by Sabina Sachtachtinskagia, Event Horizons
During the last few days Event Horizons has decided to invest in The DAO. Our intention is to support this crowdfunding initiative and to participate actively in this emerging project – because, as we will show below, The DAO is much deeper than it looks like. Far from being another tech start-up, it literally becomes the way for bringing innovations into life and, more broadly speaking, for working towards progress. There are many reviews of The DAO in the web that provide general information and it would be redundant to cite them here. Instead, after giving a very brief overview, we are going to focus on the practical implications of The DAO that people tend to overlook, and on how The DAO, or other alternatives based on DAO principles, can change the world in the next 10 years. These implications are of particular interest to us, since we share and promote the same values.
As you probably know, Ethereum is the innovative blockchain platform that uses code to create smart contracts that enforce themselves. The DAO is the first “venture fund” of a new type that operates on the Ethereum platform. In years to come, we expect The DAO to become one of the most influential hubs for seed-funding of tech start-ups. However, although this is not exactly apparent, The DAO potentially is more than a venture fund – it can morph into to an eco-system for blockchain innovations, a lab for social or economic experimentation and many other things. Empowered by smart contracts, DAOs (Decentralized Autonomous Organizations) implements a new, revolutionary process of making decentralized economic (and not only) choices – and, even more importantly, this process can guide the system to evolve. Currently The DAO applies this process particularly to the early-stage funding of technological progress. Seed-funding for new technology is exactly the sphere where the butterfly effects most strong and has the best potential to change the world. Furthermore, after The DAO succeeds in their “proof of concept” as a venture fund, there is no stop for DAO principles to be implemented anywhere – in any field of economic, social or political life.
So, here are the points of huge DAO potential, and some of them may have been met already as the development of The DAO initiative:
- Fractality and multiplicity are the primal characteristics of DAOs. Theoretically, The DAO can be “split” into 2 parts, into 2 separate “realities” whenever a choice is made, for every choice that is made. Every new DAO that is formed through a split is but another fractal of the initial one, based on the same fundamental principles. Therefore, ultimately the result not a single organization, but is a huge “portfolio” of embedded organizations that relate to each other. Notions like “monopoly” or “competition” lose their meaning here, because DAO principle spreads everywhere and competes with itself, being extremely adaptable and customizable.
- The DAO could become an instrument for accelerated social and economic evolution, since it treats human groups in the same way that nature treats individuals: it speeds up the group evolution by supporting infinite “mutations” and providing a transparent selection process. Furthermore, a “portfolio” of DAOs allows to model and test the game rules and to pick not only the optimal players, but also the optimal rules and environments. Multiple social and economic experiments will be running in The DAO and in other DAOs simultaneously, rewarded with monetary or other incentives. Any assumption can be tested there – this way, even Philosophy becomes applied science.
- Perhaps for first time in history, The DAO embellishes Democracy with the sense of full economic and social responsibility for one’s votes. It removes away the tyranny of the majority and the concerns of the minority, since it allows everyone to reap the rewards and to suffer the consequences of their own choice. This achievement is hard to overestimate, as it sets the example for future political systems based on verifiable meritocracy.
- Also perhaps for first time in history, decentralization (even as anarchy) is supplemented with unbreakable laws in form of mutually agreed contracts that enforce themselves. Therefore, giving all the power to individuals does not reduce the authority of the law. This feature is common in all smart contract projects, so we refer to The DAO here mostly because so far it is the most complex and all-encompassing project in blockchain technological sphere and applies not only to one particular sector (like e.g. cryptocurrency), but to the economy as a whole.
- Last but not least, The DAO by design can accommodate economic deals between agents whose worldviews are very diverse, or even deals with non-human agents (A.I., trans-humans or any other possible form of intelligent life). Again, this feature is common for all smart contract projects, but since The DAO is all about tech innovation, it is reassuring to know that human progress will not be bounded by human bigotry.
One important thing that The DAO currently lacks is a reputation system. It is present there implicitly (when the groups that make the best decisions receive more membership and funding), but not explicitly. A reputation system might appear redundant when the contracts are implemented automatically, but really there are still some fields of expertise like science where reputation between peers plays a role. Reputation needs to be quantified and converted to economic or social rewards (e.g. as in our Research Grid project). There have been talks that Whisper, a companion Ethereum project, may implement a reputation system into smart contracts, but this is yet to be done.
Also published on Medium.