DAOSTACK - An Operating System For Intelligence People
Abstract
Since firstappearing on the planet, humankind has been constantly inventing new ways to organizeand increase the scale of cooperation with more and more effective structures, from the nuclear family and tribes to states, corporations, and the global economy. The mostadvanced organization thus far, the Internet, opened the door for real-time information exchange at a worldwide scale, but it lacks the economic means for general-purpose coordination and global peer-production. The Blockchain made this possible by providing areliable, open and programmable accounting system, consequently leading to the invention of the Decentralized Autonomous Organization (DAO).
DAOs are open, self-organized networks coordinated by crypto-economic incentives and self-executing code, cooperating around shared goals. Powered by the network effect, DAOs providearevenue modeland incentive for the production of open, shareable resources (such as open-source code and a music file). With the creation of more open resources, the DAO will beable to scale indefinitely while keeping itsagility and coherence,and in many cases outcompete existing corporate structures.
DAOstack is an operating system for DAOs. With DAOstack, thousands of open source creators can jointly produce decentralized applications (DApps), while distributing individual ownership in the product to contributors of value. Crowd curators can cooperatively own and manage multi-valued ranking systems to compete with Yelp, TripAdvisor, or YouTube. And autonomous networks can run their collective investment or insurance fund. We believe DAOs will radically change the way people organize, from startups to corporations, to nonprofits and even nation states. DAOstack develops the foundational elements needed to enable this transition to the future of work.
The Future of Organization
The ability to well-organizeand coordinatealarge number of individuals is one of the greatest forcesand drivers of society, which has gone through constant evolution over thousands of years.
Legacy Organizations
Cooperation of agents increases their efficiency with respect to external competing market forces. This is the basic origin of the company and the reason organizations want to grow. However, coordination of agents entails increasing coordination cost as the organization grows, and that is why organizations cannot grow indefinitely.
When growing, organizations need more rigid structure in place, and thus face a growing challenge to:
a) maintain agility with respect to rapidly changing conditions.
b) preserve alignment of interests, trust and engagement among their members.
In short, the larger an organization is, the more internal friction it needs to cope with; the smaller it is, the more external competition is predominant. The actual size of a company is generally the sweet spot balancing between these two forces.
Once in a while, the introduction ofa new technology or paradigm shift enables the reduction of coordinational cost, pushing up the scaleand efficiency of organizations to new levels. It triggersatransition in the landscape of work and business, and thereafter a social change too, as was exactly the case with the invention of crowdsourcing and the Internet itself. The Internet allowed for an open, real-time and peer-to-peer information exchange on a global scale. As such, the Internet media has become more effectively scalable than traditional media outlets, and has quickly assimilated the latter. However, the Internet by itself does not support open, peer-to peer exchange of valueand general-purpose coordination, and is thus limited in its potential to power global cooperation.
The Blockchain
Blockchain is the second internet revolution, doing for value and business what the Internet has done for information and media. It allows unprecedented levels of crowd coordination by eliminating altogether the issues of fault and trust, and consequently forms the technological basis for Decentralized Autonomous Organizations (DAOs). A DAO isa new form of scalable, self-organizing cooperation, that is operated by smart contracts on the blockchain.
Agencies
The building blocks of DAOs are smart companies, or agencies (we will use those terms interchangeably). A smart agency is an atomic governance unit that is managed and operated with smart contracts on the blockchain. It has its own token (related to benefits of the company’s resources), its own reputation systems (related to credibility and influence in company matters),and its own governance system (its “bylaws” encoded in smart contracts).
The governance protocol embedded in the smart contract ofan agency can beanything one can come up with. A simple example is a proposal-based governance system, with a yes/no majority vote on proposals needed for approval and execution (which become a single action in smart companies). Proposals might be about token distribution, for example, and votes can be weighted by the voter reputation. We will give a handful of other examples in the next chapter. In a heuristic visualization it could look like this.
The solid balls represent agents in the company; their distance from the center reflects their influence power, or reputation (the closer they are the more influence they have);and their size reflects their native token possession (the larger the ball the more of the company’s tokens they hold). One agent is proposing to allocate 5 ETH to agent A for her valuable contribution of fixing bug XXX. The agents of the company vote, with their vote weighted by their reputation, and as soon as a majority of reputation holders agree with the proposal the contract automatically executes the suggested token allocation.
