Why is it said that DAO can never rule the world?

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The DAO, which has always been given high hopes by the industry, is it a real change in organizational form, or is it a real problem facing it? In 2019 and early 2020, there were dozens of attempts to create DAOs in the blockchain industry, but most of them ended in failure or partial solutions.

As the crypto industry recognizes that the currency system needs governance, the enthusiasm for decentralized autonomous organizations (DAOs) continues to rise.

However, as the enthusiasm fades, forks (the blockchain is split into two due to changes in existing protocols), and the DAO is abandoned, the gap between ideals and reality becomes larger and larger. Despite having invested millions of dollars in development, DAO still could not find a product suitable for the market. How did this happen?

Because it places too much emphasis on profits and gains.

DAO technology is not a better way to run a business, nor is it a better way to raise or distribute funds. DAO technology should be applied to areas that we have not yet solved, and areas related to personal interests, so that everyone will have a say.

Grace (Rebecca) Rachmany is the founder of DAO Leadership and the co-author of the book "So You've Got a DAO". This article won the second place in the "Decentralized Future" writing competition organized by the British Innovation Foundation NESTA.

People try to find new forms of organization in areas that have failed and hierarchical, such as public health, climate change, cultural protection, inequality, and others. DAOs provide the potential to organize collective wisdom to solve complex problems and manage shared resources. In a recent ETHDenver speech, Matan Field, the founder of DAOstack, announced that he would turn to the governance of public resources instead of commerce, and the word "Commons" in the name of Commons Stack also indicated the clear goal of creating tools to maintain public resources. . However, the current actual technology is still insufficient.

In 2019 and early 2020, there were dozens of attempts to create DAOs in the blockchain industry, but most of them ended in failure or partial solutions, as the author recently reviewed in the DAO case study funded by Genesis DAO. The root causes of these failures are twofold: one is the application of DAO technology to organizations that do not need DAO; the other is the limitation of budget allocation and voting capacity. Since DAO technicians only focused on the "on-chain" governance of the blockchain, they also failed to create convincing technologies for the problems faced by society.


Beyond money and voting

So far, technical projects such as Aragon, Colony, DAOstack, GovBlocks, Moloch, and other DAO technology projects have one main function, that is, the distribution of funds, and more specifically, cryptocurrency (usually ETH or DAI). To some extent, this is the only function you can perform in a group that has not been formed beforehand. But if you start with a community, a political party, players who play a particular game, or other groups with common interests, then you can enforce decisions. However, if all you have is a random group of participants, then apart from allocating budgets, you cannot exert too much influence on the behavior of this group of people. If you want to achieve automatic allocation through smart contracts, then the budget needs to be on Ethereum.

In other words, the systems built by technicians are almost useless to people outside their small circle. Therefore, there will be many "dead" DAOs, ie organizations that have been created but are no longer active. These failures lead the outside world to believe that DAOs are just a craze or a scam.


What is needed for collective governance?

The feeling that almost all democratic processes will be broken in today's society makes DAO's attractiveness even stronger. Despite the growing interconnection, national and international governance structures still fail to solve the problem of public resources. Mismanagement of public health, food supply, water and air quality has had a serious impact all over the world. Whether we accept it or not, the actions of a person in the epidemic area will have a global impact.

Organizations like the United Nations, the World Health Organization, and the World Bank are neither undemocratic nor designed to gather intelligence and respond quickly and effectively to complex issues. In the current epidemic crisis, these problems with the control and command structure are very obvious. At every level, the interests of citizens must give way to the interests of large companies, politicians, and even those foreign interest groups that have received media attention. The concept of DAO is welcomed by people because the current system is simply not enough to cope with complex global challenges.

Unfortunately, the DAO technicians did not refer to the historically successful public governance models, but tried to map simple systems to complex issues. The current public health crisis of the epidemic is an example of the failure of the centralized system to do a good job in public management.

Although we do not have a large-scale public management model, we do have examples of how to conduct public management on a small and medium scale.

Examples include communities and community councils, cooperatives, and indigenous people’s traditions of protecting the environment, justice, and social cohesion. The community committee may ask people to mow the lawn and clear the sidewalks. If you don’t, someone will knock on your door to notify you. In indigenous communities, people perform rituals and traditions by telling stories and following social norms.

In other words, social norms and social coercion are effective methods of public governance. Facts have proved that incentives divide and utilize public resources. Regardless of whether the reward is in the form of financial compensation, attention to social media posts, or page ranking promotion, all types of rewards will distort public behavior in unwelcome ways. In the House of Commons, decisions are often reached through consultation, mutual respect, and consideration and consensus on environmental carrying capacity.

Opportunities for collective governance

It is possible to manage public resources in large communities through technology. In order to better promote wisdom and decision-making based on commonality, DAO technology needs to address the following aspects of collective governance. (Identity and reputation are also key elements, but this is beyond the scope of this article.)


Inclusive discussion and respectful conversation

In order to make good decisions on complex issues (such as public health), it is necessary for participants to be able to safely express divergent views, have listening skills and be willing to consider opposition. During the COVID-19 crisis, WHO conducted a large-scale review of traditional media and social media. Even in the scientific community, public discussions are censored. This top-down control reduces the variety of discussions and proposals that may be considered. In a healthy ecosystem, multiple viewpoints should be considered and tested. The structure of DAO has such potential, it allows for better meaning construction and richer discussion.

