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On October 28th, a16z, a well-known investment institution in Silicon Valley, announced that it has invested in the social DAO Friends with Benefits. The investment amount has not been announced. a16z stated that it will provide guidance and plans to empower key community members to actively participate in governance through authorization.
It is reported that Friends with Benefits (FWB) is a new type of DAO organization, which is a private club with more than 2,000 members. Joining this club requires not only passing strict identity verification, but also purchasing tickets worth nearly 10,000 U.S. dollars. The main cooperation tool of FWB is Discord, which communicates, discusses or completes cooperation through more than 100 channels established internally.
The investment in a16z has been called by some people that it has opened up a new investment track with its own strength. In fact, when we review the development of DAO, it is not an unfamiliar word (at least for the blockchain industry. ), but there are few well-known investment institutions involved in this field. Therefore, compared with NFT or DeFi, DAO has always been in a non-mainstream development, and a16zs move has aroused peoples attention to DAO again.
What are DAOs?
What are DAOs?
DAO, Decentralized Autonomous Organization in English, is an organization represented by rules coded by computer programs. These rules are transparent, controlled by members of the organization, and not affected by the centralized organization, and DAOs financial Transaction records and procedural rules are maintained on the blockchain.
Although distributed and autonomous have many research results in the past history, for example, many people believe that the decentralized organization (Decentralized Organization) was written by the American writer Ori Brafman in 2006 in a book called It was proposed in the book THE STARFISH AND THE SPIDER, in which he compared centralized organizations to spiders and decentralized organizations to starfish, and explained the differences between the two in detail features and differences. But here we mainly discuss the decentralized autonomous organization based on blockchain technology.
Regarding the concept of DAO, Dan Larimer (former CTO of EOS) originally proposed the term Decentralized Autonomous Corporation (DAC, Decentralized Autonomous Corporation) in 2013, but the concept of DAO was absorbed by Vitalik Buterin after Dan Larimer’s concept And summed it up, created the term Decentralized Autonomous Organization (DAO, Decentralized Autonomous Organization). But according to Buterin, the concept was partly inspired by Daniel Suarezs novel Daemon.
Dan Larimer regards the Coin of the native blockchain as a stake in a decentralized autonomous company (DAC), and the source code defines the rules and regulations. DACs goal is to earn profits for shareholders by providing valuable services to the free market. DAC is also explained by Dan Larimer as a decentralized system designed to provide effective products and services to society.
He said: If an institution as complex as a bank can be implemented as a DAC, then obviously there are many more things that can be implemented as a DAC. (Obviously, the lending project in DeFi today is the realization of the main business of the bank - the lending function. Unfortunately, the concept proposed by Dan Larimer was not realized by himself.)
DAC is a part of DAO. Since the company system is mentioned, we can understand DAO from the most familiar company organization. The company is centralized and manages the entire organization in a top-down manner. The rules of the entire organization are decided by the top business owner or the board of directors, mainly deciding the companys development direction and goals (what to do), how to use the companys current There are human, material, financial resources and other resources to achieve the companys goals (how to do it), and decide how to distribute the obtained benefits (how to distribute the benefits). It can be seen that the company is characterized by centralized governance, top-down management, organized by the highest power center, and decides how to distribute benefits.
And DAO is to determine what the organization will do, how to do it, and how to distribute benefits, and use the code to determine these rules openly and transparently. Then anyone can use their own resources to implement how to do it based on these rules. And according to the distribution principles formulated in the rules, get their own corresponding remuneration.
It can be seen that the company provides products that meet market demand to the greatest extent and obtains high profits through rational allocation of company resources in the process of production and operation. However, such an organizational method depends on the companys promotion or operational capabilities, and is also limited by the companys resources. But DAO breaks the framework of the company and accepts the injection of any resources with an open mind. As long as the rules are formulated in advance and the rules are decentralized, it can attract many funds and participants to participate autonomously. The mobilized resources are not the same as those of general centralized organizations.
