Decentralized Autonomous Organization

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1. From the Wikipedia:

"A Decentralized Autonomous Organization (often abbreviated "DAO"; sometimes referred to as a Fully Automated Business Entity or Distributed Autonomous Corporation/Distributed Autonomous Company, often abbreviated "FAB" or "DAC") is a decentralized network of narrow-AI autonomous agents which perform an output-maximizing production function and which divides its labor into computationally intractable tasks (which it incentivizes humans to do) and tasks which it performs itself. It can be thought of as a corporation run without any human involvement under the control of an incorruptible set of business rules. These rules are typically implemented as publicly auditable open-source software distributed across the computers of their stakeholders. A human becomes a stakeholder by buying stock in the company or being paid in that stock to provide services for the company. This stock may entitle its owner to a share of the profits of the DAO, participation in its growth, and/or a say in how it is run." (

2. Dennis McKinnon, Casey Kuhlman, Preston Byrne:

"A ÐAO is an algorithmically-governed programme that, in using trustless decentralised computing, can serve as a way to formalise multilateral relationships or transactions outside of traditional legal architecture (see the essay Formalising and Securing Relationships on Public Networks by Nick Szabo to learn more on the subject).

In legal terms, a ÐAO is therefore a medium for two or more people to conclude agreements or otherwise associate with others in a predictable way. The fact that a ÐAO built on a blockchain operates itself in accordance with pre-defined rules and cryptographically secure architecture means that its users can reliably expect instructions which they broadcast to be consistently and securely executed.

When viewed through such a lens, Bitcoin itself is a ÐAO, albeit a very early one capable of executing only the simplest one-way transactions. Until recently, ÐAOs capable of a higher degree of sophistication existed only in theory." (



"In the developed world, the hope is that there will be a massive reduction in the cost of setting up a new business, organization or partnership, and a tool for creating organizations that are much more difficult to corrupt. Much of the time, organizations are bound by rules which are really little more than gentlemen’s agreements in practice, and once some of the organization’s members gain a certain measure of power they gain the ability to twist every interpretation in their favor.

Up until now, the only partial solution was codifying certain rules into contracts and laws – a solution which has its strengths, but which also has its weaknesses, as laws are numerous and very complicated to navigate without the help of a (often very expensive) professional. With DAOs, there is now also another alternative: making an organization whose organizational bylaws are 100% crystal clear, embedded in mathematical code. Of course, there are many things with definitions that are simply too fuzzy to be mathematically defined; in those cases, we will still need some arbitrators, but their role will be reduced to a limited commodity-like function circumscribed by the contract, rather than having potentially full control over everything.

In the developing world, however, things will be much more drastic. The developed world has access to a legal system that is at times semi-corrupt, but whose main problems are otherwise simply that it’s too biased toward lawyers and too outdated, bureaucratic and inefficient. The developing world, on the other hand, is plagues by legal systems that are fully corrupt at best, and actively conspiring to pillage their subjects at worst. There, nearly all businesses are gentleman’s agreements, and opportunities for people to betray each other exist at every step. The mathematically encoded organizational bylaws that DAOs can have are not just an alternative; they may potentially be the first legal system that people have that is actually there to help them. Arbitrators can build up their reputations online, as can organizations themselves. Ultimately, perhaps on-blockchain voting, like that being pioneered by BitCongress, may even form a basis for new experimental governments. If Africa can leapfrog straight from word of mouth communications to mobile phones, why not go from tribal legal systems with the interference of local governments straight to DAOs?

