Im DAO daba dee daba die

  • Bitcoin created a novel way of running a network on a continuous basis and it was the precursor of the DAOs of today’s era.
  • DAOs are blockchain-based, member-owned groups that can quickly and easily raise funds, manage projects or make investments.
  • There is no central leadership. Decisions are made in a bottom-up way.
  • The idea takes on a life of its own, and it’s able to incentivise others to make itself happen.

DAO or Decentralised Autonomous Organization is an organisation without any central leadership or hierarchy. A DAO comes with a structure where the stakeholders participate in decision-making and operating as per the code of conduct and internal law. The rules can be amended by the stakeholders through democratic voting. The world was learning to adopt digitalisation some years back but the pandemic really changed everything. Now we prefer to do so many things digitally. A DAO is operated by digital method without any physical intervention. There is no physical address of a DAO. The involved technology is blockchain technology and a DAO generally exists as a smart contract on the blockchain (a light social DAO can be created by communities without on-chain governance).

The controversy with the first DAO

The first DAO in history is known for its famous failure. In 2016, a decentralised autonomous organization was created on the Ethereum blockchain with the objective of providing a new decentralised business model for organizing both commercial and non-profit enterprises. The code was open-source and the crypto enthusiasts participated in the crowdfunding via a token sale in May 2016. The collected ETH was supposed to be used to fund new projects as per the voting of DAO token holders. It was the largest crowdfunding in history at that time. In June 2016, a security issue was found in the contract and before the developers fixed the issue, an unknown attacker drained 3.6 million ETH from the contract to a ‘Child DAO’. The price of ETH tanked to $13 from $20. The Ethereum community led by Vitalik Buterin decided to hard fork the blockchain to restore all funds to the original contract. The controversial fork led to a chain split of the Ethereum blockchain. The original unforked blockchain is known as Ethereum Classic today.

“Wagbtc,”or “we’re all gonna buy the constitution”

The online group ConstitutionDAO will attempt to buy the last privately owned, first-edition printed copy of the US Constitution and put it “in the hands of The People.” This specific copy was first bought by a real estate developer, the late S. Howard Goldman, in 1988 for $165,000. His wife put it up for sale, and proceeds will go to a charitable foundation.

To raise funds for ConsitutionDAO, backers can contribute ether cryptocurrency in exchange for $PEOPLE tokens, which give them the ability to advise on:

  • The mission and values of ConstitutionDAO
  • Where the copy of the Constitution should be displayed
  • How it should be exhibited

The excitement has fueled over $6m in funding so far but with the text expected to go for $15m-$20m, ConstitutionDAO has a ways to go. Even if it falls short, the project will have shown a glimpse of the utility of blockchain technology.

DAOs are redefining the organisational operating process but what is the legitimacy of DAOs? The American CryptoFed DAO is the first DAO to be recognized as a legal entity in the US. CryptoFed DAO operates as a smart contract on the EOS blockchain. The Wyoming Secretary of State's office has created a separate form of limited liability company (LLC) category and the law is effective from 1 July, 2021. It’s difficult to bring a DAO under legal purview when the anonymous members are known by their wallet public addresses but change is the only constant in this world. Law must evolve in accordance with the changing business situation. The sudden rise of DAOs in the field of NFTs and DeFi isn’t a discrete phenomenon. The world should be ready to embrace a new type of organisation. The next generation business is going to be decentralised.

Nothing in this article constitutes professional and/or financial advice. The content is provided exclusively for informational and/or educational purposes. Nothing is to be construed as an offer or a recommendation to buy or sell any type of asset. Seek independent professional advice in regards to financial, tax, legal and other matters.

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