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Comment by chrisco255 | Hacker News Reader

This article is a good overview of DAOs but spends a lot of time on terminology and taxonomy, without necessarily painting a clear picture to someone not familiar with DAOs as to how they operate in the wild today and perhaps how they will in the future. I continue to believe that DAOs are one of the most disruptive technologies of the 21st century. The ability to coordinate humans and capital in a decentralized way is powerful and will be used for everything from for-profit initiatives to non-profit foundations. The pluggable, open-source nature of these systems means that DAO treasury management and governance will become more and more sophisticated with time. Eventually, many of us are going to end up taking jobs working for DAOs.

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What is the argument? Why would we expect a version of Apple with decentralized governance to outperform the current Apple?

I don't know why you would pick Apple. They are a hardware company. I'm not saying that the introduction of DAOs will be the death of all corporations. I could make a much stronger argument for a decentralized social network coordinated by a DAO, so I would make the case for a DAO-controlled Twitter, Reddit, or Facebook (which are software businesses). That's not to say that DAOs couldn't be used for a more physical business but software is certainly a more natural fit. Uniswap, for example, which is a decentralized version of Coinbase or NYSE, has something like 7 or 8 employees, is trading $2B a day in value, and has $8.5B in liquidity available for exchange. This is for a young startup less than 2 years old run entirely on smart contracts. Not bad.

https://info.uniswap.org/home https://cryptofees.info/

Uniswap is a pretty amazing story about how much operational efficiency can be gained with this technology. I'd say they're doing WAY better than "not bad" :).

It's easy to do great when you can skirt any and all regulations.

That's the story of this entire space.

What legal protections exist there for minority shareholders in the so-called DAO?

Is there anything provided by DAO that makes Uniswap runnable by fewer people? How many people would they need if they didn’t run like you say?

It's just regulatory arbitrage.

What uniswap is doing is quite likely illegal under current laws.

Please note: This is an opinion of some legal scholars on their situation. I am not making any moral or ethical judgements here, couldn't care less.

Yes, the DAO has aligned the community around Uniswap. By distributing governance over the protocol to their early users and community, they've grown to the size that they have. The liquidity providers and the traders have ownership of Uniswap. They now have a $7.5 billion treasury at their disposal, that they get to vote on how to spend based on their percentage of UNI token holdings.

So.. they capitalized on the hype around the technology and crowdfunded? From the past comment, I was hoping there’s any benefit to DAO itself that’d make an enterprise this size easier to run - you could technically achieve the same with a kickstarter campaign or a gofundme? Of course, the obvious orders-of-magnitude in value would be different, but that’s inherent to crypto’s inflation, not really due to any virtue of DAO?

No, they didn't crowdfund their token. They gave away their token to the early adopters, the users, and the liquidity providers on their platform: https://acceptingcrypto.net/uniswap-token-launch-uni/

They were already live for 2 years by the time they gave away their governance token. Even if you had just done one transaction with Uniswap, you received some UNI.

Now, those customers and those liquidity providers are aligned with the future success of Uniswap. They also get to vote on how to spend the $7.5B treasury. Pretty cool model. It's fundamentally different than anything that's come before it. Pay attention to DAOs.

How is this any different from a corporation?

At least with corporations you have legal recourse, minority shareholder protections, well developed body of law, and so on.

It also so happens that the early users just so happen to be developers themselves, and hold a

Yes, you can achieve the same with crowdfunding/crowdsale - but then you have a corporation and regulations, and the pesky anti-dilutive and other protections of minority shareholders and so on.

Governance token should be just called what it is - equity.

It is an interesting question, but what would outperforming Apple look like? and on what timescale?

Is it being more profitable? Having happier workers? Making the sleekest shiny things? And are we thinking for the next year or the next hundred years?

Decentralized organisations seem (to me) to be prioritising resilience over efficiency. This seems like a long game. But perhaps shared ownership and pseudonymous employment will appeal to people. And perhaps sourcing workers anywhere in the world will lead to quick contacts building and fast deployment too. Or it could get caught up in bureaucracy, but then we can just fork the daos and vampire attack them!

There is a lot a vague murkyness in national law as to who is responsible/where is tax payed/what is it, but the idea of being able to click a button and i have a borderless organisation with voting systems and memberships all ready to go to anyone who wants to join in is pretty exciting. Think of the crazy possibilities of collisions happening, people to meet, ideas to be generated. If we increase the speed at which people, ideas, and capital can come together that can be explosive (and that could be good or bad). We can have groups of strangers round the world seeding startups of anonymous teenagers writing code after school, before the university lecturers and vcs ever get to them. Thats radical and revolutionary. DAOs are the most exciting thing going in crypto imo.

The DAO Apple would vote to make iPhones with replaceable batteries, which as we all know, is what the market actually wants.

Because the governance structures of DAOs will be open source smart contracts they will be, in theory, easier to iterate upon and improve.

