Decentralised autonomous organization.
Picture a corporation, but instead of a board and CEO the shareholders vote on what to do directly. I'm sure someone more knowledgeable than I could come up with a better analogy.
Picture a corporation, but instead of a board and CEO the shareholders vote on what to do directly. I'm sure someone more knowledgeable than I could come up with a better analogy.
This is going to turn out to be important the first time a DAO gets significantly scammed. Someone's going to take the money and run, or otherwise violate the "contract" that the DAO thought it was "enforcing", and... there won't be anything to do. There won't be any way to fix it. The smart contract doesn't handle the edge case of having to hire a lawyer on its own behalf.
I mean, just to take this particular mostly-harmless situation as an example: that membership in the Blender Development Fund presumably includes some amount of official input into how the money gets spent. What if the DAO has specific desires or expectations, and Blender simply chooses to ignore them?
This already happened, and they hard forked the Ethereum blockchain to revert the hack.
https://www.coindesk.com/tech/2016/07/20/ethereum-executes-b...
Badger DAO got scammed for 120 million USD last week and I doubt they were the first.
But even if a DAO does everything right, technically, they're still subject to the problem of having to trust entities in the real world (e.g. "whoever on the Blender foundation gave them the address to pay") to behave the way they promise (e.g. "actually hand them an address under the control of the Blender Foundation"). It's trivially easy in this world to just cheat.
And in the real world, with real people on both sides of the transaction, that's addressed in the courts. And it works, and fraud as a proportion of our economy is quite small. But that protection doesn't extend to anonymous smart contracts.
In American law, corporations are people. American Courts will give a very high leeway to respecting whatever corporate bylaws dictate. Including being governed by code.
It’s very easy to register a Delaware LLC which states that it’s board decisions are whatever output a smart contract spits out.
Yes, but you still need people. The point was more than anonymous funders have no standing to sue. You're right you could have a conventional corporation fund itself with a DAO, but you're still trusting that corporation with your anonymous cash and if they take it and run you're SOL.
At the end of the day unless you're willing to put a signature containing your legal name as a human being down on a contract written on paper[1] the law isn't going to protect you. And if you are willing to do that, a "DAO" doesn't bring much to the table that, say, a plain old trust or LLC doesn't.
[1] Not actual signatures, not actual paper, but a real human being.
They seem to be functionally identical to a Board of Directors or how a co-operative might run.
Though as I understand, with potentially a very large number voters in ever-changing cloaked identities (as voting right tokens could be continuously bought & sold).
Today, in the real world - DAO’s are an LLC coordinating on Discord, or Zoom, or other common communication tools.
That DAO coordination happens fully in cyberspace is promoted as a unique differentiator to how businesses run today.
In my experience, the key unique characteristic of DAOs are that you may not know who you’re doing business with.
DAOs can also be built to support fund disbursal through a m-of-n multisig - ie, a certain number of members have to vote on a transaction.
It's also possible to do things like create NFTs and setup recurring revenue from them to go back to the DAO which distributes them to their members.
Side note - in WY, DAOs have some degree of legal standing now (IANAL): https://www.wyoleg.gov/Legislation/2021/SF0038