DAOs Demystified: Organization that puts people first

Decentralized Autonomous Organization (DAO) is an emerging way to organize work that changes the usual model of hierarchical power. In this new way of organizing, the arrangement of the participants is less like a pyramid, and more like a round table. This way of organizing keeps work personal. DAOs move key decisions closer to the individual contributors, giving each person more power, agency, and stake in the outcome of the work.

The History of Work

The need to organize has always been part of human survival and evolution. In the early days of the species, humans organized to gather food, make clothes and build shelters. We created tools, found ways to share knowledge, and became very efficient at the work required for survival. This meant we spent less time working for mere subsistence, and found hours in the day to contemplate new kinds of work.

Modern Work Culture

In ancient Egypt we learned that organization was a powerful tool for magnifying work; ironically, it was while building the pyramids that humans first experimented with organizational structures of more than two levels. The Egyptians also founded the idea of governance that isn’t based on family lineage. In the 4,000 years since ancient Egypt, the organization of most work has been structured as a pyramid: one person or a small cohort occupies the tip, and these few decide what happens in all the layers below them. The bigger the pyramid, the more focus is placed on the work, and less on people. There is growing consensus that this is bad for us. Headlines range from: “Stanford Professor Is Sounding the Alarm on Our Toxic, Modern Workplace (healthline.com),” to “The Workplace Is Killing People and Nobody Cares (Stanford Business).”

The Swiss Experiment

Switzerland is famous for its chocolates, its banks, its expensive watches and the alps. But did you know that it is also home to the largest and longest running experiment of an alternate organization for civil work? In Switzerland there is no Monarch or President - no single person that can unilaterally affect the lives of the entire country. Their executive branch is headed by seven equally vested people. This body (The Federal Council) has the power to manage customs, foreign policies, the monetary system, the military, social programs, and laws. Beyond these matters, the balance of civil work rests in the hands of their smallest governing division, called Communes. Communes are like a city or town, but with a lot more autonomy than usual.

Interesting facts about Swiss civil structure:

  • Any citizen can introduce a new law, if they can gather 100,000 signatures.
  • Citizenship is not issued by the central government, but instead by the decentralized communes.
  • If the federal or regional government passes a law, any citizen can introduce a challenge with just 50,000 signatures.
  • Any change to the Swiss constitution requires approval by its citizens.

Switzerland has organized the work of governing such that individuals are much more in focus than in other, more common modern government structures.

Companies with multiple CEOs

In the corporate world, there have been numerous recent experiments with the idea of having multiple head honchos. Big names such as Netflix, Samsung, Deutsche Bank, and Chipotle have explored the idea of having multiple CEOs. The general idea is that sharing the work of organizing and decision-making is healthier, and leads to less burnout.

DAO in depth

Decentralized Autonomous Organizations are a new model that brings decision making and governance even closer to the individual. It puts the entire body of individuals at the center of organizing and managing work. The idea of a DAO is that no single president should drive the agenda for an entire company, or country. Instead, any individual can set an agenda item and share the load of managing the resulting work. This way “Organizing” and management is “Decentralized.” Once the work is defined and approved, a DAO enables the “Automatic” execution of tasks that would have previously been performed by a human manager, director or oversight committee.

You already interface with small instances of Automatic Organizations if you live anywhere with ubiquitous internet access and easy online shopping. For example, when you place an order on Amazon, no human needs to verify your order. Computers automatically check that your payment was successful, and determine which Amazon warehouse near you has your order in stock. Then the computer sends the order to the warehouse with all the information needed to deliver it to your door. One central authority (Amazon) still sets the rules about how each step of the automation works, but this relatable example shows that complex, event-driven decisions can be automated.

Consider how a DAO might be used to manage a country’s education budget based on the needs of each school, supported by verifiable information that can easily be put into a computer. Verifiable information could include the weather forecast and the cost of electricity, the number of students in an area, and the distance school buses have to travel to pick up students. Since executions managed by DAO’s are automatic and instantaneous, such a budget could be paid out monthly or weekly without human delays like vacation, sick time, or employee turnover. A school may receive more money one week for air conditioning due to record high temperatures, and the next week receive their normal amounts. In this community example, any citizen could propose a change to how the amount is calculated and all verified members of that city could vote on the change without the need for a mayor or city council.

This is the power of the Decentralized Autonomous Organization. Change can come from anywhere! Likewise, opposition to change can also come from anywhere. The blockchain is permanent and secure, everything is public and auditable. As a result, once decisions are made, no one can “pull a fast one.”

DAO’s on Cardano

Decentralized Autonomous Organization is a nascent idea that is made possible by blockchain technology. Bitcoin was a successful experiment which proved that money, which was once entirely physical, can be made entirely digital. DAOs will enable us to make lots of other things digital as well. Several blockchain technologies are experimenting with DAOs; Cardano is leading the pack by making the set-up and management of a DAO incredibly easy. Cardano is also currently the only public blockchain platform with DIDs (Decentralized Identifiers) that can be used to create national ID systems and voting tools built directly into its protocol.

LIDO Nation endorses DAOs

Imagine having the choice between a career with a traditional corporation vs a DAO. Would you rather trust a Corporation to behave fairly and in your best interest, no matter who is on the board of directors? Instead, imagine having direct access to information about business operations and finances, and having a vote in decisions about how Company successes are shared.

We still have a long way to go before we start seeing corporations and governments replace some activities or bureaucracies with DAOs. We at Lido Nation are excited to participate in these early experiments, and we are motivated by the prospect of a world where every person gets an equal voice and a vote, simply for being born.

Related Links

  • Open source tools to support DAO infrastructures ADAO Website
  • Deep Dive into a Cardano DAO medium article

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