Although many social media platforms have caused more and more anti-social behaviors, well-designed systems can lead to better meaning construction. Slashdot.org is one of the earliest and oldest threaded chat platforms. It has a mechanism that, over time, people can gain reputation by judging the quality of other people’s responses to discussions. Loomio provides a discussion platform with mechanisms to encourage collaboration and safety. We also need to do more to develop inclusive platforms and mechanisms that are not driven by market incentives, so as to provide a psychologically safe place for in-depth discussion and in-depth consideration of different perspectives. In recent years, the emergence of channels such as Rebel Wisdom and Stoa has shown the public's desire for in-depth discussions, but these are limited to experts and not designed for the general public.


Acknowledge facts and opinions

The focus on "signals" and "preferences" ignores factuality and professionalism. A wise decision should include both facts and opinions. Factual information must be true, clear and reliable. Scientific research and known use cases are different from people's perspectives and perspectives. However, opinions are equally important. Views like infectious diseases can be fatal, social distancing can lead to increased rates of suicide and addiction, and long-term effects on mental health may be true. For the judgment of these influences, facts and statistics can be provided to decision makers, but only providing facts is not enough, because people's values ​​determine what results are "best" for them. Different cultures and population classes have different values ​​for the importance of these influences. Decision makers need reliable facts and multiple perspectives.

The contemporary research of Dr. Anna De Liddo of the Knowledge Management Institute has led to the demonstration of many collaboration platforms that can help people form better opinions and improve people’s critical thinking. By developing a platform where people must discuss the evidence of their claims, her team is investigating how to create a safe environment that will not only allow experts to approve, but will also encourage people to understand the content of the claim and its source. The Consider.it platform developed by Dr. Travis Kriplean provides a discussion platform designed to help people understand each other's views more deeply and provide a visual way to describe the reasons behind these views.

Problem definition and prioritization

The problems we face affect different groups of people in different ways. From a different point of view, dam building may be positive or negative. Almost every interesting question has a paradox. Therefore, the problem definition needs to consider multiple perspectives, and the definition of the problem must be a prerequisite for making recommendations.

So far, no DAO platform has the ability to define problems. However, if there is no problem definition, how can the community determine whether the proposal is valuable?

The community needs a way to define and prioritize the problems to be solved. Some platforms, such as Canonizer, define issues based on the scale of the discussion and provide intelligence on the extent to which the issue has divided the community. However, just because the question is interesting and divisive does not make it a priority. People may be interested in the gender division of toilets, but most people think it is not as important as the curriculum of the school where the toilet is located.

Plan formulation and selection

If voting has only bad or mediocre choices, democracy is meaningless. The organization uses a variety of methods for brainstorming, writing and proposition revision. Today’s DAOs allow anyone to make any suggestions, but do not recognize or reward collaboration or creativity. Although platforms like Aragon and DAOstack encourage informal discussions and deliberations on proposals for a period of time, this is not required.

Aragon provides a periodic voting schedule, so discussions are conducted over a period of time, and voting is also linked to some proposals. The DAOstack model allows for ongoing proposal development, so when a proposal appears, people can vote on it without comparing it with past (or future) proposals.

This "first-come, first-served" "yes/no" proposal favors speed and competition, rather than cooperation and in-depth thinking or considering the opinions of a few people. Making a decision in this way is like walking down the street and deciding whether to go to a restaurant without knowing what restaurants are around the corner.

You have to make a "yes or no" decision on one choice at a time. If most people always win, then vegans may go hungry. The holographic consensus mechanism on DAOstack prioritizes popular suggestions, but more testing is needed to see if it works. Because the most popular advice is not always the wisest.

Distributed technology is expected to create a variety of inclusive solutions, but so far, no system has shown sufficient capacity to accommodate the interests of a few people, or those who invest less (or no) funds in the DAO Interests.

The second vote, as implemented by Democracy Earth, allows people to express strong preferences for specific issues with equal representation at the beginning. However, when it comes to the funds of cryptocurrencies and DAOs, the representative is always related to certain donated funds, even if it is a secondary fundraising, and the fundraising is independent of those affected by voting and funding.

For example, Black Girls Code recently raised funds on the Gitcoin funding platform through a secondary fundraising method. Voters are funders, not black girls who will be affected by funding. Although there is nothing wrong with this in essence, it is not a form of democracy, because the people affected by the decision are those who make the decision. The same is true for Colorado's second ballot election. The democratic representatives of the people participated in the second vote, but the people they represented could not participate.



One of the biggest failures of the democratic system is the disconnect between legislation and enforcement. For decades, the implementation of the law and its results have not been reviewed. When these are reviewed, there is usually no mechanism to abolish the law, but only to improve or adjust the implementation of the law. DAO technology needs to include a feedback mechanism so that adjustments can be made quickly when measures do not meet expectations.

DAO technology is good at automatically executing decisions. For code changes, this is a complete process. Aragon and GovBlocks have mechanisms that allow code to be automatically integrated into the blockchain. However, in terms of fund allocation, this method has shortcomings. Groups and individuals will receive funds as soon as they are approved. However, none of the current DAO systems includes accountability procedures. If funds are abused or absconded, there is no mechanism to hold groups accountable. The SEEDS project recently started the development of a custody mechanism and a release mechanism at the technical level of Hypha DAO, which added an accountability system.

In addition, accountability for complex issues is even more difficult. For example, to improve the water quality of a river, it is not enough to implement a proposal. The final result of water quality also needs to be measured. It is very likely that this proposal cannot be verified in reality, or other additional measures are needed to help implement it. When the decision is incorrect, a feedback loop mechanism should be established to make timely adjustments.


in conclusion

The goal of DAOs is to create a more advanced decision-making system. However, so far, DAO technology only provides voting and fund allocation mechanisms. Global governance has become a top priority in responding to the epidemic. Governing this crisis and the upcoming crisis requires the development of technologies from all parties, including all aspects of discussion, collaboration, proposals and responsibilities.