Blockchain has been developed for more than ten years, and the extended technology and application innovation have brought tremendous changes to the traditional technology system. The new encryption technology certification and decentralization mechanism have brought solutions to historical problems for all walks of life. After ten years of research and development, blockchain technology uses four major innovative technologies, combining distributed ledgers, asymmetric encryption algorithms, smart contracts, consensus mechanisms, and major fields to create new application models, such as the current IEO , ICO, DeFi, etc. are all innovative modes combined with blockchain.
In addition to the above technical highlights, DAO is also one of the most anticipated applications of blockchain technology. After all, this is the first time in history that we have been able to coordinate in a faithless and anonymous manner, collectively making a decision on something. This decentralized community governance model has a profound impact on the promotion of national governance, corporate governance, and even the way the entire human community communicates and coordinates. Next, let me add MOSAAO, the world's first token DAO issuance platform, based on the article on DAO popular science by Vix Gaba Vineb, the technical development leader of Digix. There are a total of 10 well-known DAOs, and the development of DAO is popular for everyone. . In this article, I will try to analyze the well-known DAOs that exist or will be launched in the near future. When discussing DAO, I will classify them based on 3 main attributes:
1. The nature of the decision
2. Incentives for participation
3. Degree of decentralization
I will also discuss my views on DAO and my concerns about existing mechanisms.
Before I formally write this article, I need to explain my definition of DAO: In my opinion, DAO is a way for people to make collective decisions on an issue by organizations that operate in coordination with each other through trustless protocols.
(1) Bitcoin-Original DAO
In my opinion, Bitcoin is the first DAO ever. In essence, it is an organization operated by miners and complete nodes. They coordinate with each other through the Bitcoin protocol to make collective decisions on which transactions are included in the main chain of the Bitcoin blockchain and these transaction orders. The principle of this organization is simple: protect the Bitcoin network and facilitate transactions on its chain.
The decision of "Bitcoin DAO" is to carry out on the block and transaction of the blockchain itself at a relatively low level of the blockchain infrastructure. Then we can say that most other blockchains, such as Ethereum or Zcash, are also basically DAOs. However, in this article, I will mainly discuss DAOs that exist on the blockchain, which have more discussion value. I call these projects "meaningful DAO". These "meaningful DAOs" inherit the decentralized and trustless properties of their underlying blockchain protocols, and build additional logic on top to provide more "meaningful" technical implementations.
The motivation for participating in the "Bitcoin DAO" is mainly mining rewards. If the miner acts normally and diligently produces a valid block, it will receive a contribution reward for participation and contribute to "Bitcoin DAO". In my opinion, the motivation for participating in DAO is the key to its success. Rationally speaking, participants will only actively contribute to the DAO if they are fully motivated. Bitcoin has proven the way to enable participants to continue to contribute to the community. It is worth noting that the motivation to contribute to "Bitcoin DAO" is immediate, without delay, and instant gratification.
Bitcoin has a high level of decentralization. The protocol itself is completely decentralized, and it can run as long as there are participants in the network. However, in practice, we cannot say that it is completely decentralized. At the time of writing, the top 4 mining pools have more than 50% of the hash power, which means that they can collude and perform 51% attacks to block specific transactions or double spend attacks, and new upgrades to the Bitcoin protocol are also focused on Minority hands.
It may already be obvious to some people, but it is difficult to achieve 100% decentralization in practice. Even if the ability to create blocks is highly decentralized in some way, or protocol upgrades are done through a highly decentralized voting mechanism, security holes in major clients / operating systems, etc., can still seriously damage the network. As with everything else, reality will never be as perfect as theory, because assumptions do not hold. Taking a step back, should we fight for full decentralization? This is another issue that I will discuss in detail in a later section.
In any case, Bitcoin remains one of the greatest inventions of mankind. Since the days when we all live in tribal families based on family trust, humans have come up with many concepts and built many complex systems to try to coordinate among ourselves. However, Bitcoin has created a whole new way of coordination, with rules written and executed by immutable logic. Bitcoin is the mother of all DAOs.
