DAO from the perspective of Bitcoin, and the DAO model derived from it

In September 2013, Stan Larimer first proposed in Bitcoin and the Three Laws of Robotics that Bitcoin can be viewed as an unmanned company, or think of it as a Distributed Autonomous Corporation (DAC).

Bitcoin DAO

“Can we construct a DAC that you would trust more than a Swiss Bank? I think Bitcoin may have found a way – with distributed autonomous software and its own  Three Laws of Robotics." What happened between the Swiss Bank and Russia these days, answered Stan Larimer's question from the side.

Stan Larimer considers Bitcoin as a shareholder-owned, employee-run, non-profit crypto company! Bitcoin pays for “mining” services that verify transactions and secure the network in newly generated bitcoins, where miners can exchange bitcoins for other currencies, goods and services.

In Bitcoin DAO, the company's operating rules cannot be changed unless a majority of stakeholders vote for another version of the software. It is not the holders of existing shares that make this decision, but the "employees" who contribute computer resources (mining robots) to run the company.

This is exactly what Bitcoin does, shareholders get equity growth, employees get voting rights, and all "income" is paid to employees as compensation for their work. It has no profit.

Bitcoin DAO model

The DAO may be the Holy Grail of Web3, but it's also the most vaguely defined. Given this, let's try to define a DAO from a Bitcoin perspective.

A DAO is a fluid online community that uses distributed autonomous software or smart contracts to issue its own internal token and distribute it to its contributors. The Bitcoin DAO model is as follows:

Bitcoin DAO model
Bitcoin DAO model

When we talk about Bitcoin, we can actually view Bitcoin in three different ways:

  • Token perspective: each bitcoin can be regarded as a small "share" of the Bitcoin organization
  • System perspective: Bitcoin is a distributed autonomous software that follows rules defined by stakeholders
  • Community perspective: Bitcoin is operated by miners and contributed by bitcoin holders, thus forming the Bitcoin community

DAO model

However, people are not satisfied with DAOs like Bitcoin, because it is not smart and powerful enough: 1) Bitcoin does not "hire" people other than mining protocols; 2) It follows simple rules and relies on high autonomous intelligence to upgrade and manage, unable to deal with complex rules.

The vast majority of DAOs still require a lot of human participation and interaction according to the DAO-defined protocols to ensure their normal operation. Therefore, DAOs automation is at the center and humans are at the edge.

The following is a more complex DAO model evolved on the basis of the Bitcoin DAO model:

DAO model
DAO model

This DAO model supports the creation of richer types and more complex DAOs. Compared with Bitcoin DAO, it has the following characteristics:

  • Anyone can easily deploy smart contracts on Ethereum or other public chains, issue DAO tokens (or community tokens), and define minting rules.
  • In addition to supporting highly autonomous intelligent distribution such as the Bitcoin mining protocol, DAO can also distribute community tokens to contributors through the proposal voting system with the help of human wisdom.

In 2021, with the great development of DeFi, the financial infrastructure of the Web3 world has been initially improved. Platforms such as NFT, SocialFi, and GameFi have sprung up, and various DAO creation platforms such as Mirror, Colony, DAOhaus, Juicebox, and Nutbox have appeared in large numbers. DAO is on the eve of its outbreak.

Notes:

A smart contract is the simplest form of decentralized automation, and is most easily and accurately defined as follows: a smart contract is a mechanism involving digital assets and two or more parties, where some or all of the parties put assets in and assets are automatically redistributed among those parties according to a formula based on certain data that is not known at the time the contract is initiated.

References:

[ Bitcoin and the Three Laws of Robotics ]

[ DAOs, DACs, DAs and More: An Incomplete Terminology Guide ]

[ Nutbox, Create DAO and Configure its DApps in 3 Minutes ]

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