The Age of DAO – Blocksmith

This article aims to introduce and contextualize the concept of Decentralized Autonomous Organizations (DAOs), and it’s core potential for human social organisation. Irrespective of its adoption in various social domains, the technological proposition of DAOs marks a significant advancement towards the automation of social affairs. This development signifies a novel paradigm, a crucial milestone diverging from the prevailing structures in contemporary social landscapes. It holds the potential to address the fundamental principles of democracy, offering a transformative approach in the realm of social governance.

From the beginning .

The blockchain, at its core, is a tool initially designed to ensure data immutability and public accessibility. It’s a global system, comprising thousands of computers distributed across the world, each running the same program and maintaining identical datasets. This uniformity ensures that every participant in the network has an accurate and consistent view of what is deemed true or valid within the blockchain. Its primary function is to facilitate the creation of chains of blocks, where each block represents a piece of data resulting from interactions within the blockchain network. These blocks are open for public reading and verification, adding a layer of transparency and trust to the system.

The utility of a blockchain, particularly its chain of blocks, lies in the nature of the blocks themselves. Generally, contemporary blockchains support two primary types of blocks:

Transaction Block: This acts as a ledger or record of past computational processes, primarily financial transactions. Each transaction block contains information about the transfers of assets (like cryptocurrencies) or other data, providing a verifiable history of all transactions that have occurred on the network.
Interaction Block: This is more akin to a piece of executable program or software that users can interact with. Often, these are the aforementioned Smart Contracts, which are self-executing contracts with the terms of the agreement directly written into code. These blocks are not just records of transactions but are active elements that can process, validate, and enforce contractual terms or other programmed actions automatically.

This discussion focuses on the latter — the interactional blocks. These blocks represent a significant evolution in blockchain technology, extending its application beyond mere transaction recording to facilitating complex interactions and automations.

The program .

The analogy of culinary arts is indeed an apt way to describe how programs operate, particularly in the context of functions in programming. Just like a recipe in cooking, a function in programming is a series of instructions (commands) executed to achieve a certain outcome. Here’s how this analogy aligns with the concept of functions:

Inputs: In cooking, these are the ingredients required for the recipe. Similarly, in programming, inputs are the data or parameters that a function receives to perform its operations. These inputs can be likened to the various ingredients (e.g., 350g of tomatoes) that are essential to the preparation of a dish.
Process (Do): This is the equivalent of following the cooking instructions or procedures. In a program, this step involves the computer executing the function’s commands. These commands could include various operations such as calculations, data manipulations, or any other processing tasks. In cooking, this would be akin to the steps of stirring the mix or adding the tomatoes to the saucepan.
Output: The result of executing the function. In the kitchen, the output is the final dish that is prepared, such as a meal. In programming, the output is the result of the function’s processing – it could be a value, a new data set, a change in the state of the program, or any other defined outcome that the function is designed to produce.

The essence of programming revolves around the encapsulation of multiple functions into sets of small, executable units, where the aggregate of these actions or outputs leads to consistent and predictable outcomes. It goes without saying that the primary objective of creating a program is its execution. Therefore, following the establishment of the program’s definition, the question naturally arises: how will it be executed, with what inputs, and by whom? In this context, we are discussing topics such as availability, accessibility patterns, and design, all intricately linked with practical considerations. The primary reason for presenting these efforts is to address practicality.

Examples of some known usecases include:

Maintaining the aircraft on course to the target destination based on parameters like barometer, speed, altitude, etc.
Transferring X dollars in currency from one account to another.
Increasing the interest rate from 2.1% to 3.3% for our bank in response to inflation.
Connecting to radio station 114.7.5 and outputting to speakers.
Collecting provided votes and adding them to the sum of votes.
more ?

Interactional Blocks .

In the context of blockchain technology, an “interactional block” refers to a publicly accessible piece of software that represents a range of interactive possibilities within a blockchain network (the aforementioned network of computers). This software is designed to be open for access by anyone who meets certain predefined criteria, allowing them to read, review, and engage with it. The concept being described here is known as a “Smart Contract.” A Smart Contract is nothing new, being essentially an aggregation of several concepts, primarily being a program designed for execution on a peer-to-peer network. What is exceptional is the crypto-world marketing verbalism.

The analogy of a vending machine provides an insightful parallel to understand the functionality of a blockchain-based system, especially in the context of Smart Contracts. Let’s consider a hypothetical scenario where a vending machine’s operational rules are stored on a blockchain and its interface is accessible via the web:

Input: The user provides some form of fiat currency. This input could be represented digitally in the case of a blockchain-based system.
Processing: The vending machine then performs a series of actions:
- Amount Check: Verifies if the correct amount of currency has been inputted.
- Inventory Check: Ensures the requested item is available.
- Inventory Order Record: Logs the transaction in the inventory records.
- Location Check: Confirms the location for delivery or dispensing.
- Activation of Motors: Physically dispenses the product.
- Monitor: Oversees the entire transaction process.
- Compute Change: Calculates if any change is due to the user.
- Provide Change: Dispenses any required change.
These actions represent a set of high or low-level instructions or multiple functions, akin to the operations of a Smart Contract on the blockchain.
Output: The output, in this analogy, is a digital version of a product, such as a ‘digital Coca-Cola.’ While this sounds unconventional, it represents how blockchain technology transforms traditional processes. Instead of receiving a physical product, one might receive a digital token or representation, perhaps signifying ownership or entitlement to a physical item, or representing a digital asset in itself.