(2) DashDAO-the first "meaningful" DAO
DASH was originally a fork of Bitcoin and introduced additional DAO elements on top of the core blockchain protocol in August 2015: 10% of block rewards went into the pool to fund the development of the Dash network / ecosystem.
In DashDAO, anyone can pay 5 Dash to create a proposal for selection. Dash Masternodes (need to lock at least 1000 Dash as collateral) vote to decide which proposals can be funded.
The decision made at DashDAO is about how Dash circulates in real life and ultimately promotes Dash adoption.
The motivation for Dash Masternodes to participate in DashDAO voting is the long-term appreciation of the value of the Dash they hold because they vote for valid proposals and block bad ones, thus saving money for better proposals.
DashDAO has a high level of decentralization. Anyone can join or leave the community as Dash Masternodes, as long as they get a vote from Dash Masternodes, anyone's proposal is likely to pass.
As the first DAO to make a clear decision on the blockchain consensus layer, DashDAO is one of the most active and successful DAOs. To date, DashDAO has passed hundreds of proposals, from funding development work to marketing and community awareness work. At the time of writing, 31 valid proposals voted in favor of the next funding release of 5735.52 Dash in May 2019. With the support of DashDAO, Dash has built a great ecosystem, has an active community in multiple countries, and supports multiple types of services such as VPN, mobile recharge, and even buying fried chicken!
(3) The DAO-the most failed DAO
The DAO is by far one of the most exciting projects in the blockchain. It began to try to create a new decentralized business model in May 2016. The DAO-its token holders jointly run smart contracts to contribute to their token sales. Token holders voted for proposals that should have rewarded The DAO. The DAO project raised 1.27 million Ethereum funds during the ICO, which was almost 14% of the ether supply at the time.
The decision made in The DAO is similar to DashDAO: how to allocate a pool of funds for real-life proposals and ultimately return to The DAO.
The motivation of The DAO participants to participate in their voting is the return of the project's success and the rise in the price of tokens in the secondary market to achieve value enhancement. It is undeniable that there are some problems with The DAO's incentive structure. First, there is no guarantee that projects funded by the DAO will eventually reward token holders. Second, funded projects need to sell Ethereum in cash, which will temporarily reduce the value of Ethers. The second issue is shared with any The DAO, in which DAOs are funded for tokens that support the economic interests of The DAO participants. There are other problems with The DAO's structure, but this is beyond the scope of this article.
The DAO is quite scattered. There is a curator who checks the identity of the person who submitted the proposal and ensures that the proposal is legal before the address is whitelisted. This process, and how to choose the initial curator, is not completely decentralized at this point. However, one can vote as a curator, and anyone who is dissatisfied with the way the DAO works can be separated from The DAO while retaining their share of funds and rewards.
All in all, The DAO is an interesting and novel concept, no matter how it ends, it should be a cool experiment. Unfortunately, instead of letting us see more of its glory, it ended in a rather early and ruthless way. A flaw in DAO's code caused the most famous hack in history, which directly caused the Ethereum fork.
(4) MakerDAO-Administrative DAO
MakerDAO was launched on the Ethereum mainnet on December 17, 2017, and was created as a DAO to manage the operation of its stablecoin DAI, whose value is anchored to the US dollar. Dais are generated by locking some Ethereum (or other assets) into a mortgage debt position (CDP). In short, the stability of DAI is maintained by many feedback mechanisms and implemented as a smart contract system on the blockchain.
The decision made in MakerDAO is basically to adjust the configuration of the entire system and trigger an emergency shutdown state if necessary. The configuration to be decided includes the parameters of the CDP type, the CDP type to be added, and the Oracles collection of the price feed of the mortgage type. The emergency shutdown mentioned above is a global solution for the entire system, which is triggered when there is a Black Swan incident that threatens the normal operation of the entire system.
MakerDAO participation is the holder of MKR tokens. The main motivation for participating in its governance process is the appreciation of the value of MKR tokens when the DAI stablecoin system runs well and grows over time. In the Dai stablecoin system, the creators of CDP will have to pay the stability fees in MKR (or multilateral mortgage DAI to maintain the DAI savings rate), and these mortgage tokens will be burned, which indirectly increases the value of MKR. It is undeniable that this incentive mechanism is more like a long-term process, it is not like the instant gratification of Bitcoin. In addition, there is a hitchhiking problem, lazy MKR token holders can still enjoy all the benefits of the appreciation of MKR value without spending any time or energy in the governance process. This problem is also very common in most DAOs.
