DAO

DAO stands for Decentralized Autonomous Organization.

See also DHO or Decentralized Human Organization, a term popularized by Hypha.

Definition

DAOs can be defined as a multi-agent system, working towards a clear objective. As computational organizations, DAOs are comprised of humans and technology, thus DAOs are also human-machine systems, where computational components aid coordination. In a blockchain context, permissionless decentralized blockchains provide an infrastructural foundation to facilitate coordination by reducing transaction costs.

According to institutional economists, DAOs are digital organizations.

History

The phrase “Decentralized Autonomous Organization” was first mentioned in the field of cybernetics by German Computer Scientist Werner Dilger. He understood the concept as a complex, multi-agent information processing system that is autonomous, i.e. self-sustaining and self-referential. In the the cybernetics approach DAPs are symbiotic human-machine ensembles (relation of co-evolution, co-dependence, and augmentation).

The recent history of DAOs is related to the history of decentralized technologies, encryption technology, and public blockchains. DAOs embody early cypherpunk ideologies of political decentralization. In this cultural context autonomy refers to self-governance or independence from external political direction or coercion, and it is pursued via technological means.

Vitalik Buterin, Ethereum co-founder made a post about “Decentralized Autonomous Corporation” (DAC) in Bitcoin Magazine (2013). The term appeared in the Ethereum whitepaper with other related terms like DAOs and DAs.

Comparisons

DAOs are not OVNs - See Sensorica's work in progress about DAOs

In this paper, Vinicious has reclaimed the term as Decentralized Autopoietic Organism.

Design Elements

DAOs can be designed for any number of organizational functions to serve different objectives. They use various blockchains and blockchain technology and services.

DAO ontology affects DAO design

Governance

Technology is used to help with decision making and enforce collective decisions. Thus, DAOs provide an institutional infrastructure, to enact “a governance model sanctioned by software”.

Usually meritocratic, formalized by its tokenomics.

Legal structures

Legal scholars have defined DAOs as “a blockchain-based system that enables people to coordinate and govern themselves mediated by a set of self-executing rules deployed on a public blockchain, and whose governance is decentralized (i.e., independent from central control)”.

Aaron Wright states that DAOs “aim to be governed by democratic or highly participatory processes or algorithms”. This view focuses role that computation, algorithms play in DAOs to automate procedural elements of organizing, to allow humans to focus on the more substantive elements.

COALA researchers outlined 11 points for DAOs to meet the requirements for legal recognition as an entity, which constitute a legal basis for conceptualizing DAOs

1. Deployed on a blockchain,
2. Provide a unique public address for others to review its operations,
3. Open source software code,
4. Get code audited,
5. Have at least one interface for laypeople to read critical information on DAO smart contracts and tokens,
6. Have by-laws that are comprehensible to laypeople,
7. Have governance that is technically decentralized (i.e. not controlled by a single party),
8. Have at least one member at any given time,
9. Have a specific way for people to contact the DAO,
10. Have a binding internal dispute resolution mechanism for participants,
11. Have an external dispute resolution mechanism to resolve disputes with third parties(e.g. service providers).

• Informal - no legal representation, only exists on the blockchain (Ex. Bitcoin, Ethereum, Uniswap)
• Associations
• Wyoming DAO LLC

External links

• DAO Design Patterns: Components that constitute “Decentralized Autonomous Organizations”
• Experiments in algorithmic governance continue