Fireside DAO Chat with Ashish (Byz)

Introduction

A Decentralized Autonomous Organization (DAO), in many ways, is this mystical fantasy “thing” within the blockchain space. Ask a handful of experts and you are going to get different answers and viewpoints of exactly who, what, where, why, and how anything related to a DAO works. There are many projects with the letters “DAO” at the end, but in my mind, they are not fully decentralized, or fully autonomous, and often they are anything but organized.

Personally speaking, I do not feel that any single project has fully demonstrated the power of a decentralized autonomous organization. A DAO in my mind should organize a decentralized workforce autonomously through a programmatically governed model to use its resources in the most efficient, advantageous, and fault-tolerant manner that continuously increases the value of holding an underlying token (fungible, non-fungible, or semi fungible). Many of the ideas in this article have been envisioned in my mind for years with no means of sharing with the world until I joined this project. Much of what is below is really what makes me excited about being involved in the blockchain space. This is the stuff that I have energetically discussed with people within the blockchain space since around 2016. Being a part of something revolutionary, something bigger than myself such as the development of a DAO is not just a job, but truly a passion.

Cryptocurrency projects come with many models of governance, each with its own unique strengths and weaknesses. If we were to break down the methods of governance into two categories we could have centralized and decentralized.

Centralized: This is where a small group of people are making all of the decisions. Just like in a traditional startup company the group of founders makes decisions about the project without seeking advice from the holders of their cryptocurrency or token. The holders of the token believe in the decision-making abilities of the team generally speaking.

This format is agile, able to quickly take advantage of opportunities, and rarely has bottlenecks caused by the project being pulled in different directions. The downside to this structure is that the team can lose interest over time as they make money from the project, they can become misaligned to do things that benefit themselves more than the holders, and the holders of the token do not have much in terms of say in the decision making process to prevent things like this from happening.

Decentralized: This is where there is no single owner or group of owners of a project making decisions. Instead, almost all decisions are voted on by the community every time major decisions are made. The holders of the token have a voice through their voting in the future of the project.

This format is the holy grail of cryptocurrency projects because it can provide long-term benefits and alignment in which a centralized structure cannot. One simple example is if key members of a “Centralized” project were to get bored or pass away, the entire project could potentially lose its value without the intellect of those who created the vision and be unable to keep its playbook fresh with innovative ideas. Alignment is often compromised as a project grows more successful because the founders will often make decisions that do not equally benefit the holders as it does themselves or entities that are indirectly connected to the largest holders.

There is a problem with decentralization which no project has yet fully overcome in my mind. That is the problem of being pulled in too many directions because there are so many differing opinions on what to do, how to do it, who to do it with, etc. Many projects which are decentralized are large, slow-moving organizations that can rarely agree on doing anything productive, often resulting in a lot of in-fighting and politics. What is good in theory of a fully democratic system seems to be inefficient in practice thus far.

So which one of these is better?

A properly implemented decentralized organization is likely the best of both worlds. Many projects are trying to find the balance between these two structures, but very few have succeeded. Personally speaking, I do not think that any project has been successful. Ultimately, decentralized organizations in my mind will succeed in cutting out the proverbial middle man within society and the business world.

As a society, we have not found an answer that translates to real-world successes while simultaneously being “fault-tolerant”. To be fault-tolerant would mean that even if part of the autonomous organization was to break down, the whole of the organization would not fail, whereas if a single core team who held all of the control over the project were to break down, the project would most certainly fail. This series of articles is my unique take on what a DAO should be and most importantly the best way to bootstrap them into a fault-tolerant decentralized autonomous organization by leveraging a centralized team to launch.

— Ashish Vaja (ByzantineHash)