On the other hand, there is a case where it is not necessary to motivate so many votes. After all, voters with a small amount of right to know may be better than voters with more tokens but less knowledge.
MakerDAO is quite decentralized. In theory, all decisions in MakerDAO are done purely through MKR voting. However, the distribution of MKR is not the most dispersed. Moreover, it is difficult to configure such a complex system through decentralized decision making. Many configuration changes, such as stabilization fee adjustments, need to be studied and proposed by the Maker Foundation. If everyone was free to choose all configuration values and the result would be a weighted average, that might be crazy.
This leads us to a point put forward by Vitalik, which includes that completely decentralized, tightly coupled chain governance is overrated. Through our culture, the current human coordination mechanism has been developed for hundreds of thousands of years. In contrast, the new method of decentralized personnel coordination through blockchain technology and DAO is not even new. Although DAO and decentralized voting are exciting breakthroughs, I think it may be too early to rely on them 100%. This combination of inputs from chain voting, informal offline consensus, and core development teams may be more ideal, at least for now.
(5) DigixDAO-Gold DAO
The purpose of DigixDAO is to promote the adoption of DGX. Digix Gold Token is supported by 99.99% gold 1: 1. DigixDAO currently raises 395,000 Ethereum to fund projects in the DGX ecosystem.
The decision made in DigixDAO is similar to DashDAO: how to allocate a pool of funds for real-world projects to promote DGX adoption.
The motivation for participating in DigixDAO is slightly different from other DAOs: DigixDAO participants holding DGD tokens receive a reward every quarter from the fees of DGX transactions. These rewards depend not only on how much DGD you have, but also how actively you contribute to DigixDAO by voting or executing a project. As a result, participants are relatively more directly motivated and satisfied, and can suppress less active participants.
DigixDAO is definitely not one of the most decentralized DAOs. Proposers must be verified by Know-Your-Customer (KYC) from the Digix team. For policy, regulatory or legal reasons, the Digix team can also stop funding for certain projects. It can be said that by operating blockchain gold products, Digix and DigixDAO need more central decision-making processes in the real world. (6) MolochDAO-Incentive Balance DAO
MolochDAO was launched in February 2019 to solve the ubiquitous Moloch problem. This problem occurs when personal incentives are not aligned with the best global results. The immediate example that MolochDAO aims to solve is the current state of Eth 2.0 development: Although some people spend a lot of cost and effort to contribute to Eth 2.0, the benefits of their work are disproportionately shared with all other projects, and they are not necessary Make your own contribution to infrastructure development. Paying is not proportional to the gain, which consumes the enthusiasm of the developer.
In MolochDAO, new members need to include Ethereum into the funding pool to join and get the corresponding number of shares. These bets are used to vote on proposals that further advance the MolochDAO cause and should increase its value.
There are two types of decisions in MolochDAO: First, who can enter the guild. This is to better align the interests of new entrants with the guild. Second, how to allocate new funds (basically diluting the bet pool) to proposals that should increase the value of the entire guild.
Members of MolochDAO can liquidate their funds at any time to obtain the corresponding amount of funds from the guild. Therefore, participants can increase the value of the guild by providing excellent proposals, or increase the number of company shares they hold by implementing the proposals themselves. For example, a proposal requiring 1% of the value of the guild to upgrade core infrastructure, which is believed to increase the value of Ethernet by more than 1%, should always be funded. Admittedly, those outside MolochDAO can still use these infrastructure upgrades for free. However, a clever thing is: for the big Ethereum users, he may do better, contribute their idle Ethereum to MolochDAO and help fund system upgrades, which may significantly increase their net Ethereum The value of blockchain. If you want your Ethernet storage value to grow, instead of complaining about the direction and speed of blockchain development, it's best to do it yourself. . It will be interesting to see how MolochDAO performs in practice.
