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I funded a small amount of it.

DAOs (distributed Autonomous Organizations) could be better thought of in a corporate governance framework.

A) Least distributed corporate governance: Sole proprietorship who owns 100% of their business

Every other organization sits between least and most distributed

B) Most distributed corporate governance: Full democracy state controlled

DAOs are special because the voting mechanism lets people vote across boarders/jurisdictions etc from their computer... but it also relies on the creators giving the right level of control to the DAO voting. If they gave voters 100% control, someone could do a 51% attack and have it destroyed, or something else. But, if they don't give enough control it is effectively a rug pull.

ConstitutionDAO is an amazing initiative because it puts so many assumptions up for a test, and crosses crypto world to mainstream. Its revolutionary.

The 'power' struggle is real... and fully on display

If there is an undemocratic layer exercising overall control then the net result is authoritarian. It would be neither distributed nor autonomous. It’s precisely why democratic governance generally tries to balance power between elements that can exercise checks on one another and why eroding those checks is so worrying.

Like if you’re trying to buy the constitution in a democratic fashion you’d think you’d at least try to understand what it means.

> DAOs are special because the voting mechanism lets people vote across boarders/jurisdictions etc from their computer... but it also relies on the creators giving the right level of control to the DAO voting.

Aren't these votes broadly speaking non-binding?

Is this really any different than an LLC that runs a periodic twitter poll?

Yes, one major difference between DAOs and LLCs is that DAOs exist in a nebulous legal space and might technically be general partnerships. Members of a DAO have potentially unlimited liability if it gets sued.

if they can be found.

Interesting that "buying majority control" of an organization in crypto-land is now called "doing a 51% attack".

It's not amazing. Like any company (a DAO is just a company), it could be run well, by good people, or run badly, by bad people. Whichever ways it turns out will not prove anything about DAOs.

A DAO is more like a specific corporate governance mechanism than a company. For example, ConstitutionDAO will be a non-profit, with a non-profit board etc. I presume they will put things up for vote using the DAO.

If it is executed flawlessly it will prove DAOs as a viable corporate governance mechanism. If it fails or struggles, there will be learnings.

> For example, ConstitutionDAO will be a non-profit, with a non-profit board etc.

Ok but you can just form a 501(c)(3) whenever you want right, which actually has some force of law over its activities.

> I presume they will put things up for vote using the DAO.

But... they don't have to.

It's all fun and games until there's a disagreement over what to do. The way in which a meaningful disagreement is resolved is what will prove the viability of this model. When everyone's aligned already, it doesn't really prove much.

Except owners of the governance tokens have zero legal authority.

Traditional shareholders have actual legal voting power. Nothing is stopping this group from ignoring governance token votes.

Corporate governance by voting has already been proven to be viable. That's how publicly traded companies work.

A DAO is not special. It's just an unregulated international corporation.

How is any of it enforced? Are the daily operations of the organization encoded in contacts or something?

This is rather unfortunate. I understand they have good intentions of keeping an important document out of private collector hands but this would have been a stellar time to issue governance tokens and expose the wider world to the potential offered by DAOs.

> "they have good intentions of keeping an important document out of private collector hands"

Well, out of other private collector hands, into their own private collector hands. As other commenters have pointed out, the members of the public who donate to this don't have any form of ownership.

They could have formed a 501c3 non profit, accepted tax deductible fiat donations, established a governance model, and arranged ongoing storage and viewing of the document. Private shared ownership could’ve been membership interest in an LLC managed by Carta or similar. LLCs have no membership limit unless taxed as an S corp (to my knowledge).

I bet if you brought Carta enough money they’d prioritize an option to make your ownership interest public and shareable on their backlog, by entity, individual participant, or however else you want to slice and demonstrate ownership interest.

> Private shared ownership could’ve been membership interest in an LLC managed by Carta or similar. LLCs have no membership limit unless taxed as an S corp (to my knowledge).

You can’t offer membership interest to the public unless you are registered with the SEC and in compliance with the states you make your public offering. There are some exceptions to the SEC for limits much lower than the ~$30M raised as of now.

Nor can you with crypto. I suggested the path avoiding unnecessary tech, the regulatory requirements apply regardless.

An SEC complaint would likely clear the matter up, if anyone is feeling particularly adventurous.

but they didn’t offer a security or investment contract, they offered a token that gives holders a form of governance/voting.

You are saying you offered a suggested oath to “avoid unnecessary tech”, but you removed the concept of a voting right for a security.

There is plenty of precedent of the SEC responding favorably to “no action letter requests” without requiring registration when organizations publicly offer voting/governance rights in exchange for money.

but they didn’t offer a security or investment contract, they offered a token that gives holders a form of governance/voting.

You are saying you offered a suggested path to “avoid unnecessary tech”, but you removed the concept of a voting right for a security by suggesting they could have offered interest in an LLC.

There is plenty of precedent of the SEC responding favorably to “no action letter requests” without requiring registration when organizations publicly offer voting/governance rights in exchange for money.

I believe they only have to fulfill the SEC requirements if there is an expected return on investment.

It cannot be taken for granted that they have good intentions.

In the crypto/NFT/DAO space, be suspicious until proven otherwise.

> It cannot be taken for granted that they have good intentions.

This is where I pull back and kinda laugh with irony at the effort. Much of this process (most likely because of the hurried pace) seems to be "just trust us" but wasn't the whole point of the Constitution to build a system of checks and balances so we didn't have to just trust one group of people?

And what would that potential be? Just curious, I don't see any potential.

> You are receiving a governance token, not fractionalized ownership. Governance includes the ability to advise on (for illustrative purposes) where the Constitution should be displayed, how it should be exhibited, and the mission and values of ConstitutionDAO.

uh, that’s what they’re doing. They ARE issuing governance tokens.

They call it “governance” but describe it giving the ability to advise, but not the ability to govern.

I think you're right that the lack of fractional ownership undermines what should be the primary benefit of the crypto + DAO model.

However, I think they aren't doing the fractional ownership to avoid running afoul of securities laws-- ie. this is a coincidental drawback of this instance of a DAO under today's US laws, and less so a fundamental issue with the DAO model.

90% of what “ownership” of a non yield-bearing asset gets you is governance over the project. We’ve seen things like UNI and ENS which are governance tokens w/o any yield component, and they keep value. So it’s sort of just a game of semantics. Plenty of people are contributing to this expecting that the governance token will be worth as much as their contribution — you’re just not supposed to be super vocal about that to avoid drawing attention from the SEC.

Oh that is top tier silly

While also true, the reason they changed the wording is for regulatory purposes, and is not at all the limitation of the token or the project.

This is standard word games in crypto projects that are acknowledging their US components. Keeps the SEC off their backs.

It is not possible for projects to compete with asian crypto token offerings that say speculation inducing things. But if you understand already you can see through it and speculate wildly for great reward.