Therefore, we can summarize several characteristics of DAO. One is decentralization, the set rules will not be tampered with by the centralized organization at will. The second is autonomy. The driving force of DAO operation is often the autonomous behavior of participants, rather than through employment relationships. The third is tokenization. The realization of DAO requires the participation of Token, so as to determine the weight in the governance process, or design some incentive mechanisms to promote the development of DAO. However, it should be noted that the Token here can be a valuable pass or a worthless point (the latter is often used for non-profit organizations). The fourth is autonomy and rationality. The operation of DAO is not decided by a centralized organization, but is jointly built, shared and governed by all relevant parties participating in DAO. For example, major changes that affect the development of the entire organization are often passed by all participants. Vote to decide whether to adjust the direction and so on.
Although DAO is a new organizational method, it has the advantages of being open and transparent, preventing favoritism and fraud, building and sharing with everyone, and avoiding centralized evil, etc., but it is not a panacea, and there are still some problems:
① Crowd problem, not all decisions must be correct if the opinions of the majority are correct. How to balance the correctness of decision-making and maintain fairness will be an important solution that DAO needs to explore;
②There is a high turnover of personnel, the organization may be relatively loose and lack of firm supporters, and it is easy to slow down the development of DAO. How to design some incentive mechanisms or operating mechanisms to make DAO more sticky and participants more autonomous? Strong, it will also be the direction that DAO needs to dig deeper;
③ How to better govern DAO is still being explored, and there are no universally feasible and long-term verified governance methods;
④The security involved in DAO will also be affected by the security of the chain itself and the level of smart contract design.
However, any organization will have advantages and disadvantages. Make good use of its advantages and explore to solve its shortcomings. The new organizational method brought by DAO still has great potential worth exploring.
Note 1: Due to translation problems, many articles often refer to decentralized autonomous organizations as distributed autonomous organizations. Here we have to make a distinction. Distributed is just a form of architecture or organization, but the real governance method behind it may also be the center For example, we know that Alibaba Cloud is a distributed architecture, but it is still managed by a centralized organization behind it. But what we are discussing here must be whether it is centralized at the governance level, so the most correct way to write DAO should be a decentralized autonomous organization rather than a distributed autonomous organization.
Note 2: From Dan Larimers description of the DAC concept, it is not difficult to imagine why EOS is a DPoS consensus mechanism.
Note 3: Although Dan Larimer regards the operation mechanism of BTC as a DAC, everyone can spontaneously participate in the maintenance of BTCs ledger, in order to obtain BTCs blockchain rewards and miners fees, and build a huge BTC computing power network . Many people also regard BTC as the first DAO, but the author thinks that Autonomous in DAO is more inclined to the governance level of this organization, and BTC is more of a decentralized organization (Decentralized Organization).
Therefore, the DAO discussed in this article will be more biased towards more applications in governance scenarios. Otherwise, all blockchains can be regarded as DAOs, and the discussion will be of limited significance.
Why should we care about the development of DAO?
1. Why did DAO appear?
Before the birth of the blockchain, almost all human organization and collaboration methods were centralized to a certain extent. Although some decentralization or distributed forms were also proposed, these methods were only to a certain extent. There is some decentralization, but its essence is still centralized.
There are no two kings in the country, and there are no two suns in the sky. Since ancient times, we have known that the governance policy of multi-management cannot be formed. But is this because centralized governance is really the only way to govern? In fact, it is not. The main reason is technical problems, because the decentralized governance method similar to multi-management is difficult to solve problems such as fairness, corruption, and evil in the governance process without the technical support of blockchain.
But after the birth of the blockchain, for the first time, humans can let the program execute the set content in a decentralized manner, and it can be guaranteed to be tamper-proof. The decentralization and non-tampering characteristics of blockchain can just solve various problems of previous centralization and bring new solutions. Based on blockchain technology, for the first time in human history, there is a way to enable participants to cooperate with each other in a trustless and anonymous manner based on a certain goal, and work together for a certain goal.
Generally speaking, when new technologies are born, humans will definitely try to use new technologies to solve old problems, or use new technologies to solve new problems, in order to explore more possibilities of new technologies. Therefore, it is logical to use new technologies such as blockchain to solve some ancient problems such as organizational collaboration or governance. From this point of view, the author believes that it is inevitable to transform the centralized organization and collaboration into a decentralized DAO.
2. Why is DAO an important development direction in the future?
The sharing economy of the Internet has the embryonic form of DAO
Although DAO has appeared, we still need to pay close attention to its development, because DAO is likely to be an important development direction in the future.