These public softwares, or Smart Contracts in the context of blockchain technology, are developed by individuals or groups with specific intentions or desired outcomes in mind. The potential applications of these Smart Contracts are as varied as the intentions of their creators: Commercial Ventures, Social Engagements, Enterprise Solutions, Cultural Initiatives, etc. The key element here is the versatility offered by Smart Contracts when combined with user interfaces. This combination allows people and entire communities to interact with the “interactional block”, facilitating various social and organizational processes. With a little organizational intent and a set of rules governing user interactions, Smart Contracts on the blockchain present an opportunity to construct a wide array of systems and platforms. These can range from simple transactional processes to complex organizational structures, offering innovative solutions to challenges in various social arenas.

Central Entities .

The evolution of Homo sapiens, while not particularly contentious within the scientific community, is often posited to have progressed through a centralized organizational framework. This perspective acknowledges the evolutionary trajectory of great apes, wherein the presence of dominant individuals (alpha personas), irrespective of their gender, and their coalitions, play a pivotal role in the structuring of community dynamics. These alpha personas often serve as focal points around which communal norms and regulations are established and maintained. The term ‘organization’, as defined by the Cambridge Dictionary, refers to a collective of individuals coordinating their efforts in a structured manner towards a common objective.

Reflecting on historical rulers such as Pharaohs, Emperors, Queens, and Kings, and extending this contemplation to the 21st century’s analogous figures like Presidents (e.g., Putin, Trump, Macron) and legislative bodies (e.g., Councils, Senate Chambers), one observes a persistent human inclination towards appointing or recognizing dominant alpha-personas and their coalitions in governance. This trend, potentially indicative of a plutocratic influence, has been a characteristic feature of human social organization. Over the past several millennia, there has been a consistent presence of centralized mechanisms in both the establishment of rules and the governance systems. Crucially, these processes of rule definition and implementation have often been exclusive, not readily accessible or participatory for the general populace who are subject to their outcomes.

For the majority of ordinary citizens, these governance processes have transformed into procedural hyperobjects. These are entities or systems that are so vast and complex that they are beyond the comprehension of the average individual. This complexity is often compounded by a lack of transparent communication and a tendency to hide behind veils of expertise, secrecy, or inherent intricacy. In contemporary times, this phenomenon is evident in a variety of domains, ranging from the technical procedures involved in space shuttle launches to fundamental societal functions like democratic voting. These processes, despite their significance, are not immune to human fallibility and are frequently subject to errors and human-induced modifications or interventions.

In a country like 21st-century France or the US, governance in the potilical landscape is conducted through a system of representative democracy. In this system, citizens exercise their democratic right by voting for individuals who aspire to administer the bureaucratic machinery of the state. However, the processes entailed in voting, encompassing everything from the handling and counting of votes to their aggregation, often occur without direct oversight or scrutiny from the average citizen. This lack of involvement can extend across various voting systems, from physical ballot casting in France to electronic setups in the United States. The complexities and potential issues arising within these voting methodologies, coupled with a general lack of transparency, can foster skepticism about the integrity of these processes. This skepticism is fueled by concerns over the security and accuracy of vote counting, the potential for manipulation, and the overall fairness of the election system. Even in well-established and highly publicized democratic exercises like voting, there are no guarantees against irregularities or scandals. A notable example of such controversies is the election incident involving J.W. Bush in the United States, or the recent scandals shadowing the trump administration in the public sphere. Such apprehensions underscore the need for more transparent and secure voting mechanisms to bolster public trust in electoral processes.

Bureaucracy .

Some definitions of bureaucracy:

a clear hierarchy, specialization, a division of labor, and a set of formal rules, or standard operating procedures. link

a system for controlling or managing an organization that is operated by a large number of officials employed to follow rules carefully. link

The fundamental rationale behind the establishment of bureaucracies is to enhance efficiency in the coordination and organization of societal processes, particularly over functional domains of knowledge. These procedural endeavors, characterized by impersonal authority and strict adherence to regulatory frameworks, strives to rationalize all aspects of social existence. They allow for the industrialisation and normalisation of complex human interactions. In essence, the goal is to mitigate human error and variability by entrusting these processes to protocol administrators, who are, paradoxically, human themselves. In the context of the 21st century, this evidently evolved to incorporate standards that are native to the contemporary era, ie. the institutionalization of procedural norms thanks to ICT (internet-computer-technology) native socio-economic structures, for an increasingly digital and interconnected world.

