DAO: A New Possibility to Realize "Freedom to Work"

In the previous article introducing the domestic NFT market, Sanlin mentioned a new organizational method based on the development of blockchain - DAO.

Blockchain as the underlying technology has been widely used, and new organizational structure requirements have emerged. DAO is such a new thing. Many people are interested in DAO, a promising "enterprise" mode of operation. This article will talk about what DAO is, why such a "work" method is popular in Silicon Valley, and why some top talents in the industry are more and more inclined to There is a DAO job outside of the main job.

In addition to Web3, NFT and Metaverse, the extended industry following the development of the blockchain also has a very popular organization in Silicon Valley - DAO, a new decentralized organizational form based on the blockchain.

DAO, the full name of Decentralized Autonomous Organization in English, translated as "island" in Chinese, is an organization based on blockchain, relying on smart contracts, and using digital assets to operate on the Internet. Simply put, it is to encode the organization's management and operating rules on the blockchain in the form of smart contracts, and it can operate autonomously without centralized control or third-party intervention. Its management is programmed and automated.

The cost of launching a DAO is not high. Unlike traditional enterprises that require cumbersome regulations and various approvals to establish, it only needs a group of like-minded people to get together and clarify the common mission vision and organizational goals. Agreed in the form of smart contract.

For a quick understanding, we might as well regard the organizational form of DAO as a community or company that operates on the blockchain relying on code.

Those of us who work in traditional enterprises find it hard to imagine how a company can operate entirely based on program codes, but this is now being realized, and the number of DAOs is gradually increasing both at home and abroad, especially in Europe and the United States.

Some people can't help but wonder why it is necessary to establish a DAO. The modern enterprise organization form is so mature. Why is the DAO organization necessary?

Being a DAO obviously has all the advantages of the blockchain.

The first is "decentralization". Although these four words are a bit tiresome, they are indeed a highly sought-after advantage of the blockchain. As one operating on the blockchain, you can choose any public chain to develop a program and use it as the operating carrier of DAO.

For the organization, all actions and decisions are based on the blockchain, and it is natural to take advantage of the immutable, open and transparent characteristics of the blockchain information. All actions of the organization can be recorded on the blockchain for everyone to view. Corruption and opacity within companies can also be changed.

Image source: Blockchain, DApps, NEWS

Not only is the procedure transparent, everyone is the main body of decision-making is another major feature of DAO.

Because the operation is based on the blockchain, each node of the blockchain has an equal status, so in DAO, there is no so-called management and ordinary employees, and everyone has equal status and is the decision-maker of the enterprise. Since the management and operating rules of DAO have been encoded on the blockchain in the form of smart contracts, it can ensure that everyone in the organization is given the right to express their opinions freely from the very beginning.

Some people have to ask, isn't this employee autonomy? What is the real difference between Huawei and traditional companies with employee stock ownership? Obviously, Huawei is employee-owned, but employee shareholding does not mean that employees have the final say. Employees can pay dividends, but they cannot control the management of the company.

In a true democracy, the decision-making power should be in the hands of the people.

In an organizational model like DAO, the code is democracy, and the code is the law. Decisions are made one by one in a procedural way, and everyone in the organization needs to abide by the rules of the period, and cannot not do so. This procedure can be any decision related to the organization, it may be how to arrange the division of the project, it may be the rules and methods of the organization's operation (such as determining a fixed meeting time, such as the reward and punishment mechanism), and the operation of new projects, etc.

How are modern businesses organized?

Whether it is the popular flat management of Internet companies, the top-down management of state-owned enterprises, or the coexistence of trade unions and organizations in foreign companies, they all operate based on a set of management systems. In this management system, there are the board of directors (decision-making level), high-level management (CEO/CFO/COO, etc.), middle-level managers, and low-level employees. There are many disputes in the company because of various positions and salaries, and even affect the operation of the company.

During the operation of the entire enterprise, everyone should not only do things, but also be a person.

Running in the organizational form of DAO does not require manual cumbersome verification and promotion. Organization members use software and codes to manage affairs. Depending on the set procedures, the entire system can run smoothly, which also improves the efficiency of the overall operation. We don't even need to call it a business, because the organization does not need written agreements or other forms of legal formalities.

At present, DAOs exist on different public chains, and of course there are the most DAOs on Ethereum . In addition, the income of DAO is issued in the form of encrypted currency (Ethereum or stable currency), distributed in the form of project share and bonus, and the project collaboration tools used are still the tools used by everyone in the current Web2.0 network environment, such as Discord, Twitter, Telegram.

Image source: dev.to

The advantages of DAO are already obvious. Based on these advantages of DAO, some established fund institutions are undergoing transformation.

In December last year, Sequoia stated that it would help brave people create the legendary DAO. Sequoia's entry into DAO has brought this emerging organizational form into people's field of vision again.

So, is it possible for established funds to transform into DAOs? (In the technology podcast "Knowledge of Science and Technology", there is an episode of discussion about Sequoia and other big funds entering DAOs one after another. Interested friends can go to the podcast to listen to it by themselves).

In fact, the joining of Sequoia is just the beginning of the entry of traditional financial institutions into the DAO, because not long after that, in March this year, Bessemer Venture Partners, one of the oldest venture capital institutions in the United States, 1) Launched BessemerDAO and invested $250 million to build the Web3 community.

Why did established fund companies become the first batch of companies to embrace the organizational model of DAO?

