The innovation and impending proliferation of blockchain-enabled applications has and will usher in the era of decentralized governance. Among other capabilities, the technology enables cryptographic, tamper-proof transactions to occur on a well-organized, shared global database. These are the rails that allow us to more justly embrace one of our most prized human rights: the ability to influence and secure our social and economic experience through democracy.
DAOs are governed by people, but policy creation and execution is managed by software smart contracts to ensure transparency and compliance. These smart contracts run on servers all over the world, and if one server is attacked, another will take its place to serve the same contracts. This makes the software immortal, secure, and censorship resistant. Members of a DAO can vote on policies and manage their daily transactions safely from any Internet-connected device.
Here are some facts and mechanisms regarding how DAOs may operate.
- DAOs can choose how they govern themselves. They can use direct democracy, representative democracy, or multi-chamber governance. They can also use governance to change their rules and methods. They are living organizations meant to adapt with unprecedented speed and scale.
- DAOs can utilize a myriad of voting techniques. They can use one-person-one-vote, quadratic voting, cumulative voting, cardinal voting, a combination of voting types, or a yet-to-be-invented method for voting. Votes may be public or private, but they are all guaranteed to be safe and provably valid, accurate, and counted.
- DAOs can create and issue tokens to represent value or utility. For example, DAOs often provide a product or service to their customers. They can issue a token to their members/workers as compensation, and the members may trade those tokens to the DAO’s customers for a local currency that members can in turn use to pay their bills, such as rent and groceries. Customers then exchange the same tokens back to the DAO for products and services to perpetuate the economy.
- Charitable DAOs can provide operational transparency and governance tools to donors. Donors can see precisely how, why, where, and to whom their donations are being used, and the impact that they had in furthering the cause of the charity/non-profit.
- Like popular social media networks and groups, DAOs are borderless and real-time. They enable global integration to previously inaccessible economic freedom.
- DAOs have tools to provide access to capital and stakeholder management not available to even the largest corporations in our most open economies. DAOs can issue tokens to represent stakes in their organization, and then provide micro-rewards back to token holders from every transaction that sells a product. Literally and proven, a DAO can share the profit from a sale of a single banana, seemingly infinitesimal, to millions of token holders in real time with perfect precision.
- DAOs can easily be layered or integrated, perhaps using a franchise-esque or local-first organizational model. Like minded DAOs may integrate tightly, loosely, or not at all, depending on their goals and values. Like all policies, these integrations are managed via governance and execution guaranteed via smart contracts.
We are only at the beginning of innovating and learning how best to exploit this transformative technology. There is no better time than now to contribute your expertise and energy to pioneering the era of decentralized governance.
GBA Decentralized Governance Working Group
Furthering its mission, the GBA is chartering a new working group, led by Max Gravitt, to be focused on building, implementing, and promoting decentralized governance to solve public sector challenges around the world. The team will create an open source platform and toolkit that organizations can use to design, launch, and manage DAOs of all sizes and missions.
About Max Gravitt
Max is a lifelong technologist passionate about building software products that increase freedom and are loved by users. He has industry experience in analytics, supply chain, commerce, and consumer goods. When he’s not designing products or developing smart contracts, he can be found coaching track and field and trying to keep up with his 12-year-old triplets.
Max founded Digital Scarcity in 2017 to build a platform that enables practical, real world blockchain solutions for communities and businesses.
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Hypha, our most recent DAO, watch a quick 5-min video demo of Hypha DAO here