DAO Under Checks and Balances and Prudent Decision-Making
ARB+4. 88%
Five full years have passed since the world's first decentralized autonomous organization, The DAO, emerged in April 2016. Although some industry participants are still immersed in the shadow of the massive damage the hack inflicted on Ethereum, after five years of development, DAO organizational structures around the globe have taken initial shape, and people's understanding of DAO has far surpassed what it was at the beginning.
With the help and efforts of smart contracts and the crypto community, decentralization and autonomy are no longer utopian concepts — they have become one of the foundational infrastructure pieces for governing crypto communities, protocols, and projects. People decide the fate of millions or even tens of millions of dollars in funds, and vote on protocol development direction, through Discord servers in chatrooms ranging from a handful of people to tens of thousands.
Of course, DAOs can do far more than that. The crypto community even believes that DAO could be the future direction of corporate organizational structures, representing a complete devolution of power, and a comprehensive revolution in human self-organization concepts and production relations backed by blockchain technology.
So, how exactly can the DAO ideology of today's crypto community propel project development? Where is the future of DAO heading?
1 **, DAO Under Checks and Balances and Prudent Decision-Making**
DAO stands for Decentralized Autonomous Corporations, or decentralized autonomous organizations. It coordinates the actions and resources of members through pre-agreed rules of procedure, allows investors to anonymously transfer funds from anywhere in the world, and then provides tokens to these contributors, giving them voting rights on proposals — all fully implemented through smart contracts. The Constitution DAO's participation in the U.S. Constitution auction in mid-November perfectly embodied this autonomous philosophy.
From the earliest The DAO, to today's DAOquare, Dora Factory, Moloch DAO, DAOHAUS, and Pie DAO, developers have always believed that if project teams fully return decision-making power to the community, and leverage the automated execution of smart contracts combined with fully inclusive crowdsourcing processes, they can maximize the avoidance of catastrophic risks that highly centralized decision-making could bring to a system, while also eliminating human error or manipulation of investor funds.
In short, the DAO operational process can be likened to democratic voting in Greek city-states, made more open and transparent through blockchain and smart contracts — completely avoiding phenomena like the 2020 U.S. presidential election, where red states suspected blue states of manipulating vote results, because everything is verifiable on-chain.
The governance philosophy of DAO is evident throughout the development of blockchain projects, and the most noteworthy example is the proposal to deploy Uniswap v3 to Arbitrum.
In May of this year, Compound founder Robert Lesher initiated a governance vote proposal to deploy Uniswap v3 to Arbitrum. Uniswap is the most important DEX trading system in the decentralized world and is deeply loved by investors. However, with the joint support of the Ethereum Foundation and crypto risk investment giant Andreessen Horowitz (a16z), the Uniswap development team decided from the outset to deploy Uniswap v3 on the Optimism network, which was developing at a slower pace — rather than on Arbitrum, which had far surpassed it in development progress.
Needless to say, the Uniswap community had something to say about that.
UNI whale and Compound founder Robert Lesher initiated a vote proposing to deploy Uniswap v3 on Arbitrum first, which had more complete infrastructure and smoother development progress. The proposal resonated with the community, quickly gained support from the entire Uniswap community, and passed unanimously. Subsequently, the Uniswap team immediately began preparing to deploy Uniswap to Arbitrum, and Uniswap founder Hayden Adams also stated on Twitter that he accepted the vote result.
Imagine what would have happened if the Uniswap development team had continued to forge ahead on its predetermined path under the sway of capital — the implications are self-evident. As proposal initiator Robert Lesher clearly stated in the vote description, not deploying Uniswap to Arbitrum, Polygon, and other emerging networks would simply allow other exchanges to fill that void, thereby sharply reducing Uniswap's fee revenue.
It is clear that in the blockchain protocol governance process, DAO can play a corrective role. Investors holding project tokens can serve as a powerful check and deterrent against the obstinance and arrogance of project leadership — if the vote result isn't implemented, well, that's easy to handle: sell your tokens and walk away.
