Guide for beginners (by) Tao

Guide for beginners (by) Tao

Decentralized autonomous organization (Tao) – a group organized around the mission that coordinates its activities using a general set of rules enshrined in the blockchain.

One of the main advantages of Tao is that they are more transparent than traditional companies, since all actions and financing in Tao are available for viewing anyone who wants. This significantly reduces the risk of corruption and censorship . Publicly traded companies should provide financial statements that have passed an independent audit, but shareholders can see the financial condition of the organization only at the time of time. Since DAO balance exists on a public blockchain, it is completely transparent at any time, up to each separate transaction.

DAO , As a rule, more Available on a global scale and have lower barriers for entering than companies . Given the transparency and lower barriers to the entry, DAO members are not consistent with the rules and actions, most likely, will be less than the cost of switching. DAO with similar missions may have to compete for members/participants, and they have an incentive to be as transparent as possible and not extract too much rent from the group in order to be able to attract the best of the best. DAO may also need rapid development to meet the needs.

The purpose of this post is not to describe all the DAO in detail, but to give a high -level review of what DAO is, why they are interesting, and demonstrate some potential cases of their use.

Examples of Tao

Perhaps the most famous DAO today is The DAO, which was launched in April 2016 as a decentralized venture fund.

The participants made ETH and received DAO tokens in return, which could be used to vote about which projects should be directed to funds. The fund attracted $ 150 million to ETH and was hacked, as a result of which 60 million dollars were stolen. It is interesting that, despite the fact that DAO no longer exists, anyone can see all the transactions that have occurred because they are in a public blockchain, and this record will never disappear. Unfortunately, hacking DAO temporarily left a negative impression or skeptical attitude to the term DAO, but DAO is an extremely powerful form of the organization, and it did not take much time to see the revival of DAO activity in crypto space.

Crypto projects themselves can be considered DAO , If they are managed by decentralized management, where tokens holders can vote for the direction of the development of the project or various parameters, and are not determined exclusively by a centralized command. For example, tokens holders MakerDao , creating decentralized stablecoin, can control the system and vote according to such parameters as the charged fee.

Another example – Curve Dao , creating an automated market-miker (AMM), which generates commission and provides the distribution of income between tokens holders who block their tokens. The longer the Curve (CRV) token is blocked, the more votes and remuneration the DAO participant receives. Unlike traditional companies, where profit is paid in proportion, this DAO is arranged in such a way that the right of voting and the share of income is weighed depending on the duration of the time during which the holder of the tokens remained “invested”.

DAO assets can be controlled by interested parties directly through the token . Interested parties can be pseudonyms and be anywhere in the world. These pseudonymous interested parties can unite to distribute DAO assets for any purpose, including employees. This is what is happening today. DAO, consisting of hundreds of famous and pseudonymous members, hire employees legally, based only on the reputation of the community. For example, Dao Empty Set Dollar (ESD) pays $ 180,000 to his community manager Levy, who said that this is the highest paid position in his career. Other blockchains, such as Tezos and Decred, also have a similar system for encouraging participants for their work.

We saw a number of DAO created to finance investments or grants.

Moloch DAO – DAO that provides grants for the development of Ethereum ecosystem . They also allow people to withdraw funds in Rage Quit mode if they disagree with the general DAO solutions. Moloch DAO contracts were repeatedly subjected to overclocks to create other DAOs.

MetaCartel Ventures -The fund that invests in Dapps and is the early investor of many well-known crypto projects, including Zapper and RAI . The members of the fund consist of experienced builders in the crypto community.

The Lao, another DAO, consisting of Ethereum enthusiasts, which invested in the early stages in such projects as projects such as BoardRom and AAVEGOTCHI .

MetaCartel Ventures and The Lao are DAOS examples that have a lot of access to the stream of transactions in the crypto emission on equal terms, and sometimes more than many venture funds, since the founders want to work with DAO members, and the DAO itself is a crypto-space ethics.