MolochDAO is not too decentralized in the way it directs its first members and restricts access to new members. Initially, the upgrade plan was to replace it primarily by exiting the old DAO and redeploying the new contract. As stated in the MolochDAO white paper, these off-chain and centralized mechanisms are functions, not defects.
(7) DAO stack and holographic consensus
This section introduces the DAO Stack, the framework for creating the DAO, and the holographic consensus concept introduced by the DAO Stack.
The first DAO built using the DAO Stack will include Genesis DAO; DxDAO, created by DAO Stack itself, and PolkaDAO, created by Gnosis, to fund Polkadot's community projects. At startup, all these DAOs are accessible through Alchemy, which is a UI framework for DAOs using the DAO Stack.
For the sake of discussion, let's talk about SampleDAO created using DAO Stack. There will be two main tokens in SampleDAO's work: non-transferable reputation and predictor tokens. Reputation will be used to vote for proposals in SampleDAO. Suggestions can be made to upgrade the logic of SampleDAO itself to make it a self-developing DAO.
Now there is a problem that DaoStack's holographic consensus is trying to solve: As SampleDAO grows into a large DAO, there will be many proposals to follow. DAO's attention should be used only on more recommendable proposals, not on spam proposals. Summarize the holographic consensus of the DAO Stack: If they think that A may pass, people can put some Predictor Tokens into a certain item A. If A gets enough predictor tokens, it will be promoted to a more people will pay attention It's in the pool and adjusts the required voter turnout. If A does pass, then those who put tokens into A will get some rewards in terms of tokens and levels. So there is a prediction market that will motivate people to filter better proposals.
This seems to be a clever way to solve the problems of scalability and elasticity. In addition, the DAO Stack envisions that different DAOs using its framework will use the same Predictor Tokens GEN created by the DAO Stack itself. This will create a network of "predictors" around different DAOs and help filter better proposals.
After reading about the DAO Stack, my first concern is: A person who bets on A for bidding X will only vote for A, whether or not A is suitable for bidding, because X wants to get the correct predictive reward.
The second question is: What incentives can reputation holders take to vote for the project being promoted? Without enough incentive, the only active voter could be the Stakers themselves due to the first problem. I will discuss this more in DxDAO.
The third problem is that because "correct predictions" are only defined by voting results, predictors may be more concerned with public opinion about a proposal than the actual quality of the proposal. It could look like this: "Oh, I know Proposal B is a bad proposal, but I also think it's popular, so I will never pay for it because I already voted for it."
I know that these concerns have not been addressed, and it is still difficult to have a sound mechanism, although it is not impossible.
(8) DxDAO-Anarchist DAO
DxDAO will be launched in April 2019, created by Gnosis using the DAO Stack, and is a completely decentralized DAO. Gnosis will exit and will not retain any control or pre-set assets in DxDAO after deployment.
The original purpose of DxDAO was to manage the parameters of the DutchX protocol. DutchX is a novel and completely decentralized transaction protocol that uses Dutch auction principles. By trading on DutchX, you will gain the reputation of DxDAO. Reputation is basically a bet used to vote in DxDAO. You can gain prestige by locking Ether or other ERC20 tokens traded on DutchX.
Although managing the DutchX protocol was the original purpose of DxDAO, DxDAO can gradually evolve into any possibility in the Ethereum blockchain because its participants can vote to upgrade the logic of DxDAO itself.
The motivation for participating in DxDAO is to gain more reputation. However, I have yet to find a good link between the success of the DutchX protocol and the value of DxDAO's reputation. This is basically my second question about the DAO Stack. Indeed, predictors can be a good incentive for people to use GEN and filter proposals. However, if there is little correlation between the reputation value in the voter account and the success of the DutchX protocol, the only people who are motivated to vote may be the predictors themselves, who will only vote for their proposal.
As for the degree of decentralization, DxDAO is obviously highly decentralized in the spectrum. Anyone can participate, and no one has special powers.
DutchX will become one of the most important DAOs using the DAO Stack framework, with a holographic consensus mechanism. This is a new concept to see how this "anarchist DAO" will become interesting. As Gnosis said:
"DxDAO will develop itself independently of Gnosis, living or dying to see itself"-Gnosis
(9) Polkadot-Meta Protocol DAO
Like Bitcoin, most blockchains are already DAOs and can make decisions on block and transaction levels. However, most of the blockchain protocols remain unchanged. If the agreement is to be changed, it will be through offline and traditional human coordination methods (for example, through opinion leader debate and community support).
