactly do you propose we check it out? You mean "Orange Protocol" which is a centralised aggregation service that pinky swears it will run a DAO at some unspecified point in the future?

magicjosh10• 4 years ago

And how exactly do you propose we check it out?

Just google it or something, the concept sounds neat. Sounds like you know more about it already. Not a DAO yet? Oh well.

Brajeshwar3• 4 years ago

Well, I stumbled and saw a few social impact DAO. I like them and so invested very tiny amounts to just be part of them. Then, I introduced the story to my team for an initiative that we were planning. We want it to be a DAO to get others involved, and make it socially viable. We are pretty technical but not DAO technical. Unfortunately, no one came, including those who came to me and I invested in them.

Now, I’m not sure if it makes sense to try to bridge the physical world happening to a digital heavy concept of DAO.

We just wanted to plant trees, lots of trees (not guns) - https://treeslotsoftrees.org

dmitriid14• 4 years ago

You need neither a DAO nor a blockchain to "crowdfund planting of trees with accountability and trust"

It's also incredibly funny how you pretend to care about trees and ecology ... and using the single most ecology unfriendly tech on earth.

01acheru3• 4 years ago

That's a beautiful initiative and you seem a nice person, could you explain why it needs to be a DAO?

I read all your site twice and I cannot find anything that make it necessary for your org to be a DAO. What technical aspects of a DAO are necessary and why couldn't it simply be a non profit with a "donate here" and a "subscribe for a fee" and whatever else?

Are you running all your logic on chain o it is mostly off chain?

Thanks :)

magicjosh10• 4 years ago

Same here, would be helpful to hear more of your logic.

That way I, or others interested in DAOs, can find our what aspects are especially promising to a project like this.

Brajeshwar3• 4 years ago

We have a broader idea brewing. So, the answer below will touch that and I’m sorry for not just focusing on just the tree planting part. This is a draft and please treat it as such. The final will make it to the site’s FAQ soon.

Here is the list of reasons we are doing a DAO as opposed to a traditional donation model:

- Easier data sharing among organizations.

- Secure and auditable transactions enabling verifiable and trusted logs of transaction (monetary, carbon credits, monitoring events, donations).

- Decreased inefficiency for currency exchange rate and cross border transaction costs.

- Support for NFT and automatic calculation of carbon dividend.

- Easier reporting and analysis.

- Transparency in operations (which portion is going to what organization and for what reason).

- Platform of choice for next generation of climate change advocates and supporters.

- Smart contracts enabling decentralized calculation of carbon offset for many daily activities (offset your emissions by planting and monitoring trees.

- Crypto mining is a great source of emissions, its way easier to plug our DAO into the existing networks to calculate and offset transaction emissions in a user friendly way.

- Blockchain allows for more secure anonymous donations which can be essential for some contributors.

woleium• 4 years ago

https://archive.fo/qQLrj

hi5eyes• 4 years ago

daos: under the table trading of whitelist, presale allocations for their governance token/raise

friesdao team make up: a coinbase employee, fast food franchise operators, registering in wyoming and reviewed by the dev of vfattools

In quieter corners DAOs are forging a new ecosystem for digital startups

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