DAOstack

Historically, when there has been a need to coordinate large groups of people and point them toward collective action, humans have relied on systems of top-down hierarchy, as in corporations, governments, and militaries. It’s fairly easy to point the ship when you have only one captain, or a small team of navigators. One major problem with top-down hierarchies is that they contain concentrated points of failure, since individuals are subject to bias and have limited bandwidth. The interests of the powerful few are often misaligned with those of the less powerful many, leaving the decision-makers frequently incentivized to act against the common good. Hierarchies also create information bottlenecks: leaders, even if they are benevolent, can’t always keep up with all the needs of their much more numerous community members. An exciting alternative has arisen in the form of a movement toward decentralization, in which networks of peers self-organize to act collectively without such concentrated power centers. DAOs are a part of this movement. In a DAO, a network of peers encodes its protocols for decision-making into secure, decentralized software (in our case, smart contracts on the Ethereum blockchain). This software becomes the arbiter that tallies votes and carries out the will of the people. It’s a popular concept because it promises to “eliminate the middleman” — and the boss, for that matter — as well as to circumvent centralized funding mechanisms like venture capital in favor of crowdfunding. Imagine thousands of people working together to solve major world problems, with rewards distributed according to value contributed, and decisions being made through the wisdom of the crowd. It might be Facebook or Amazon but owned by the users; a hedge fund with no one skimming off the top; or even equivalents of BP or ExxonMobil, driven by the people and for the people (and the planet). Up until this point, however, DAOs have remained largely an abstract idea, not yet real except in a handful of limited cases. And the decentralization movement has not yet scaled. It turns out that decentralization poses some major challenges. Perhaps the biggest one is inefficiency. If you give everyone a voice, things can get very noisy very quickly, like an annoying neighborhood association meeting, multiplied by a thousand. The more you distribute decision-making power throughout an organization, the more you risk either taxing everyone’s attention with a sea of decision-making or creating gridlock among decision-makers — or both. So, if you’re going to coordinate a crowd effectively, you need technology not just for making proposals and tallying votes, but also for managing the collective attention. You need ways to determine who can make proposals and how. You need ways to determine which proposals should actually get the attention of the voters — sort of like means of voting on what to vote on. And you need ways to determine who should be involved in each decision, according to reputation or subject-matter credibility. You also want none of these mechanisms to be vulnerable to corruption, which is to say you don’t want influence easily bought and sold. You want everyone to be incentivized to act in alignment with the greater good. And you want all these systems to be robust enough that they can scale to provide viable alternatives to today’s telecoms, oil giants, social networks, and so on.