VentureBeat is running a series of articles focused on Decentralized Autonomous Organizations (DAOs) and Corporations (DACs), written by Jeremy Epstein, CEO of Never Stop Marketing, a marketing consultant for the blockchain and decentralized computing sector. Epstein shows a remarkable knack for identifying and focusing on the core concepts behind the technical implementation details.
Many other interesting articles for the blockchain business sector can be found in the Never Stop Marketing blog.
“DAO” and “DAC” are often used interchangeably. I prefer using “DAC” to emphasize that a DAC can be a real business and make real money. But Epstein uses “DAO,” so I’ll stick to that in this post.
A DAO is owned, managed and staffed by token holders (members) who have purchased DAO tokens at an Initial Coin Offering (ICO), or on the open market. Typically, DAO tokens are crypto assets that are recorded in a blockchain and traded on external exchanges. DAO technology platforms are often based on Ethereum smart contracts, which play the role of self-executing procedures. In a simple use case, token holders vote on a proposed project or executive action, which is launched automatically if and only if approved by a predefined quorum. For example, tokens can be paid to a member in compensation for work done.
This, and much more complex procedures and workflows, are automatically taken care of by smart contract software. But let’s not get lost in the intricacies of Ethereum software (a fascinating topic, but not my focus here) and look at the big picture.
DAO token holders can make money in two ways, explains Epstein in the latest post. First, by profiting from the increase in value of the token itself (buy low, hold, and sell high). Second, by doing work for the DAO and receiving tokens in compensation. The core concept is that, for a well designed and well implemented DAO that produces real value, the value of the token goes up and up, and the token holders can make money by selling tokens on the open market.
This creates a solid motivation for all token holders to contribute to the success of the DAO, by upvoting submitted projects that show a real potential, and doing their best work on the projects they personally participate in. This is also the main reason why traditional companies give stock options to key personnel, but in a DAO share ownership is built-in and extended to everyone.
“So, everyone is hyper-focused on putting as much value into the DAO as possible and, conversely, extremely disinterested in doing anything that doesn’t add value.”
In a traditional company, most people are not motivated, let alone enthusiastic, and many workers tend to spend their time looking busy with pretend work, going from useless meeting to even more useless meeting, and hoping that the boss doesn’t notice that they add nothing of value. Often the boss is in exactly the same position, so everyone is happy. Everyone, that is, but the company’s customers and shareholders. In the public sector, things are even worse: the unhappy customer and shareholder is a whole society.
In a previous post, Epstein concluded that:
“It’s possible that, in the future, you’ll have 10 different contribution contracts to multiple DAOs that, collectively, pay you more than a full-time job AND give you the flexibility to do more of what you love. All without a crappy boss.”
Make no mistake, decentralization is the future if work – work 2.0. Gone will be the days of wage slaves forced to live in a place they dislike, do a job they hate as poorly as they can get away with, for a boss they despise, at a company they don’t care for. Instead, future workers will be free agents able to choose where they want to live and what they want to do. The concept of “hiring,” which today strongly limits the ability of a company to acquire talent, will also go. Future companies and organizations will be able to find the talent they need in a global pool of motivated, empowered collaborators.
Realizing the full potential of smart contract -powered DAOs will require adaptations to current legal and banking systems, but the needed adaptations are coming. In a few years, blockchain-based smart contracts could trigger payments in fiat currency from pegged bank accounts, with all the needed legal safeguards in place. This could enable, for example, DAOs active in the real physical world of tangible goods and traditional business. Think, for example, of a global collective dedicated to distributed manufacturing with 3D printing technology.
In the meantime, distributed and decentralized workplaces 2.0 can be prototyped by combining innovative DAO concepts with more traditional governance and operational models. For example, a global worker-owned cooperative could start gradually adopting smart contracts and DAO-like practices for governance and operations.
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