We also observe the appearance of DAO focused on more specific investment capabilities, such as owning art-NFT and virtual game objects.

Yield Guild Games – A game guild that turns gamers into investors, buying NFT in games such as Axie Infinity, League of Kingdoms and The Sandbox.

Flamingo DAO – Commercial DAO, focused on NFT. They actively invest in NFT and made news when they paid $ 762 thousand. In ETH for rare Cryptopunk NFT.

There are also DAO organized around work, such as Raid Guild -a decentralized team of builders and designers who are ready to work on products in crypto space, and MetaFactory , organized around fashion and culture that sells the products they created.

DAO tools

There are a number of tools for creating and coordinating DAO, such as Aragon, Daostack, Daohaus, Llama and Myco , so that the participants do not have to create everything from scratch.

There are also such tools as Snapshot , which specifically control offers for voting tokens holders, allowing you to easily see the corresponding details of the proposal and voting status.

There are even projects in which you can buy and sell voices for management, for example Automata . This concept can be controversial, since it can lead to the fact that those who have great capital will be able to control the voices, but I think that the creation of such borrowing and lending systems will be inevitable and will lead to the fact that Projects will tighten their management system .

As for the metrics, there is Deep DAO to track the DAO ecosystem. It is not necessarily comprehensive, but it is interesting to look at indicators such as the number of members, proposals and participation in the vote.

Future use scenarios

There are many interesting options for using DAO, and we are only at the beginning of the way. With the help of Tao, we will be able to experiment with control systems at a fast pace to quickly improve what works and what is not. For example, there may be DAO using Futarchy to make decisions, which will consist of the rates of members in the forecast markets, and then the use of the results of these markets to determine the actions.

We will also see a meta-control when the DAO themselves will serve a number of different protocols and receive in return for control tokens. Tao will begin to vote and act as delegates in other Tao.

One of the possible use options – DAO, where all members are anonymous and can accumulate a reputation in DAO without the need to disclose their personality . This allows members to be in more equal conditions and facilitates the remuneration of individual participants for DAO, and non -encouragement of better known participants with a large number of subscribers.

Another interesting option for using Tao is the collective ownership of the art of NFT, where The neural network each member can vote for various attributes of works of art, and a common work of art may vary depending on individual attributes.

Potential problems

DAO is a powerful way to organize, But potential problems can be associated with them, and they are not an ideal system for all. Although DAO can replace some aspects of legal contracts with code and save a huge number of operating overhead costs, in some cases there is no legal protection outside the rules set forth in smart contracts that contribute to the operation of DAO. This can create problems if control over DAO is centralized or not clearly defined, although some DAO can also form legal persons standing behind the DAO themselves. Through the Vaiming Senate Committee, a bill on Tao was also adopted, which will help in the creation of legally recognized Tao.

Depending on how Tao is organized, it can be more difficult to coordinate and operate quickly compared to centralized leadership, for example, the general director who makes quick decisions when it is necessary. However, DAO can create quorums that will not take much time, and establish requirements for how responsive DAO members should be. In addition, at the beginning, when you need to make many decisions, there may be more centralization among certain members, and then DAO will decentralize over time, which is called » progressive decentralization «.

There is also the possibility of voters apathy , when not all members want to vote or even have the best qualifications for voting on all changes. In this case, voters are likely to delegate the powers to members who can be more informed and active in voting, which also corresponds to their beliefs. Such representatives are sometimes called protocol politicians, since they often agitate DAO members for delegated voices, just as existing politicians do. Perhaps protocol lobbying groups will appear, which will try to influence the decisions of these politicians. On the other hand, one day we can even see how Tao will be lobbying and will become large political institutions themselves in society.

Another problem is that the openness of membership can lead to a decrease in quality and increasing the noise level inside the DAO, but this can be solved using the DAO selection processes or a minimum number of tokens in their hands in order to at least make sure that the participant has his own skin in the game and interested in the success of DAO.

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