This has to start with the development trend of the current society. In fact, there have been many clues to the emergence of DAO a long time ago. With the continuous development of Internet technology, some new business models are being born, and the way to develop a business body is no longer just relying on the company alone. We often hear the term viral communication, which actually uses the enthusiasm of the public and the network to spread and spread marketing information like a virus, and then quickly spread to tens of thousands or even more audiences in a short period of time.
Among them, many methods used in viral transmission are to link some incentive mechanisms with sharing, so that users can spontaneously spread for the company, and get corresponding rewards according to the profit distribution mechanism set by the company. This is what we often see How much money is rewarded for inviting new users to the Internet App. Some of the gameplay will add a distribution mechanism or a rebate mechanism, which enables those who have influence or resources to quickly realize their own resources through these mechanisms, and then promote the rapid spread of this app. , and then achieve a win-win situation for individuals and companies.
This method is already somewhat similar to DAO. It also sets up rules and profit distribution methods, and can drive users who are not employees of the company to quickly empower the company. However, this method will be subject to the companys operational capabilities, integrity issues, and the fact that the company obtains most of the benefits in the distribution of benefits, but there are already DAOs. If the framework of the corporate system is fully opened, it will no longer be a centralized governance, leaving only rules and operating methods, and it will look like a DAO.
Freelancing is becoming the trend of the moment
On the other hand, with the development of the Internet, the links between people have broken through geographical restrictions, and the new exploration of business models has also spawned many dematerialized means of production processing, which means that many peoples abilities only need Collaboration with others and realization of capabilities can be realized online. Freelancers are an organizational group that develops rapidly under such a trend.
According to statistics, there are about 1.1 billion freelancers working in the world, and among all organizations (with more than 1,000 employees) in the world, one in five includes at least 30% remote workers. 50% of all organizations have seen a significant increase in their freelance workforce over the past five years. (Data Sources:https://www.websiteplanet.com/blog/freelance-stats/）
The openness of mind is also the reason why freelancing has become popular, especially the new generation of young people now pay more attention to their own feelings in the workplace. They pay more attention to their independence and are more willing to cooperate with people with the same values. Freelancing You can also freely control your own time and energy allocation, and avoid encountering some company-related workplace problems.
Affected by the epidemic, tools and working methods such as online office and cloud collaboration are also rapidly popularizing. Freelancers can more easily collaborate with others online, or complete a project with people who share common interests. Behind some well-known projects are a group of technology developers distributed around the world who have reached a consensus online and completed them together. They have truly operated in the form of a DAO and made successful projects.
DAO is in legalization
In March of this year, at the Companies, Elections, and Political Partitions session of the Wyoming State Assembly, the Senate approved Bill No. 38 proposed by the first committee hearing, which aims to clarify the decentralized autonomous organization DAO. The legal status allows DAO to legally register itself as a limited liability company (Limited Liability Company, LLC).
The Pandoras Box of DAO has been opened, let us wait and see what kind of surprises will be released.
DAO has been verified in the blockchain field
As the largest project in the DeFi field, MakerDAO is undoubtedly a superstar in the DAO field. Founded in 2014, MakerDAO is not only a decentralized autonomous organization and smart contracts on Ethereum, but also provides the worlds first decentralized stablecoin DAI, and in 2019 accounted for the entire DeFi lockup amount above 50.
MakerDAO realized a never-before-seen experiment and established a decentralized central bank on the blockchain. Its method of creating stablecoins with over-collateralization on the chain provides the currency market with liquidity that can be adjusted according to demand, and at the same time eliminates the risk of printing money out of thin air, so that each currency in MakerDAO has sufficient assets behind it. At the same time, since MakerDAO has no counterparty risk and is subject to the influence of a certain sovereign policy, there is no risk of central custody, making MakerDAOs stable currency achieve a beneficial balance between transparency and system risk.
Now MakerDAOs TVL has reached 17.6 billion US dollars. This application, which has only been developed for a few years, has rapidly grown into a giant, which has exceeded the productivity of most centralized organizations. The success of MakerDAO made users deeply feel the charm and advantages of DAO for the first time.