By moving the protocol upgrade mechanism on the chain, Polkadot took it to another level. This means that Polkadot's stakeholders can decide on a hard fork through chain voting, which can smoothly evolve Polkadot into anything through protocol upgrades. Therefore, Polkadot can be said to be a meta-protocol, a protocol that changes its own protocol.
Polkadot's decision is taken through a referendum and can be submitted publicly or by the "Council". The committee consists of a number of seats that are continuously increased or decreased through the electoral process. The council can propose referendums and block malicious or dangerous referendums. Ultimately, the referendum must pass share-based voting before its proposed changes are implemented.
Stakeholders' motivation to participate in the "Polkadot DAO" or Polkadot governance process is that, due to the success of the Polkadot network, they are rewarded with Dot tokens.
Polkadot clearly has a high degree of decentralization, and even a hard fork is determined by voting. It is undeniable that the original council selection may not be completely decentralized, which is a necessary condition that many may agree. However, at least in theory, the rotation mechanism of council seats should become more decentralized over time.
Polkadot will be one of the most famous blockchains that implements chained governance for protocol upgrades. It will be interesting to see how much Polkadot will upgrade. As Gavin said, he wants to see Polkadot itself develop into an entity, a powerful concept that could change the way society and humanity coordinate in the future.
(10) MOSDAO- the world's first token issuance DAO
MOSDAO is the world's first token DAO issuance platform. Compared with the traditional centralized token issuance platform, behind the platform operation of MOSDAO is not a centralized institution or company, but a decentralized community. DAO.
The launch of MOSDAO is mainly to solve the problems of opaque operation of the current centralized token issuance platform, incomplete and true information disclosure, and lack of voice of community members, which leads to fraud and air currency clusters. Provide investors with quality crypto asset investment opportunities. At first, MOSDAO was run on the smart contract of the Ethereum public chain. After the MOS public chain goes online, it will run on the MOS public chain smart contract.
MOSDAO has designed a new organizational structure that includes the roles of community members, jury, community leader, and development team. These roles are interconnected and motivated by distributed rules, avoiding the lack of traditional DAO architecture. Disadvantages such as automatic execution mechanism, lack of effective incentives, and community dominated by some people have laid a solid foundation for the operation of various distributed financial applications, and thus formed a new DAO 2.0.
Community members will also receive token rewards for participation. For example, participate in the DAO issuance of MOS tokens and get MOS token rewards. Make the fundraising process transparent through DAO, make the project disclosure information complete and authentic, and allocate incentives through smart contracts to make the distribution reward transparent. Through DAO, the token issuance right is completely down to the community, and token circulation The amount is determined by the consensus of how much the community purchases, and the price of the token is determined by the consensus of the community's willingness to purchase the price. By issuing tokens and fundraising in this way, the price consensus formed by the tokens is decentralized, reliable, long-term, and free, rather than centralized, speculative, short-term, and locked-up. . The issuance is on the market, and the primary and secondary markets are linked, which has a certain inhibitory effect on the problems of excessive speculation in the secondary market due to excessive speculation, lack of information, and incomplete consensus caused by incomplete consensus.
MOSDAO is a completely decentralized DAO. Anyone can participate, and no one has special powers. In the DAO 2.0 architecture, for the screening process of the jury, a random mechanism based on VRF (Verifiable Random Function) can be used. That is, during the process of determining issues and projects and submitting votes, a certain number of Random factors have avoided the possibility of relying too much on specific members and the possibility of stakeholders bribing known members, and truly achieved "decentralization."
With the launch of MOSDAO, MolochDAO, DigixDAO, GenesisDAO, DxDAO, WBTC DAO and PolkaDAO, 2019 can be said to be a year of DAO. It's great to see that there are different concepts among these new members of the DAO world. In practice, some of these concepts may succeed and some may fail. In any case, early experiments with DAO to witness new ways of human coordination will be an exciting and interesting journey. As you know, we may see the future direction of human organizations.