Hacker News Reader

Comment by drcode | Hacker News Reader

TLDR; A computer program living on the ethereum blockchain is currently in control of 107+ million dollars, making it the second largest crowdfunded project in history. Shareholders vote on proposals to give money to other entities (probably also programs on the ethereum blockchain) that they hope will make money and send it to the parent contract.

All votes are managed by a program written in EVM code, which runs on a sort of "virtual computer" that is designed to be (in theory) 100% secure, 100% reliable, and 100% incontrovertible. No middlemen have any control over this program, it essentially completely outside of any human control (beyond the voting rules encoded within it.)

UPDATE: Apparently this morning it passed $120 million and is now the largest crowdfunded project in history.

View on HN

Although the "proposals" themselves are Ethereum "contracts" (programs), the thing that the money goes towards doesn't have to be a program.

The most popular proposal for The DAO to invest in is actually a German corporation called Slock.it UG: https://www.online-handelsregister.de/handelsregisterauszug/....

And Slock.it is the creator of The DAO...

Sounds like money laundering to me

nope, but I wouldn't argue if you called it an unregistered security.

This sounds like a bad way to launder money, the logistics and scale issues make it impractical. Besides I doubt transferring $→ETH→DAO→ETH→$ is adding any extra obfuscation compared to $→ETH→$.

For what it's worth, I follow this space closely and have seen several recent things that look like money laundering to me that I won't name- This project is not one of them (though I have other concerns with this project)

More like a pyramid scheme?

It's a long process to check all the boxes for what makes a good proposal, so the fact that Slock.it had such a head start on any other potential proposers is more than a bit suspect. Perhaps there should be a proposal to lock all funds for, say, 45 days so there can be enough of a competitive environment for proposals?

The bigger issue is that the DAO has raised >$120M, and Slock.it hasn't said how mich funding they need. Many people are fully expecting the ask to be much larger than they would have originally asked for. It's a terrible decision on their part and raises a red flag for me

100% secure

AFAIK the formal verification mechanism for EVM programs is not yet complete, so that's a risky claim. Not to mention that the people involved are interacting with it using ordinary PCs, so spear-phishing them might be the easiest way to steal the $120m.

And, to the best of my knowledge, it has not been reviewed by experts. Platforms like this are notoriously difficult to build securely.

Not to mention, there are huge liabilities from a legal/securities perspective.

I'm wondering how this is different from a game of Nomic (the game where people vote on the rules of the game) played for money.

Now, Nomic can be fun. But a game of Nomic typically ends up with someone winning, not by gradually achieving the intended goals of the game that people wrote into the rules, but by exploiting a major flaw in the ruleset that lets them rewrite the game to be one that they instantly win.

When someone wins at the game of Ethereum, how much of other people's money do they walk away with?

If someone breaks Ethereum most of the money is destroyed. Once people realize that it's happened no one will trade anything for ether.

They don't have to break Ethereum, just the DAO code or surrounding systems.

Last time I checked, Apple Computers is worth $500+ Billion and is a public company.

Don't forget that the stock market is the original mass-crowdfunded project. Anyone can become an owner if you go to a brokerage account, and ownership rights entitles you to a vote for the board of directors and a share of the profits (ie: the dividend)

Agreed, "crowd funding" is an inexact term- I described it that way to help explain why some people think the project is novel. Certainly there is a lot of arbitrariness as to what belongs on a list of "top crowdfunded projects".

Yup. I just want to bring up the fact that this thing seems more akin to a classical public company, but in many regards is less transparent.

There's the fact that all the code and mechanisms is public, but that's the part that everybody trusts anyway. When you're a shareholder in Apple, the votes are tallied, all relevant information from the board of directors is published, etc. etc. And the SEC forces the company to publicly disclose financial information in the form of 10k, 8k, and publicly announce insider trades.

At the moment: I don't know who the "insiders" of this company are. Maybe one dude has $50 Million USD and effectively controls the entire damn "movement". Or maybe not. Knowing the identities of large shareholders is a BIG DEAL in public companies.

Still, the digital form probably has some advantages. Maybe future companies will find a compromise and manage to exist as digital contracts akin to this DAO? But I don't expect this first version to actually work. Its pretty much a learning experiment, to see what is and isn't possible with technology.

If any lessons are to be learned from Bitcoin: politics will affect this entity eventually. The technology currently serves as a mask to the politics. But politics always rears its ugly head eventually.

Apparently 0.8% of DAO token holders own >50% of the tokens. There is lots of potential for conflict of interest

ya but they are publicly traded. crowd-funded refers to group funding for privately owned companies

Your summary somehow reminds me of TRON... ;)

I guess it comes down to the question whether one beliefs that mankind is naturally good or bad. As I still believe in the first one I may give this idea a chance. I still have a dream...

>I guess it comes down to the question whether one beliefs that mankind is naturally good or bad.

Incentives and structures rule all. They're much more powerful than the individual goodness of people, or even their collective goodness.

Reply on news.ycombinator.com