Many will of course be concerned that having uncontrollable entities moving money around is dangerous, as there are considerable possibilities for criminal activity with these kinds of powers. To that, however, one can make two simple rebuttals. First, although these decentralized autonomous organizations will be impossible to shut down, they will certainly be very easy to monitor and track every step of the way. It will be possible to detect when one of these entities makes a transaction, it will be easy to see what its balance and relationships are, and it will be possible to glean a lot of information about its organizational structure if voting is done on the blockchain. Much like Bitcoin, DAOs are likely far too transparent to be practical for much of the underworld; as FINCEN director Jennifer Shasky Calvery has recently said, “cash is probably still the best medium for laundering money”. Second, ultimately DAOs cannot do anything normal organizations cannot do; all they are is a set of voting rules for a group of humans or other human-controlled agents to manage ownership of digital assets. Even if a DAO cannot be shut down, its members certainly can be just as if they were running a plain old normal organization offline." (

DAO's and increased social inequality

David Morris:

"Who will own the DACs, who will profit from them – and whether ownership or profits are even the right terms – are still open questions. Larimer, from his tone to his pitch, seems relentlessly fixated on the idea that the funders of DACs will reap profits. The investment-like structure of DACs, funded by cryptocurrency, means that those who establish them, back them early and host them will benefit when their associated cryptocurrencies rise in value. Such enviable roles are reserved largely for the technically savvy, resource-rich, and well-educated: in other words, the already privileged.

On the other hand, the open nature of DACs might allow those who were excluded from traditional entrepreneurial channels to gather capital support for their ideas. Imagine startups in developing countries, frictionlessly funded by international backers in roles somewhere between investors and philanthropists. Whatever ominous developments the new technology portends for the managerial classes, it is still possible to imagine DACs contributing to the larger cause of global justice. After all, if they don’t care about borders, who is to say they won’t work to flatten the huge inequalities between nations?" (

A Technocratic Vision

Julian Feder:

"the Idea of a Decentralized Autonomous Organization that truly isn’t controlled or owned by any particular individual isn’t only revolutionary on a political or social level. One is almost tempted to call it an ontological revolution, one that redefines the basic categories of what is objectively real and what is simulated.

Classic distributed organizations such as shared stock companies, nonprofits or cooperatives simulate distribution. Their existence depends on laws, terms and regulations – guarded and executed by armed men and women (mostly men) – which restrict the otherwise total control of the individuals in power.

In comparison, a DAO, once in place, is a self-existing entity that transcends time, space and the personal existence of specific individuals and their ability to use institutional force. It is in many ways something entirely new; one could call it a new form of social automatisation, solely made out of information.

The idea of an organization without the need for an headquarter, which exists almost outside of physical space and that cannot be captured or seized by any kind of military force, would have sounded almost religious just a few decades ago. The bewildering implications of this new potential form of human organization seem to a 20th century mindset almost as alien as the landing of a flying saucer on the lawn of the Whitehouse, albeit less photogenic.

It might sound pathologically optimistic, if not straight out insane, but this new ability we are developing – to create autonomous complexes made out of information that exist in some kind of digital hyperspace and that have the ability to execute themselves and self-regulate while abiding nowhere and everywhere at once, with no servers or strings attached, might not just revolutionize governance and modes of production, but might very well transform our very understanding of nature itself.

Why would one claim such venturesome preposterousness? Well, because in the few decades in which our information technologies developed from handwritten manuscripts to mass distributed copies of disembodied information, our universe expanded from a few dots encapsulated in transparent spheres to a mind boggling vastness reaching to the outer ends of infinity, that’s why. In the end, it was our ability to conduct an (almost) global dialog, which transcended the ingenuity of the particular individual that brought us the telescope, calculus and eventually a new and alien universe.

Furthermore, this new technology of Decentralized organizations, databases, applications, contracts and what have you, are not just a new tool for exploring the world. To a large degree they are a new territory of existence to explore: a dimension of autonomous information.

But then again, It might very well be too early to jump to specific conclusions. We wouldn’t expect a 16th century peasant to foresee late consumer capitalism and to understand what an employee of Goldman-Sachs does for a living – let alone contemplate on interstellar spaceflight. But luckily time seems to speed up as history progresses so hopefully it won’t be too long until we’ll be granted with a glimpse of a world to come." (

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