I have been doing some reading and learning this last week. Some things I have found:

1. Terminology: A lot of the terminology around DAOs is still inconsistent and open to interpretation. and best practises around how to run and govern a Decentralized Autonomous Organization are still being formed.

2. More than tech: The concept of democratised or decentralised organisations requires much more than technical understanding. To grasp the magnitude, we need to begin to rethink how organisations operate and peel back some of the fundamentals around ownership, participation, hierarchy and pretty much anything that can be classed as an organisational structure.

3. Yoda or Vader?: There could be a pretty thin line between utopia and dystopia around how these things could develop. We should all think like Yoda not Vader on this one.

   I will make some analysis / commentary on the above or if you are that way inclined, just scroll to the bottom of the entry to look at some memes that try to explain the same concepts :-)

   Terminology

   Way back in 2014 Vitalik Buterin, founder of Ethereum, college drop out and ETH billionaire, tackled some definitions:

Vitalik outlines the differences between Decentralized Applications (DA - although referred to today as dapps), Decentralized Organizations (DO) and Decentralized Autonomous Organizations (along with other concepts).

To paraphrase and simplify for the lazy amongst us:

Decentralized Applications

“a decentralized application has an unbounded number of participants on all sides of the market. Second, a decentralized application need not be necessarily financial.”

An example of a decentralised application most of us are familiar with are the peer to peer file sharing services e.g. BitTorrent

Decentralized Organizations

To provide a comparison point for “DO’s”, Vitalik goes on to baseline a typical mainstream organisation with shareholders, leaders, employees and a hierarchical set of norms that govern operation. Then:

“The idea of a decentralized organization takes the same concept of an organization, and decentralizes it. Instead of a hierarchical structure managed by a set of humans interacting in person and controlling property via the legal system, a decentralized organization involves a set of humans interacting with each other according to a protocol specified in code, and enforced on the blockchain.”

For him a decentralized organization is basically a regular org with a blockchain as the ledger of record for all value and property transactions.

Decentralized Autonomous Organizations

“The ideal of a decentralized autonomous organization is easy to describe: it is an entity that lives on the internet and exists autonomously, but also heavily relies on hiring individuals to perform certain tasks that the automaton itself cannot do……The obvious difference between a DO and a DAO, and the one inherent in the language, is the word “autonomous”; that is, in a DO the humans are the ones making the decisions, and a DAO is something that, in some fashion, makes decisions for itself.”

For visual learners:

More than just tech

The lack of a firm definition and the fact that there are no blueprints or best practises to running a DAO yet, dictates an environment of experimentation and LEAN startup style learning cycles.

Rapidly, service providers are growing to “enable” DAOs to function. It will be fascinating to see how this ecosystem evolves. From Corbin Page:

Wonder is one of just many startups putting some structure and definitions around the operation of DAOs.

The Mckinsey of Web3? (probably much better than Mckinsey themselves…)

Utopia or Dystopia?

This is a big meaty topic and probably should have it’s own blog and insights from those deeper in the space (Chauncey - looking forward to our catch up!)

OK ….. The Memes

The end until next time!