The author believes that the DAO-based operation model may be based on the embrace of new things on the one hand, and on the other hand, for venture capital institutions, DAO does have some advantages: the transparency of the organization avoids the black-box operation of funds; The clarity of the rules saves management costs; the autonomy of the organization avoids dictatorship. With the loss of DAO, the chains between many rights (ownership, governance and dividend rights) in the traditional model can be disintegrated. From efficiency to risk to cost control, DAO has its own advantages.

In the case that the founder has made relevant preparations, all members of the DAO have a common organizational goal and organizational culture. Based on such a goal, create a rule system of governance and incentives that everyone recognizes, and then operate these rules in the form of code programs through blockchain technology. All participants in DAO will participate in the operation of this organization and obtain relevant incentives .

Note: The five most popular DAOs

For financial institutions and innovative industries, such an approach can stimulate organizational vitality, and financial institutions rely heavily on the autonomy of their employees. Such a choice is understandable.

What's more, in the form of DAO, the layout cost is not high. For example, in the traditional corporate system, the transfer of equity is very cumbersome, but for DAO, the transfer of "equity" takes only a few minutes or even seconds, just like completing a virtual transaction on the Internet, with high efficiency and low cost. Low.

If a financial institution finds that this method is not in line with the company's development after trying it one day, it can cancel it at any time. It is also easy for community members to quit the organization. It is an organization established based on consensus and smart contracts. To put it bluntly, you can quit by unplugging a network cable.

In China, there is also the existence of DAO as an organizational form. Conflux, the largest public chain in China, has its own autonomous organization, ConfluxDAO. Members who want to join the DAO must first enter its departmental organization, and their contribution to the department determines whether they can become core members. Currently, ConfluxDAO has begun to take shape.

In the future, it is foreseeable that more and more domestic and foreign enterprises or communities will adopt DAO as an organizational method to operate.

As can be seen from the above, the operation of DAO has many advantages. Before that, everyone was still excited about the future way of working as digital nomads. Now, even enterprises don’t have to exist, allowing you to transition to DAO with one click. However, as the current blockchain technology is still far from mature, the way DAO operates naturally has many flaws.

In 2014, The DAO received huge crowdfunding funds and locked the raised funds in the Ethereum smart contract, but due to technical loopholes, the crowdfunding funds were stolen by hackers. There is no doubt that DAO is still relatively immature in terms of technology, and when the infrastructure in the initial stage is not perfect, it is very expensive to try rashly.

In addition, DAO runs smoothly and has high system efficiency, but once it involves things outside of the program, it still cannot get rid of the old problem of long cycle of democratic decision-making.

We mentioned above that DAO's decision-making is sufficiently democratic, but what is the price of democracy?

Sanlin thinks that one of them is efficiency, which is also where the organization form of DAO is difficult to operate in China. According to the characteristics of project implementation in the United States, a project needs to be proposed, reviewed and confirmed by all parties, and opinions collected from all parties for evaluation. The project is implemented in months. It can be seen that the price of democracy sometimes means that the cycle is too long. On DAO, such problems also exist.

Furthermore, in the world of DAOs, there are still many problems to be solved, such as:

• compliance issues;

• How to collaborate within DAO members and between DAOs and DAOs;

• If a member does not join a company but participates in several DAOs as a trendy employment method, how to calculate the member's pension, insurance and other benefits;

• In DAO, the flow of members is simple and random. How can a DAO organization ensure that the organization has sufficient talents to maintain operations?

• Since it is an organization formed by consensus, stability has become the fatal injury of DAO. When many people hope to have a stable job and source of income, can the advantages of DAO outweigh the disadvantages? After all, freelancing has never been mainstream, and income fluctuations are difficult for most people to accept;

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In addition, Sanlin believes that not all organizations are suitable for the form of DAO.

Indeed, DAO members can feel that it is difficult for traditional organizations to obtain a sense of ownership, and they do not need to start their own companies to take on the entrepreneurial trend. This seems to be trendy enough. But apart from enthusiasts and people who are persistently pursuing decentralization, industries and companies with innovative needs may be more suitable for an organization like DAO, because stimulating the vitality of creators is the biggest feature of DAO, and some companies , still needs boards and policymakers to determine the way forward.

Of course, we all know that the development of new things takes time. Sanlin’s view on DAO is: this is a method that can be accepted by some industries and organizations, but it may not be suitable for all industries, at least at this stage.

Even if there are deficiencies, people in the circle still have high expectations for DAO. Before 2021, DAO in the United States is not recognized by law, but since last year, the legal provisions have been relaxed. Last July, Wyoming became the first region in the United States to legally recognize DAO, and CryptoFed DAO became the first legal DAO recognized by Wyoming.

In February of this year, the Republic of the Marshall Islands (RMI) announced the registration of a decentralized autonomous organization (DAO) as a legal entity, the first sovereign state to be so defined.

In the future, Salim believes that more and more countries will open up legal licenses.

In the first two years after the outbreak of the epidemic, "digital nomads" once entered the public's field of vision and were considered to be very trendy things. With some technology companies in Silicon Valley and New York allowing permanent home offices, digital nomads have become a popular way of working for young people . Now, after the DAO came out, even the trendy concept of "digital nomad" is not enough.

Not only can we move away from working from home, we can even move away from traditional organizational forms and start working for ourselves. It is possible for us to realize the way of integrating work and life in Vietnam, enjoying low-cost villas, eating juicy fruits and plenty of sunshine.

With the development of DAO, who knows whether such a scenario will be realized in the future?