Automated Bureaucracy .

A network nexus point, or “on-chain”, set of idiomatic protocols for some social arena, characterized by increased procedural clarity / scrutiny, in order fully automate the normalization of complex human interaction?

Welcome to the world o DAO - or decentralized autonomous organisation.

DAOs are commonly defined by specific characteristics: flat organisation, full transparency ( ideally emphasizes protocol over personal discretion in governance), open access and decentralisation. Let’s run through the Trigram :

Decentralized: DAOs operate without centralized leadership, relying instead on democratic voting mechanisms. They are resilient to single points of failure, as they are powered by a distributed network of computers. This ensures:
- A distributed power structure, where no single entity controls the entire system.
- The public nature of the rules governing DAOs ensures transparency and prevents tampering, manipulation, or alteration of outcomes, thereby guaranteeing reliability and public trust.
- The code execution has no jurisdiction. The hardware execution, distributed network of computers, can happen anywhere desired, transfered, and parallelised (multi-where).
Autonomous: DAOs function through pre-set codes or rules, executed by computers. Once deployed, these rules operate autonomously, allowing interactions from anyone, anywhere, at any time. The code, including its versions, is publicly accessible. This means that any modifications (akin to updating a recipe) are transparent and trackable, allowing users to know which version of the code is in effect during interactions.
Organisation: ( some idea of ruled interaction - as in the opposite of chaos? ) An organisation defines human interaction by some statement of intent and rules. These rules are public contract, documented, systematized, about how the organisation behaves and produces outcomes. DAOs are more than just technical constructs; they are communities of like-minded individuals united by common goals or interests. They are effectively clubs, digital. Clubs that have a bank account.

The big picture: Imagine a community bureaucracy, executed anywhere at anytime, for which the evolution of the bureaucratic protocol and its applicative outcome themselves are voted for by community members (shareholders or stakeholders). That is, the people they affect. The question arises for us developers: What is the blueprint defining a DAO program?

Basic structure .

Beyond the trigram mentioned above, what makes a public program or “smart contract” effective as a DAO is a set of what we will call (taking a modular assembly paradigm approach) common “architectural components” or modules as follows:

Governance Module : A mechanism for decision-making within the DAO, which facilitate proposals management (submitting and vetting evolutions of the protocol or organisational behavior and outcomes), voting system, and implementation of decisions.
Impact: The design of this module affects how democratically and efficiently the DAO operates. A well-designed governance module ensures fair representation, prevents manipulation, and encourages active participation from members. For example, the choice of voting mechanisms (e.g., one-member-one-vote, token-based voting) can significantly influence the power dynamics within the DAO.
Treasury and Financial Module: Manages the DAO’s assets and funds. This includes defining policies for total supply (fixed, capped, or inflationary), investment strategies, and allocation of funds. Here may be defined total supply policies (fixed, capped, or inflationary), etc.
Impact: The module’s design impacts the DAO’s financial stability and growth potential. Decisions on fund allocation, investment, and supply policies directly affect the DAO’s ability to fund projects, reward members, and sustain its operations.
Token Creation and Distribution Module: Manages the creation and distribution of the DAO’s native tokens.
Impact: This module influences the DAO’s economic model and member incentives. The method of token distribution (e.g., airdrops, sales, rewards) affects member engagement and distribution of power. The tokenomics (token utility, supply dynamics) play a crucial role in defining the value and usage of the tokens within the ecosystem.
Communication Systems Module: An apparatus decicated to manage organisation communication, ie. plugs with capabilities to facilitate discussion, collaboration, and dissemination of information. The aim is to ensure a seamless integration with the DAO’s governance structure.
Impact: Effective communication is key to DAO’s functionality and member engagement. This module’s design affects how information is shared, how transparent decisions are, and how members collaborate. Tools like forums, chatrooms, or integration with social media can enhance member participation and consensus building. When voting on protocol evolutions or project becomes automated, communication becomes key to operational efficiency.
Identity and Membership Management Module: Manages member identities and roles, including the definition and management of different levels of participation and access rights.
Impact: Maintaining the integrity and security of the DAO. It defines how members interact with the DAO. The design choices around anonymity, verification, and role assignment affect the DAO’s openness, inclusivity, and the ability to delegate tasks effectively.
Dispute Resolution Module: A Framework for resolving conflicts - the design of a set of rules and protocols (e.g., mediation, arbitration) to handle disagreements and conflicts within the DAO.
Impact: Maintaining harmony and fairness in the DAO. Effective dispute resolution mechanisms ensure that conflicts are addressed efficiently and fairly, preserving trust among members and preventing fragmentation of the community.

Each component of a DAO is a topic of substantial discussion and analysis, as the decisions made in the architecture and design of these components significantly influence the DAO’s behavior, functionality, and overall outcomes.

Next, we will take a deeper look at the Governance Module of a DAO.

Stay tuned!