In 20 years, there will be no companies but DAOs? Vitalik Buterin’s ultimate vision of decentralization

Have you ever thought that in 20 years, the concept of company may no longer exist in this world!

Have you ever thought that any work you do can become a force for the company's development, and as the company grows, you will benefit for life!

Have you ever thought that even a centralized enterprise can use a decentralized management method, the company can still run smoothly, and you are no longer just an employee.

All of this is being realized or has been realized!

In life, we often encounter a situation where you work very hard in a company and make great contributions, but once you leave and go to work in another company, any development of the original company will have nothing to do with you. So, what is the meaning of your efforts in the past? What is the result of your struggle for the company?

Vitalik (founder of Ethereum, V God)'s ideal: Decentralized Autonomous Organization (DAO) is becoming a reality, trying to record the efforts of any individual on the blockchain in an unalterable way and preserve it forever. Any individual's contribution and achievements will become a lifelong token in DAO. This is a new corporate system, a new incentive method, and will also be the future direction of corporate development.

Regarding DAO, as low-level or high-level "workers", we all need to think deeply about its principles and future development!

01
The Nature of Companies and Attempts at Blockchain Governance

In the 16th century, the Dutch East India Company was established. As the pioneer of the modern capital governance system, the company system has greatly changed the way human society collaborates . It is precisely the emergence of the company system that has transformed the decentralized, inefficient, and primitive human collaboration in agricultural society into a centralized, concentrated, and efficient modern collaboration method .

The emergence and large-scale implementation of the Western corporate system laid the groundwork for the Industrial Revolution. It can be said that most of the theoretical foundations of modern capitalism and the political operation of many modern capitalist countries are closely related to the corporate system. For hundreds of years, the corporate system has penetrated into every aspect of any economy participating in the global economy, making economic globalization and trade globalization possible .

As the most effective way of operating economic groups so far , the company system is undoubtedly "a great achievement in human history", and the maturity of Internet technology and big data technology has become a booster for the thorough "maturity" of the company system. For example, Google, Amazon, Baidu, Tencent, Alibaba, etc., which we are familiar with, have not only allowed people to enjoy the convenience of the Internet era with the breadth of industry popularization and the depth of assistance to personal life, but also achieved trillions of company valuations for these companies.

When the company system develops to the level of the above-mentioned enterprises, it will basically lead to two results: one is the technological monopoly of a certain industry, and the other is the squeeze on the living space . This is very easy to understand. Large companies have more capital to recruit excellent talents and form technical barriers. When talents are concentrated in one or a few companies, other companies cannot obtain sufficient technical reserves and technical support if they want to develop.

Another thing is that Internet companies are now involved in e-commerce, payment, catering, express delivery, finance and other fields that you can think of and can't think of. Under this situation, the huge size of the above companies will inevitably require more living space, and the integration capabilities of large companies are far superior to those of startups. Therefore, under the premise of being involved in any field and making certain achievements, the situation of startups will become increasingly difficult, to the point that they will have no way to survive.

The extreme centralized company system has formed a barrier to technology and capital . The market and the government have both seen this, so the Anti-Monopoly Law was officially implemented on August 1, 2008. However, the Anti- Monopoly Law has not achieved satisfactory results in the 13 years since its implementation, and the market is still controlled by large companies. It was not until around 2015 that the blockchain technology wave became popular, and people saw the opportunity to replace the centralized collaboration mode with the decentralized collaboration mode. Blockchain has also become the point of separation and convergence of the Internet's company system, and some simple distributed collaboration methods have begun to appear.

Around 2017, 1CO (Initial Coin Offerings) began to try to open companies on the blockchain, but this form of company is still centralized . The entire company is controlled by a core team, and because of this, many fake projects and "air tokens" have conducted 1COs, causing many people to be deceived. The first distributed collaboration attempt on the blockchain ended with an overly rudimentary institutional structure.

In response to this phenomenon, Ethereum founder Vitalik proposed the concept of DAO1CO, combining his ideal DAO (decentralized autonomous organization) with 1CO (initial token offering) . A smart contract is used to lock the tokens raised by 1CO, and according to the expected project progress, a certain amount of tokens are unlocked at each different project progress point as a reward for project developers.

This method can effectively prevent the core team from committing fraud - because if the team does not produce anything, or what it produces is not recognized by the investors (through a voting method pre-programmed in the smart contract), the team will not receive any compensation, and at the agreed time, all investors' funds will be returned to the investors.

Just as someone predicted 20 years ago that "all companies will be Internet companies in the future" , 20 years later, it can also be predicted that "all companies will be DAO organizations in the future." As a creative attempt, DAO is essentially a new type of production relationship that subverts the modern company system - a decentralized cooperative relationship. The emergence of blockchain technology has brought about the possibility of a new type of production relationship.

