I do believe DAO's are one of the best parts of crypto so far...
Any DAO that wants to do anything of any meaningful complexity ends up registering as a Wyoming entity which isn't really any different than an LLC.
DAOs are an attempt to separate the crypto nouveau riche from their tokens.
You can achieve anything you want to from a DAO with a corporation plus a twitter poll or SurveyMonkey thing - except the issuance of unregistered blue-sky securities.
Anyways, what's going to get really interesting is when we inevitably have see some legal challenges around this. I strongly suspect we'll see some personal liability materialize and this is going to take a lot of the fun out of this new grift.
How would accept money from thousands of people without being public? How would those ownership stakes be easily transferred?
If DAO tokens do convey some ownership interest, then they'd have to be registered as securities - which is why DAOs are very clear that you get nothing but their appreciation in exchange for the tokens. In which case you'd sell them the same way you sell any other securities.
Reg A+ and Reg CF allow the sale of equity for crowdfunding contributions, btw. There are even some marketplaces that sprung up around them.
If a DAO token is a security, it does need to be registered: it either needs to be registered or have available an exemption from registration.
There are DAOs that try to fit within an exemption from registration. See the LAO, and it's offshoots, like Red DAO, Flamingo DAO, etc., which sell LLC interests to a limited number of accredited investors.
[0] https://medium.com/openlawofficial/the-lao-a-for-profit-limi... [1] https://www.flamingodao.xyz/
Ok, but that's just an LLC with extra steps no? If you're only accepting accredited investors then you're required to validate that they are accredited meaning that you have to pierce the veil of anonymity. It imposes legal control over the transfer of these tokens which means there's no reason whatsoever for them to be decentralized, permissionless and on the blockchain?
Accredited investors were always welcome to buy whatever toxic garbage they wanted.
I would say the core idea of a DAO is this: how can we organize a disparate group of people around a common goal, more easily than in the past?
Whether you think they are a joke or not, ConstitutionDAO, SpiceDAO (which I think is the worst example in this space given their lack of diligence or thought on IP issues), OrangeDAO, FlamingoDAO, etc., are all unique in that they have organized a disparate group of people more quickly than in the past, and enabled them to more efficiently work together towards a shared goal.
There are many ideas being explored:
1. Can we have better laws (like Wyoming is exploring) or regulations? 2. If the DAO is decentralized enough, are the tokens still (or should they be) a security? Are there better ways to regulate something like this globally? 3. How do you coordinate a disparate group of people? How should you let in new entrants, or weight votes? How should a DAO manage its treasury? 4. What happens if all voting proposals are public and verifiable on the blockchain? Is that good or bad?
At it's core, yes, I think you can say that a DAO is basically the idea of a corporation, except with most of the discussion on Discord and with on-chain voting, and plus some securities laws issues that are at best gray areas and at worst, in some cases, clear violations. But I think that is ignoring that something worthwhile might come out of that design space.
I disagree, because, the Great Depression.
They're not setting out to solve a limitation around business organization. You can do basically anything you want out of a Delaware LLC or C-corp except sell the shares to an un-accredited investor without registering them. There's even a light-weight way to do that with Reg CF and Reg A+.
You want public voting? Ok, that doesn't require a blockchain and it certainly doesn't require a whole new legal framework for organizing a business. Twitter has managed to have polls for years.
Most people actually trying to build a business of value aren't trying to reimagine the concept of a business.
By all means, go with God, find a better way to organize companies. If they land one one, I'll happily use it. But so far all I see is grift, crime and frankly, little else.
Also, it's possible to sell these investments to non US-persons under regulation S without bothering with the accredited investors.
>Most people actually trying to build a business of value aren't trying to reimagine the concept of a business.
Most people actually trying to build a business fail. It would be fallacious for me to imply that means not reimagining concept of business means likely failure, even though it is technically true.
Really curious - is it enough for another party to attest that they are accredited? Ie- could I set up a company selling verification services, saying “the person with this key is accredited, send the feds our way if they ask”? (Pure mental exercise, just honestly curious)
Not just that, what about transferring shares of a business requires the business to have tokens issued on a blockchain?
And how would you write an option on your ownership stake using conventional technology? That seems like it would be prohibitively hard.
How would you use your ownership as collateral in a loan? The illiquid nature of private stock may turn some lenders off. On a blockchain, the collateral can be part of the smart contract.
Many technological advances simply make already possible things easier. For instance, checks were around since the time of the Crusades. Functionally, checks transfer money from one account to another. We also have a postal service we can use to send checks almost anywhere in the world. So why do we have digital banking infrastructure and wire transfers?
The issues you describe are intentional encumbrances on the part of the company and corporate attorneys which they could stop at any time. You haven’t described how this model would change their minds. Changing their minds is the thing holding back what you desire not the technical limitations.
Even if Carta and Pulley didn't exist, this is still not a technical limitation of non-Blockchain systems, at all.
To date: few DAOs are actually selling equity…more of a donation with a fancy membership / receipt.
As equity requires a poking the veil of the DAO and setting up an LLC.
1. “No wireless. Less space than a Nomad. Lame”; from Slashdot, dismissing the new Apple iPod.