Additionally, the Constitution auction in mid-November also deserves special attention. The auction was initiated by Sotheby's, and the lot was one of only two privately held copies among the 13 surplus copies printed by the 1787 Constitutional Convention.
In terms of collectible value, this artifact is the first printing of the U.S. Constitution, and its value far surpasses that of any portrait or painting. In terms of historical significance, the U.S. Constitution is the world's first written constitution of modern civilization, and one could say that the entire trajectory of human civilization has been profoundly shaped by it.
If individuals participated alone, they clearly could not go head-to-head against wealthy professional collectors. But pooling the strength of the entire internet? Now that's a different story! DAO can clearly leverage its "many hands make light work" advantage.
To win the auction, the online autonomous organization Constitution DAO pooled donations from 17,437 people. In just one week, strangers from around the world raised over $40 million through DAO — although they ultimately failed to secure the copy of the U.S. Constitution, losing to a mysterious big player who bid $43.2 million. Nonetheless, this was the first time the crypto world launched a challenge to the IRL (real world).
In the future, with the efforts of DAOquare, Dora Factory, Moloch DAO, DAOHAUS, Pie DAO, and other global DAOs around the world, more small and refined organizations will be created through DAO, and entrepreneurs will also concentrate more strength entering this space.
In fact, the industry's enthusiasm for DAO has never waned — it has only grown stronger.
2 **,DAO , A Brand-New Asset Class Highly Favored by Industry Participants**
If you haven't seen the impassioned speech by Gitcoin donations organization DAO CEO Kevin Owocki, you simply cannot grasp how confidently crypto industry participants view the future development of DAO.
In an interview with CoinDesk earlier this month, Kevin Owocki said: If we succeed, Meta Factory will disrupt Shopify; if we succeed, Friends With Benefits will disrupt Y Combinator; if we succeed, Gitcoin will disrupt LinkedIn. This is a cultural upheaval. Thousands of experiments are flourishing — perhaps only a few will succeed, but once they do, they will become giants.
In short, in Kevin Owocki's view, DAO will become the requiem for traditional centralized governance companies. Everything will be devoured by DAO.
Additionally, in a recent Coinsesk interview, Yearn Finance core contributor and DAO administrator Tracheopteryx stated that DeFi is betting on the direction of finance, while the future direction of NFT could be art and real estate, or any type of property — but DAO is betting on the future of human organization itself, and that is a much bigger thing.
Tracheopteryx further explained: "Imagine if you could have bet on the concept of a company when the Dutch East India Company was founded — you could never have imagined what form companies would evolve into on this planet. And DAO is the future form of companies and organizations… This is a bigger, much bigger market."
Opolis is a decentralized platform dedicated to providing salary and benefits protection for freelancers. Its head of product and technology, Bill Warren, stated that major investors can direct money to DAOs that manage investment portfolios — for example, the YGG guild is such a DAO.
However, Bill Warren believes that people who view DAO purely from an investment perspective are being too one-sided. He does not think DAO is an asset class in the traditional sense — DAO communities own assets, and some of those assets have real-world value. You can sell them at a higher price.
If Bill Warren's observation is accurate, then DAO will develop into another major asset class in the crypto space after DeFi and NFT. Currently, DeFi protocols have over $100 billion in staked assets, the top 100 DeFi protocols by market cap have a total value close to $93 billion, and the total NFT market cap is close to $50 billion. By comparison, the total DAO market cap is less than $5 billion, leaving considerable room for future growth.
Furthermore, in terms of future application scenarios, DAO will have an important impact on the development of both DeFi and NFT. Even today, virtually all major DeFi applications — from Uniswap to Aave to MakerDAO — are managed by DAO. Through DAO governance, all token holders participate in project governance. In the BoredApe Yacht Club, all NFT holders can also be classified as a "collection DAO" — a form that unites collectors around certain assets or collectibles.
In summary, in the long run, DAO will be a replacement for the corporate form. In the short term, crypto projects governed by DAO can play a corrective role in project development — as demonstrated by the Uniswap v3 launch process — and can also serve the function of pooling strength from the crowd. Ultimately, DAO may evolve into an entirely new asset class in the crypto space.
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