Everything is a DAO shouldnt be a joke
More and more cases are proving that DAO, as a new type of organizational collaboration, has been verified and accepted by more people. Then, if all the existing centralized organizations try to explore and improve in the way of DAO, they may all get more or less better results. From this point of view, everything can be DAO may not be a sentence Just kidding, but it should be a way forward for brave exploration. Braves need to use DAO to verify the operation of all things, and we also expect DAO to come out with more classic cases.
DAO in Polkadot Ecosystem
In the past, we spent a lot of time to sort out the emergence and development of DAO. Now we will turn our attention back to the Polkadot ecology to see what kind of sparks will be produced in the DAO with the support of the Substrate framework and the superimposition of cross-chain functions, and What innovations were born?
1、SubDAO
SubDAO should be regarded as the first team in the Polkadot ecosystem to announce that it would specialize in building a DAO. It has therefore received a lot of attention and has been favored by capital since its establishment, including Hypersphere, Huobi Ventures, OKEx Blockdream Ventures, and CMS Holdings. Dozens of well-known institutions such as , Signum Capital, and NGC Ventures have become investors in SubDAO.
So what exactly does SubDAO do, why has it attracted so much attention, and even won three grants from the Web3 Foundation?
What are SubDAOs?
We can use a simple formula to describe what SubDAO does, that is, SubDAO=DAO platform + social network + cross-chain wallet + electronic signature service.
First of all, we need to clarify that the core thing is that SubDAO can be used as a basic tool for DAO (DAO platform), which is what most DAO organizations currently lack. Therefore, SubDAO will develop a series of tools around the use of DAO for community use; Secondly, SubDAO is also a social tool in essence. We can understand it as a Discord dedicated to serving DAO organizations. This part of the expectation may bring huge surprises.
There are too many examples of the economic effects that social networks can bring in reality. In the Internet field, new Apps have to open WeChat and QQ logins to divert their traffic, and have to distribute huge profits to Tencent. , which is also one of Tencents main revenue methods. In the field of blockchain, the success of Axie Infinity is inseparable from the support of YGG, a guild, which happens to be the embodiment of social networks.
In addition, SubDAO can also be used as a cross-chain wallet, but unlike other wallets, SubDAO’s wallet is more integrated as a DAO or social tool, more like the WeChat wallet we use. Finally, SubDAO can be used as a smart contract in line with the electronic signature service we use, which is convenient for DAO organizations to complete certain cooperation needs.
Therefore, in the face of these avant-garde functions of SubDAO, we have seen some new functions for DAO organizations, which is also the positioning of SubDAO: to allow any decentralized organization to quickly create and manage DAOs. At the same time, SubDAO plans to become a parachain of Polkadot, and will grow into a decentralized DAO platform service platform that supports high customization, low development costs and multi-asset support.
SubDAOs innovative economic model
In addition to the advantages of the product, SubDAO’s economic model is also an interesting attempt. We know that the DAO organization has some financial attributes since the earliest The DAO. This is also the birth of The DAO. It raised more than 12 million Ethereum in its early days , it can be seen that financial innovation in the form of DAO has also received a lot of favor, and DAO organizations are inseparable from financial tools. After all, according to PolyChain founder Olaf Carlson-Wee, the current size of funds under DAO management is about 75 billion US dollars , and still maintained a good growth rate.
To this end, SubDAO innovatively proposed Governance Mining (governance is wa mine). Its target is more like a DeFi tool. It uses TVL to measure the value of DAO and guide DAO organizations to use their own funds reasonably. Therefore, 27% of Governance Mining is set in SubDAO’s token economy. This part of the token is mainly used for the activity and contribution of DAO organizations in the ecology as DAO rewards to support the development of the community. Most of the development paths are driven by interest, and the incentives preset by SubDAO are bound to bring new growth points to the development of DAO and DeFi.
In the future, SubDAO will connect with more public chains and DeFi, realize DAOs cross-chain aggregation and cross-chain governance model, and create DAO products with a wider range of applications for project parties.
The addition of Governance Mining will also allow SubDAO to accumulate more DeFi funds, which may lead to more practical applications of DeFi and improve the utilization rate and liquidity of funds in DAO organizations.
What will SubDAO bring to Polkadot?