I'd say you could gain some efficiencies. I think the same governance structure that Apple has can be implemented for the most part in a DOA (e.g. shareholder voting, board assignments, CEO hiring, dividend distributions). The hard part is interfacing with physical world legal system. But even then the DAO can agree to accept jurisdiction X. Then we can do taxation and accounting in the clear. Obviously far out. But not impossible.

So, the company would have the same governance structure, only more efficient? How exactly it would be more efficient, you don't say.

Voting, and dividend distribution today requires intermediaries (e.g. broker). Those can be direct.

> Voting, and dividend distribution today requires intermediaries (e.g. broker). Those can be direct.

Issuing dividends in a cryptocurrency would disintermediate brokers and doesn’t require a DAO. Nor does “let’s upgrade our voting systems” require a DAO.

It does require a DAO. You need to know that no one party has control over the funds. Or they can screw the community. If the community is distributed the token in a fair way (and they'll know, since this is all blockchain and it's all visible), they can also inspect the code that protects the funds from being spent. So you can encode the mechanisms that protect the disbursements, and you can do this in a provable way. It's not some SQL database that's controlled by an admin key. It's not a bank account that the CEO has control over. All the funds are on-chain, in a smart contract, protected by code and cryptography. That aligns incentives in a powerful way that you can't replicate with stock ownership. You can't replicate it with a voting button on the Robinhood app. It is a fundamental shift in capital management and human coordination.

GP asked how a company like Apple would be made more efficient by becoming a “DAO”. A DAO acolyte — miketery is assuredly invested in a closely linked cryptocurrency — then opined Apple would save money on dividend distributions by becoming a DAO. And that shareholder voting would become more efficient. Yet neither thing requires having a DAO, assuming efficiencies are even possible to obtain that way.

I’m sorry, but I don’t see how what you posted is relevant to this discussion.

I'm confused... what do you mean no one party has control over the funds? Surely the whole point of investing in a company is to transfer control of the invested funds to the company so that the company can do what it intends to do. Otherwise what are we talking about here?

The funds are in a smart contract on the blockchain. They are protected by code which ties the result of on-chain votes to the release or emission of funds. DAOs mean the users, the token holders, get to participate in the company governance directly. They get to post in forums, create campaigns for changes to protocols, and vote on whether to implement new proposals and how much funding to allocate to those proposals. Maybe that's hiring a new developer. Maybe that's launching a new feature. Maybe it's incentivizing growth through marketing or other grassroots strategies. It's incredibly flexible.

I see... so a DAO is corporation where shareholders are in charge of managing the company. It has no professional management, instead it's all managed by the shareholders democratically. If this is it, DAOs are probably a bad idea in most circumstances. There are good reasons why management is separated from ownership in modern corporations.

The only efficiency is fleecing suckers faster.

DAOs are just unincorporated partnerships with anonymous partners.

I did a thread on the history of cryptocurrencies today. It explains the history of DAOs, their benefits and some future aspects we are likely to see:

https://mobile.twitter.com/moo9000/status/138957146600232551...

> most disruptive technologies of the 21st century.

I couldn't agree more.

Though, as far as this article goes, I was looking for more of a playbook than high-level market analysis.

If the DAO has to plug back into existing legal/technical infrastructure (which includes almost everything outside of a few narrow cases like token market makers), there's not really any meaningful improvement from using a DAO over a traditional legal structure.

Of course there is. First of all, these systems will cause legal systems to change over time to adapt to their existence. Second of all, they're borderless, open, permissionless, pluggable systems for the coordination of human creativity and capital. There are thousands of ways to take advantage of that that far exceed what you can do with a Delaware C-Corp.

> borderless, open, permissionless

None of this matters if the actual real-world resources of a DAO are under the legislative power of a government. The DAO is no better off than a normal corporation with a charter.

Sure it would. For one, you can have the capital and funding controlled by the DAO. Right? This model obviously works better for software or more abstract mostly-digital businesses such as banks or exchanges or insurance but it could still fundamentally improve the accountability of a physical-asset backed business. Look at Uber as an example of how a taxi company is managed despite the fact that Uber doesn't own any cars. All that was needed for Uber to exist was smartphones with GPS and the right incentive structure in place to keep people honest.

But it's clearly better than Uber, for example, if a decentralized ridesharing organization were to exist. Because in a DAO situation, the early drivers and customers of this DAO-Uber could have been rewarded with governance tokens that helped guide the development of the protocol. Maybe Uber would have been a less toxic corporation if it was basically owned by its drivers and customers. The DAO would have the treasury, the community, etc. It would have managed incentives based on on-chain voting.

This is how Uniswap works today. This is how MakerDAO works today. This is how Aave works today. We're already disrupting exchanges and banks. A lot of other business models will be disrupted in similar ways.

> you can have the capital and funding controlled by the DAO

Only the capital tied up in crypto tokens, which is probably very small compared to the capital tied up in offices or machines or whatever, which a government has control over.

> The DAO would have the treasury, the community, etc.

As far as I can see, none of this is easier to do on a DAO than with some more traditional method of organization.

DAOs that will be incorporated and so on.

Assuming personal liability by engaging into a DAO in personal capacity is just dumb.

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