Leadership with something to lose

Imagine a world in which all leaders were actually held accountable. DAOs point the way.

Ian LeViness

2021-05-14 2 min read

The deeper I fall down the crypto rabbit-hole, the more intrigued I get with one specific aspect of the space. What is that, you might ask?

DAOs and their related structures.

If you don't know what DAOs are yet, then it's time to get familiar with them because they're turning the idea of what a firm is on its head and changing organizational structures for the better. Picture a company in which every single member leads it. That means that together, they vote on every action as a collective entity, and their votes relate to the percentage of the company they own. Now imagine that to gain voting power, you have to purchase a "token," which is basically just a vote represented by a cryptographic hash on the blockchain. If you're not familiar with what a hash is, just imagine an entry in a shared database that looks like a secret code(a randomized string of letters and numbers). That is, for all intents and purposes, what a token looks like on a blockchain. 

In most cases, with DAOs, when you buy that token, you instantly have access to a private Discord or Telegram server where people discuss what to do with thousands, or even millions in capital. Essentially, once you've bought your vote or votes(some DAOs require members to purchase/have thousands of tokens), you're a leader with every other member of the DAO. The only difference between members lies in voting power. Historically, most DAOs have incentivized "whales," or holders of very large numbers of their tokens by making voting power proportional to how much of the DAO they've effectively purchased. 

In other words, the deeper the pockets, the more weight behind the vote. 

To me, that's an imperfect system, not all that different from how traditional companies are run. If the driving mantra for the crypto space is truly "the decentralization of everything," i.e., giving the power back to the people, then shouldn't DAOs reflect that? To me, change will come. As with any technological vertical, everything's iterative. 

Right now, a DAO is a four-fold entity. First and foremost, it's a contract, or more accurately, a smart contract. If we get down to brass tacks, a smart contract is nothing more than a piece of software that's hosted on a blockchain and runs on conditional logic. It's smart contracts, in turn, that kickstarted the crypto space into a bona-fide industry as well, since they allow anyone to create a cryptocurrency(also called a crypto token, depending on its' use case and method of issuance), with only a few lines a code. While Bitcoin and Ether were created through launching dedicated blockchains, these smart-contract-based currencies(or tokens), live in software on top of blockchains. 

Circling back to DAOs, however, their other three elements are: their tokens(which are used as votes), their token holders(who do the voting and lead the organization), and the arena in which those holders meet. With all of this in mind, imagine the possibilities. Industry could be entirely reshaped by consumers who band together in DAOs to make things better. For that to truly be a reality, however, DAOS have to become fairer or more complex than just crypto-native versions of the status quo.

If you still don't fully get DAOs at this point, that's natural. Truthfully, this discussion was just meant to introduce you to their foundational concepts. Because I believe DAOs are one of the five most important elements of the entire crypto movement, I aim to dig deeper and deeper into them here over time, as I build out this academy of sorts. 

For now, however, until next time, feel free to reach out via Twitter and stick around as I continue to demystify the sheer power of the crypto movement!

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