We can imagine that with the development of information technology, individuals will be liberated from the cage of corporate systems, and blockchain technology has greatly increased this possibility . In the future, blockchain will become a large platform, on which any project can split and publish work content in the form of task rewards through smart contracts. Individuals who are capable and willing can freely choose to accept tasks according to their own circumstances and realize true freelance work.

02
Two major examples of DAO governance

There are two well-known cases of DAO recently: 1. A16Z (Andreessen Horowitz), a well-known Silicon Valley venture capital, invested in MakerDAO and increased its holdings of 6% of MKR with $15 million; 2. People (Constitution DAO) participated in the auction of one of the first copies of the US Constitution at Sotheby's. Both can provide us with a practical case analysis for a deeper understanding of DAO.

1. MakerDAO is a smart contract system on Ethereum, providing the first decentralized stable currency Dai (Ethereum Dollar) and derivative financial system . Dai is issued with full collateral of digital assets and is pegged 1:1 with the US dollar. Currently, Dai is the largest decentralized stable token . MKR is the equity and management token of the Maker Decentralized Autonomous Organization (DAO).

A16Z Crypto's $15 million investment makes it one of the important governance parties of the decentralized stable token project MakerDAO. The A16Z team will provide MakerDAO with three years of capital operation, business network, market personnel and operational support, as well as Dai's regulatory compliance and large-scale adoption. Interestingly, Kathryn Haun, co-helmsman of A16Z Crypto, was once a federal investigator in the Mt. Gox incident and the Silk Road case.

Currently, MakerDAO has launched a test network for multiple collateralized Dai and launched the first public governance vote.

2. Constitution DAO was created by several crypto enthusiasts who raised ETH from the entire network through a simple and straightforward official website to auction a copy of the first U.S. Constitution. They also distributed ETH to all participants who donated ETH at a ratio of 1 ETH = 1 million People.

However, what no one expected was that this seemingly "crazy and wild" idea was recognized by more people, and a large number of people began to donate. Just 72 hours after the establishment of Constitution DAO, it raised 42 million US dollars worth of ETH , but in the end, the founder of Constitution DAO gave up the auction because he did not have enough US dollars, and guaranteed to refund all investors.

Then, a dramatic scene occurred: some people believed that the Constitution DAO team was a scammer, so they sold their People tokens at a huge loss , while others bought a large number of People tokens from the market at a low price.

On November 22, the official Twitter account announced the detailed refund process. Then, a more interesting scene appeared. A large number of investors did not choose a refund, but chose to hold People tokens . Since refunds require the destruction of People, it has now become a rapidly shrinking and non-renewable asset . In a sense, Constitution DAO has now become an "ownerless project", which is very similar to the popular MEME token some time ago, both of which have experienced a rapid increase in value in a short period of time.

03
Deep thinking about blockchain DAO

Through the above two cases, I believe everyone must have a certain understanding of the "Distributed Autonomous Organization" (DAO).

However, we believe that we still need to think about the deeper logic of DAO . From the examples we have seen so far, we know that DAO is indeed as Vitalik envisioned. Through a series of open and fair rules, the system can even operate autonomously without human intervention and management.

With the support of blockchain technology and smart contracts, the operation of DAO is open and transparent. Everyone can become a participant of the organization by purchasing shares or providing services . It is worth mentioning that during the operation, it can also be continuously maintained and upgraded according to actual conditions, and adapt to the environment around it through continuous self-improvement.

If we think about DAO from a more philosophical perspective, it is undoubtedly creating a utopian world in the blockchain world where everyone is equal, rights and interests are reasonably distributed, and there is joint governance .

Of course, the reality of DAO is that it is still in the early stages of combining rules and technology . The above two cases also show that in the early stages of DAO formation, a founding team is still needed to conduct initial governance and rule-making, and then transition from smart contracts to the DAO model . In layman's terms, the current DAO process and results are distributed, but the launch is centralized , which may favor the interests of the founding team in the formulation of initial rules.

In addition, the distribution of governance rights is still unbalanced at present, and in fact it is impossible to achieve complete balance . If you want to promote the distributed structure of DAO governance, you must set a threshold for voting rights. However, it is still questionable whether the few people who can pass the threshold can represent the interests of the majority of investors. Once an accident occurs, the consensus of the DAO will be very serious and basically lose its function.

04
Conclusion

We cannot give up our dreams, just like we cannot give up our yearning for the blockchain utopia DAO, but we must also face the reality, just like the most perfect utopia DAO at this stage is not completely decentralized. Reality tells us that it is difficult for the current blockchain to have a completely autonomous system. As long as we can solve the problem with the help of centralized methods, even if it is not completely decentralized, it is still commendable.

As for the "opponents" who are unable to look at problems dialectically and are immersed in self-righteous cognition and "oppose for the sake of opposition", arrogance and prejudice cannot make what they believe in beauty become a utopia.

The world is in motion, and the imperfection of DAO today may be the beginning of a "perfect" future. When ideals exist, wealth and opportunities emerge at the same time, the future of DAO will inevitably move towards "perfection."