Decentralized Autonomous Organizations (DAOs) are one of the hottest new trends in blockchain technology. The concept of a DAO, a virtual corporation existing entirely in cyberspace, acting independently of its creator thanks to the peer-to-peer blockchain network it runs on and the ‘smart contracts’ which enforce its rules, is very exciting. Natively international, enjoying many of the advantages of the digital economy, the open democracy and unmediated participation of the internet, as well as the corruption-resistant characteristics of the blockchain, the DAO seems to present itself as an idea that embodies the spirit of our times.
But the whole idea is also still very new and largely untested, and will certainly face many challenges and obstacles before it can claim to have proven itself.
Will DAOs prove to be the next big thing in business, becoming a staple of the economies of the future? Or will they prove to be a mere folly, the pipe dream of technophiles whose grand science fiction inspired dreams fail to translate into a practical reality in all but the most obscure niches? At this point in time, no definitive answer can be given to those questions. What we can already do with certainty, however, is to identity the biggest obstacles that DAOs are likely to face and explore the most plausible solutions to these problems.
One project which aims to take on some of these big challenges is ‘Wings’, a platform for creating, managing and participating in DAOs. I spoke to core Wings developer Stas Oskin about how to make decentralized autonomous organizations a success.
Power & Responsibility: Tackling Voter Apathy
Perhaps the most significant barrier to success that the initial wave of DAOs must overcome is that of voter apathy. It is said that with great power comes great responsibility, and as the very nature of a DAO is to distribute power and authority normally held by a CEO or exercised through a central head office to all of the organization’s stakeholders, being a stakeholder in a DAO comes with a great deal of responsibility. Any DAO must rely on a high participation rate from the people who own its tokens. This is essential not only to fully manifest the kind of ‘wisdom of the crowd’ which DAOs promise, but also for security – because otherwise small voting blocks could hijack the voting process and manipulate votes to their own personal advantage and against the best interests of the organization as a whole.
Will token holders take this responsibility seriously? Some commentators have expressed scepticism. For example, lead developer of Bitshares and early pioneer of the Dao concept Dan Larimer has written about how voter apathy and the undue influence of short term traders who are unwilling to approve medium or long term investments created huge problems within his own project. Many other voices have joined the chorus of concern over this issue as well.
Wings aims to attack this problem on two fronts: by making participation as quick and easy as possible, and by introducing a flexible range of governance structures which enhance participation.
Although DAOs are certainly an example of bleeding-edge high technology, interacting with one shouldn’t require technical skill or knowledge. In fact, if participation in voting is any more difficult than buying tokens, you will inevitably end up with token holders who either can’t work out how to vote or just can’t be bothered to try. The bigger that gap is, the lower the participation will be.
The solution to this problem being developed by Wings is to allow the participants in a DAO to use a medium that they are already familiar with, and commands which are intuitive and easy to learn.
“Chat UX, whether through Telegram, Facebook Messenger, or Slack is one of the most used interfaces of communications today, especially for people whose primary window to the Web is a smart phone,” says Oskin.
By allowing users to interact with both its own DAO and any DAO created through its platform by using chatbots, Wings aims to make participation as quick, easy, and enjoyable as possible.
According to Oskin “Sending and receiving all the DAO tokens powered by the Wings platform, checking on balances and performing other future functionalities powered by the Smart Contracts becomes easier than talking to a bank teller”. The conversational interface being planned by Wings isn’t limited to the basic functions of controlling tokens either, but can be extended to every aspect of the DAOs functionality. “DAO participants can get contacted by their chatbot with proposal updates, casting their vote on the proposals and participating in communication with other DAO participants.” he told me.
On the second front, Wings aims to provide a set of tools and templates for creating more advanced governance structures than simple majority voting, which will allow for token holders to delegate their responsibilities or for the DAO itself to find different ways to access the wisdom of the crowd in more effective ways:
“Our take on this is enabling flexible governance for DAOs. We will provide participants of any DAO using Wings the ability to choose among one of several governance models, such as peer-to-peer democracy, liquid democracy, incentivized / penalized voting and probably a simplified form of futarchy. Participants will also be able to change the governance model during a DAO’s lifetime through established voting rules.”
Anyone should be able to create a DAO
It is unfortunately true that most start-ups fail, and there is no reason to think that DAOs will be radically different in this regard. If the concept of the DAO is to take off, therefore, it is essential that anybody with a good idea can access this new technology. Otherwise, the idea may fizzle and die out before it has really had a good chance to prove itself.
Currently that is not the case. Specialist programming skills are required to write the smart contracts needed to power a DAO, whilst legal and regulatory issues can be highly complex and introduce a degree of uncertainty which will be off-putting to many. Although some entrepreneurs may, of course, be able to hire people to do these technical jobs, the kind of early stage start-up likely to seek seed funding through the formation of a DAO may not be in a position to do this.
The primary purpose of Wings is to provide tools that anybody can use to create a DAO without the need to do any programming themselves. When combined with an in-house legal advice service, and the fact that the Wing’s service can be paid for out of the money raised through crowdfunding, it is hoped that this will break down barriers and make the formation of a DAO a realistic possibility for anybody who can make a good pitch for their new business.
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