Agency functionalities
An agency deployed on the Ethereum blockchain via the DAO stack can, in principle, do anything that can be done on the blockchain. In particular:
- Token distribution. Each agency or DAO can issue and distribute its own native tokens to contributors of value, as valued by the organization. The issuance of native tokens enables the organization the creation of its own separate economy. The utility or benefit of the tokens can be anything that the agency decides about, such as entitling access to the DAO’s product (we will call these utility tokens), or entitling a share of the agency’s revenue (we will call those share tokens).
- Funds allocation. An organization can earn, or collect via its own-token sale, external tokens such as ETH, GEN or other DAO’s tokens. It can keep them in reserve, and distribute to third parties in exchange of a particular effort or contribution. This is somewhat analogous to an agency using its funds to compensate contributors, employees or other service providers.
- Reputation assignment. Each agency can assign reputation scores to its members. Reputation is a representation of one’s professional credibility, and thus influence, within the organization. As opposed to traditional blockchain-based tokens, reputation is not transferable. It is awarded to or earned by specific members, according to their merits and contributions made to the organization. Since reputation is tied with decision-making power in the organization, more reputation should be allocated to those who the organization believes make the best decisions. However, in order not to lock up decision-making power over time, the organization might decide that reputation dissipates over time.
- Collective data curation. An organization can manage its own collective databases of objects, and maintain their curation. It can be the curation of articles, website, organizations or anything else. The power of a shared database lies in its network effect; if everyone are looking at the same spot (because it’s well-curated), then that spot is valuable (and monetizable too). We will see below a few examples with the collective DAOstack registries, the ArcHives.
The DAO stack
DAOstack provides the foundational tools for the creation, operation and governance of DAOs, internally and externally within a broader ecosystem. In a nutshell, it can be regarded as an analogue of Wordpress for DAOs — it does for blockchains what WordPress has done for the web. This vision is made possible with the following stack of components in place:
The DAOstack ecosystem is made of a multitude of distinct but interoperable DAOs, interacting with one another in order to maximize the potential benefit of open and distributed collaboration. At the technical level, all DAOs are made of a series of smart contracts, deployed through Arc: a Solidity framework of governance allowing to create, configure, deploy and operate DAOs onto the Ethereum blockchain, possibly relying on, IPFS as an overlay network for data storage and retrieval.
Arc
Arc is a general governance framework for an interacting internet of blockchain agencies, the basic operating system for DAOs. It is an open-source, modular and general-purpose framework by design, and it comes with an open library of template governance modules, or elements, that will evolve by the needs of its users. It also allows an easy upgrade and modification of a governance system to better fit the organization’s needs over time. Arc is not limited to aspecific set of governance systems,and it makes it easy for third parties to create their own elements per their needs. By combining available elements each agency can implement its own governance system that specifies the rules for the issuance, management and assignment of scarce resources, including transferable assets (e.g. tokens) and non-transferable assets (e.g. reputation).
Architecture
Arc elegantly implements in smart contracts the basic decomposition of governance systems discussed in the previous chapter, with: actions, schemes and global constraints that every agency can be built of. Below isa visual representation of the logic and smart contract architecture of the Arc framework:
The GEN Economy
Circular Token Economy
Agencies, DAOs and DApps (Decentralized Applications) are all based on circular token economies. The general idea is that tokens are being distributed to contributors of value — for value that is contributed to the network. On the other hand, the same tokens gain benefit from the value created by the network. The more value is being created the higher the value of the tokens, the more the organization can incentivize the contribution of more value, and so on and so forth.
Decentralized Collaboration
When the governance system of the DAO is used for decisions about the incentivization and reward of contributions to the DAO itself, we would call it a decentralized collaboration. As already seen from the blockchain DApps, the token-distribution incentive model works very well in driving engagement and adoption. In the Bitcoin network, miners adoption rate looks like this:
Total hashing power in the Bitcoin network has grown exponentially and multiplied about 650 millions times over the past 7 years, due to the built-in economic incentive in mining.
With DAO stack and, for example, the relative-majority decision-making protocol described above, tokens can be easily distributed to contributors of value, including developers, promotersand early adopters of a network. There is no limit (unless chosen so by the DAO itself) on the purposeand rate of reward to contributions,and it allows for crowd engagement and coordination at unprecedented levels.
Team
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