2. "For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software"; from HN, on the launch of Dropbox.
Yes, DAOs may be similar to corporations mixed with a SuveyMoney, and the above comments also have some truth to them. But all three entirely miss the forest for the trees, and miss that there are qualitative changes that make the impact of the new version much greater.
DAOs allow a disparate group of people to raise capital and execute towards a shared idea far faster and greater than was previously possible. That is a qualitative difference worth paying attention to.
And while you are correct that the legal frameworks backing DAOs currently have many problems, that is something that will change.
And for the HN skeptics, over 1,000 YC founders disagree with you: https://techcrunch.com/2022/01/24/hundreds-of-y-combinator-a...
It was a major contributor to the Great Depression.
So my question to you is: what has changed since last time we tried this? Why am I to believe that "this time is different."
[edit] Your suggestion that an idea cannot possibly be bad because 1000 startups are chasing it holds no water, it's an appeal to authority. Worse than appeal to authority: it's an appeal to the wisdom of crowds. Crowds of course are notorious for making great decisions. Hundreds of thousands of individual investors thought that sub-prime mortgage backed securities were a brilliant plan.
Your arguments can (and have been) those that applied to Uber or AirBnB; namely, that the only value they had was in skirting regulations, and that eventually the regulations catch up such that Uber or AirBnB is no better than the predecessor taxi and hotel industries. And I think there is certainly a lot of truth to that, but I also think this is normal human progress. As times change, we try something slightly different, and where old pain points arise again, we re-regulate accordingly. You are left with something that is indeed quite similar to the older industry, but with a fresh coat of pain and some improvements. You can dismiss that as entirely worthless, but I see it as normal and part of progress: two steps forward, one step back.
Similarly, I think having financial regulations that were created in 1933 be static forever is a mistake. As technology progresses, there can be room for changes. So I see DAOs and crypto in a similar light: yes, certain actors violate existing laws, but there is a freedom to explore a new design space, and then the regulators will catch up and reign it back to something more reasonable.
As for my link to OrangeDAO, it is not about 1,000 YC founders with Web3 startups, but 1,000 YC founders that are members of a DAO that seeks to invest and help other Web3 startups.
As for what's different, my answer would be scale. DAOs make it easier to coordinate large groups of people. Take a look at what OrangeDAO seeks to fund:
https://orangedao.notion.site/0516999b88534575bf759323f5e9fe...
Many of them are targeted towards corporate infrastructure; replacing traditional processes with software-first functions, which allow a lot of disparate people to function together more easily, and reduces the friction of "a group of people working together towards a common goal" from that of an existing corporation.
In the sale of blue-sky securities? Not a darn thing.
> As for what's different, my answer would be scale. DAOs make it easier to coordinate large groups of people. Take a look at what OrangeDAO seeks to fund.
Sounds like a VC fund. Just wait until you see the list of those projects!
> Many of them are targeted towards corporate infrastructure; replacing traditional processes with software-first functions, which allow a lot of disparate people to function together more easily, and reduces the friction of "a group of people working together towards a common goal" from that of an existing corporation.
So like, Zoom and GSuite? I'm not sure how "Waze for moving crypto assets" fulfills that goal.
On the other hand, ConstitutionDAO - the most noteworthy example to date, was a complete failure and hasn't even been able to handle refunds.
> that is something that will change.
"Talk is cheap. Show me the code."
The sheer incompetence/negligence/malice would be funny if it weren't so sad.
I'm familiar with this DAO, they have been advised by a competent IP lawyer before even bidding on the book. There is a crucial legal difference between derivative work, and work "inspired by" another.
[1]: https://twitter.com/TheSpiceDAO/status/1482404318347153413
edit: Thanks - that tweet doesn't inspire confidence. Why would you need to overbid on a sketchbook in order to make a show which is inspired by it? Why not just, you know, make the show...
Not by a screenshot of the tweet, but by the tweet itself. And it was rightfully ridiculed for it.
And now they are "producing an original series" and don't have the money for a writer's room? https://news.ycombinator.com/item?id=30046358
For three million dollars they could've created not just "a package with a powerpoint", but half of an animated series, probably.
Or how (the heck) did offers raise to almost three million dollars?
Orange DAO being completely separate from YC suggests this is a possibility. Imagine the year is 2030: Orange DAO has more assets under management than YC itself, and has proven greater returns for investors in both percentages and absolute dollar value.
And I am elected God Emperor of the Known Universe.
Here's an alternative: The year is 2030. Orange DAO is a distant memory, and cryptocurrencies have all gone to zero. YC continues to grow.
Anyone using ETH would presumably have been aware about the enormous fees involved.
To this day, it still trades for ~10X its initial value on Uniswap: https://info.uniswap.org/#/tokens/0x7a58c0be72be218b41c608b7...
Anyone who bought more than ~$50 of DAO tokens before the auction could stand to make a profit on the aftermarket even accounting for gas fees.
In case it needs to be said: this all seems crazy to me, but it is what it is.
this isnt like a ticketmaster convenience fee, everything on that network costs that much
Transparency is the next fight for the workers and ideas like this could prove very valuable