DAO with Zero Knowledge Proof
March 22nd, 2023

DAO (Decentralized Autonomous Organization) is a form of organization that leverages blockchain technology to achieve autonomous governance, distribution, and collaboration in a decentralized manner.

1. DAO infrastructure can be improved, especially in regards to its privacy characteristics:

  • All DAO information is publicly available, including member details and business secrets.

    • Current DAO technology requests members to reveal transactions and contribution records, which may be an invasion of privacy. The more obvious case study is Constitution DAO, where the public could always view the treasury amount and bid slightly higher than the DAO (which is what happened)
  • No private transactions within DAO communities.

    • The publicness of a DAO can be a double-edged sword. While public records can ensure fairness and transparency, it does not protect the anonymity of members in cases that they are needed. Existing DAO technology cannot execute private transactions within DAO members.

2. Zero-knowledge Proof + DAOs: Create a new era for the Web3 community.

Zero-knowledge proofs are a cryptographic primitive that verifies a statement without revealing any information. In Web3, zero-knowledge proof technology can be applied to various scenarios, such as identity verification, asset transaction, data sharing, etc. In a DAO, zero-knowledge proofs can be used in scenarios such as private transactions and public elections.

By implementing privacy-protected election and voting mechanisms, participation within DAOs will increase significantly, and the security and privacy of DAO members will be greatly enhanced.

A classic example of zero-knowledge proofs in a DAO election will look like this:

  1. Create a DAO contract
    First, create a DAO contract to manage the voting process. The DAO contract should contain a set of voting rules, such as voting start time, voting end time, voter qualifications, list of candidates, etc.

  2. Register voter
    In the DAO contract, a process of registering voters needs to be clarified so that only qualified voters can participate in voting. Voters need to provide necessary information to prove eligibility, for example, proof of identity, proof of address, etc.

  3. Create a zero-knowledge proof
    Voters use zero-knowledge proofs to prove their eligibility without revealing any private information. Voters can use zero-knowledge proof protocols like zk-SNARKs to generate proofs.

  4. Anonymous voting
    Voters use their crypto wallets, which have already been verified by the zero knowledge proof to be eligible without any private information of the voter, to vote for candidates they wish to vote for. Voting results will be encrypted and only a specific decryption key can decrypt them.

  5. End the election
    When the voting is over, the smart contract will calculate and verify the voting results. Voting results will be stored in the smart contract in encrypted form, and only a specific decryption key can decrypt them.

  6. Publication of election results
    Finally, election results will be announced and revealed to voters and other interested parties.

3. Maximization of Fairness and Collective Profits

Circling back to the example of Constitution DAO, ZKP technology can ensure:

  • All donations to the DAO are confidential

  • DAO treasury will remain private

The above points would have prevented Constitution DAO from being exploited during bidding. Additionally, ZKP is also useful in fund voting and incentive distribution for community members.

4. Artificial intelligence (AI) technology will greatly improve private communities’ self governance abilities

Clique has recently made an effort to explore AI technology, such as ChatGPT, and ZKP into the infrastructure of DAOs. These technologies offer the potential benefits of enhanced privacy and security, as well as increased intelligence and autonomy for DAO systems.

  • AI verification and decision-making: Certain DAO systems require members to provide information to verify their qualifications and contributions. This could entail sensitive and confidential data, such as transaction and voting records. Zero-knowledge proof technology can facilitate verification without divulging such information. Furthermore, AI can analyze and process this data to generate more precise and intelligent decision-making outcomes.

  • AI data sharing and collaboration: By focusing on the management of AI data sharing and collaboration, a DAO can promote fairness and transparency in the exchange and utilization of data. Through the DAO platform, members can participate in voting, proposing, and approving decisions, while smart contracts can be utilized to guarantee the security and credibility of data exchange.

  • AI autonomous governance and optimization: In certain DAO systems, active involvement from members is necessary for efficient and effective decision-making and governance. However, the incorporation of AI technology can enable self-governance, problem-solving, and automatic optimization of system processes and rules. Additionally, zero-knowledge proof technology can safeguard the privacy and interests of members while bolstering the credibility and dependability of the DAO system.

5. Conclusion

This article only briefly discusses the impact of ZKP’s potential in the Web3 community. As technology advances and application scenarios expand, the combination of zero-knowledge proof and AI technology is expected to play an increasingly significant role in DAO applications. We anticipate that in the near future, more secure, credible, and private DAO organizations will replace traditional community structures, thus maximizing the protection of members' interests.

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