From the development of modern humans, we as people have collaborated towards achieving common goals. Our modern corporate and political governance structures have evolved accordingly, and over time, we’ve seen major shifts in the way we govern large corporations; the industrial revolution vastly changed those structures, and again we saw similar adjustments with the birth of the internet. We’re on the cusp of seeing an even more substantial shake-up with the invention of the Decentralized Autonomous Organization (DAO).
DAO’s provide the ability to run an organization with no centralized leadership. This means no appointed Board of Directors, no CEO, and no Manager. Each and every person is considered a “contributor”. A DAO runs by executing smart contracts on the blockchain, which in turn, solidifies the rules of the organization and carries out the functions of the business. Team members within the organization are incentivized to work on projects by receiving reputation and tokens that hold value on the blockchain. These tokens provide workers with an income structure, and their reputation gives them decision making power within the organization. As a contributor you’re allowed to propose certain tasks, vote on proposals, and influence the direction of the company. Those who contribute the most have the most influence within the organization, and rightfully so.
A relevant example of a DAO company is Dash (Digital Cash). The development of any project and its funding are publicly proposed and decided on by the Dash community. Those who have contributed to Dash since the beginning have special roles in these votings. This assumes that the ones most invested (time/energy/coins) will have the most incentive to make the project a success. Their interests are proven by their reputation and contributions to Dash over time. With the DAO model decisions that often take classic organizations months or even years, can be made within a relatively short amount of time.
DAOstack
DAOstack is a fairly new player in the DAO field, evolving from Matan Field’s Backfeed project. Field states that DAO companies have lacked a solid framework to support decentralized self-governing organizations thus far. DAOstack aims to fix that.
DAOstack classifies itself as an operating system for the DAO. Just as Wordpress allows for the creation of websites, DAOstack allows for the creation of decentralized web companies. In their own words, “It’s the Wordpress for the DAO. It does for the blockchain what Wordpress has done for the web.” It offers the ability to use a plug and play model to start a new DAO, configure its governance structure, distribute tokens and reputation, find collaborators and offer rewards to workers.
DAOstack introduces users to building DAO companies in a way that’s easy to use. They’ve created what they call their “DAO stack”. This provides the necessary framework needed to bring DAO’s to life. The following becomes the internal product layers making up their stack.
- Arc is the framework that runs the operations and governs the agencies within DAOstack. This makes it easy for agencies to create, configure, deploy, and upgrade from the library of governance modules and templates.
- Alchemy is the decentralized application (DApp) built by DAOstack that provides the user interface for Arc. This is how users interact with the platform.
- Arc.js is a javascript library that makes it easy for front-end developers to create applications on top of Arc with little to no blockchain experience.
- The ArcHives are a shared set of registries within DAOstack. Including the registry of all agencies and DAO’s, the registry of pre-built governance modules, and a registry of offers and requests. This helps third-party DApps network with each other, resulting in further collaboration.
Key Benefits
The modular design of Arc means every new DAO automatically has a menu of pre-built governance modules at its fingertips. Users have the ability to pick and choose the modules that best fit the specific needs of their organization, thus making development cheaper and more efficient by employing pre-built blocks that are easily accessible. This saves time, storage, and operation costs.
As with any organization, growth welcomes new challenges. It often becomes evident that the old way of doing things doesn’t make sense as companies grow. As DAOstack’s governance modules are plug and play, they can be easily changed and upgraded to make new rules in an ever-evolving organization. However, changing these governance modules comes with its own challenges. There are guidelines that come with changing a set of rules within a DAO.
DAOstack’s open framework enhances an ecosystem of true collaboration. This ecosystem is made of a multitude of distinct but interoperable DAO’s that interact with one another. This allows users to form large-scale, open-source networks and business agreements in fractions of the time and costs than it has traditionally. Over time, contributions from independent developers and new DAO companies built within DAOstack will create a database of templates, governance modules, and applications that the community will continually benefit from. The incentives that developers are given to continue contributing to the community will allow them the freedom to experiment with an increasingly large number of governance protocols.
What sets them apart
DAOstack is doing something different than other players in the DAO marketplace. What sets them apart is the ability to mix and match certain governance modules and rules that make the most sense for your organization. Where __________ might work for __________, it doesn’t make sense for the __________ community to govern by those same set of rules. This is important because DAOstack now appeals to larger organizations. Offering complete customization to fit any project, no matter what the size. Competitors have limitations on flexibility; applications on the DAOstack don’t have such limitations. Another DAO company, Aragon, offers a framework that is more suitable for startups but is not as applicable as organizations scale. DAOstack modules provide a scalable product, allowing the ability to make changes quickly and with ease by removing outdated governance modules and adding new ones. The open framework allows the user to leverage the knowledge base, at a fraction of the cost. This will allow companies to form faster, requiring less capital to scale and upgrade on the fly using an established product that has been vetted by the DAOstack community.
Conclusion
Convincing large existing corporations to adopt this model will be the greatest obstacle to the success and development of a DAOstack community. Since the decision makers already have vested interests in keeping themselves and those they’ve appointed in power, why make a shift that would essentially put them on an even playing field? I could see smaller internal projects being operated through a DAO to take advantage of outside talent (similar to Microsoft leveraging ideagoras on the internet), but shifting their current company’s governance structure is a tall task, to say the least.
It’s too early to tell, but my thought is that real adoption will come with the formation of completely new DAO companies that take over old inefficient markets. Similar to how Netflix put Blockbuster out of business when they utilized the benefits of the internet. DAO’s will expose the inefficiencies of the archaic hierarchy model, and fix the problems associated with getting large groups of people to work together. It will give rise to new major organizations that will change the way we govern big business, and DAOstack is creating the first framework to make that possible.