One of the most important functions of Polkadot is one-click chain issuance, which is mainly realized based on the Substrate framework behind Polkadot. This framework includes a variety of functional modules needed to build a blockchain, allowing developers to build a blockchain. When developing a block chain, mature modules can be assembled directly, and a chain can be issued within a day. Polkadots parachains are all built on the basis of the Substrate framework, and SubDAO provides the basic tools for DAO, which are naturally adapted to other parachains.
As we mentioned above, many projects can use DAO to collaborate. Then, as Polkadot that can link all blockchains, there must be many parachain projects and bridges in the future. When these projects have a demand for DAO , you can directly use the ready-made SubDAO DAO platform. SubDAO is also equivalent to a tool that perfects the DAO direction for the Substrate framework. As more and more projects use SubDAOs DAO platform, SubDAO can be linked to various blockchains at the same time through this tool, and then become a DAO in the Polkadot ecosystem. center of.
At present, there is still a lack of such a role in the DAO ecological niche in the Polkadot ecosystem. As for whether SubDAO can achieve this goal, we need to continue to pay attention.
2、Dora Factory
Dora Factory originated from DoraHacks, a global geek community and hackathon organizer. It has a high degree of participation in community groups at home and abroad, and has a certain user base at the beginning of its establishment. Dora Factory is an open and programmable on-chain governance protocol platform based on Substrate, and also a DAO-as-a-service infrastructure based on Polkadot.
Any organization or group that needs on-chain governance can use Dora Factorys underlying and core on-chain governance modules to provide secondary voting, curve auctions, Bounty incentives, cross-chain asset management, etc. for the new generation of decentralized organizations and developers Pluggable governance functions. Dora Factory provides a free infrastructure square that can easily create DAOs and meet their needs in governance, fundraising, collaboration, management, etc.
The current projects supported by Dora Factory mainly include decentralized media DAOrayaki, hackathon Hackathon DAO, anti-Sybil attack and large-scale quadratic funding agreement Quadratic Funding V2, etc.
3、Opensquare
Opensquare is a Substrate-based platform that provides decentralized collaboration modules for the application layer. There are mainly two development directions: decentralized Linkedln and collaborative DAO. The users collaboration data will be stored and viewed by other organizations under the condition that the blockchain guarantees its security. Opensquare has built a user credit model based on these historical collaboration behaviors. Its vision is to build a credible decentralized collaboration network .
Drawing on the past experience in the development of the DeCo platform, Opensquare has created four different modes of collaborative operations based on the characteristics of the Polkadot ecosystem itself. Created a collaborative production line integrating Bounty collaboration, short-term employment, knowledge payment, and personalized thinking. At the same time, Opensquare has introduced a credit building system to quantify the credit ratings of participants based on the mutual evaluations of Hunter and Funder and the intelligent evaluation of the platform. And a parliamentary system was introduced to make the community more democratic and fair.
postscript
postscript
Before, MakerDAO expanded its territory in the DeFi field and became the largest decentralized stable currency project. Later, YGG relied on the power of the community to help Axie Infinity create the largest blockchain game. The potential of DAO has been verified by tens of billions of dollars of high-quality projects many times, and many late stars are also following the trend and trying to use DAO to govern and develop the ecology. Because compared to projects that are well-designed and regardless of subsequent development, projects with governance mechanisms will gain more scalability and more possibilities, and it is easier to become a surviving blockchain industry in the fast-evolving, competitive and iterative blockchain industry. the winner. Therefore, DAO will be the norm in the blockchain industry.
Today, a16z, which manages a $3 billion fund, has also begun to deploy in the DAO field. This kind of appeal is like a social giant like Facebook changing its name to Meta and announcing its entry into the metaverse, which will make subsequent capital more actively deploy DAO.
It is foreseeable that DAO will be adopted more frequently soon, and projects surrounding DAO will also receive more capital attention under the spotlight. The development of the entire DAO ecology will be accelerated, and the wave of DAO is quietly coming.
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*The information provided by the Polkadot Ecological Research Institute does not represent any investment hints. The published articles only represent personal opinions and are for reference only. Since there are no policies and regulations related to digital assets in China, users in mainland China are requested to pay close attention to the development of Crypto.
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