DAOstack – Making Decentralized Incorruptible Governance a Reality

Introduction

Human collaboration from the beginning of time was one of assigning tasks to a group of individuals and ensuring that each got done for the progress of the entire community. Hence, there were hunters, gatherers, cooks, and importantly, a chief, who would govern the role of each function. The chief, himself, will not interfere in the role of each group but will be there to identify shortcomings in the working of each group and hence suggest or take corrective action. This is more or less what we see in many tribes across the globe. Governance becomes the responsibility of the chief and the tribe operates well under the guidance of such chiefs.

Fast forward to the 21st century and the idea of such chiefs applies even to Corporations and Organizations. What we call as the Chief Executive Officer (CEO) or Chief Operating Officer (CEO) are examples of such chiefs required to ensure smooth working of the organization. The chiefs that we saw in early human collaboration was one governing survival and hence life and death of the group. There was hardly much of incentive to allow wrong – doing because it in effect may lead to scarcity of resources or unavailability of skills to do a certain task. As an example, if guidance given to hunters by the chief, puts them right in the path of predators then sooner or later they will die out and the whole group will starve to death. This is anti-collaboration and one which is not self-sustaining and hence the chief would disallow such a course.

Now coming to organizations and corporations, the story is not exactly similar.

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What Changed?

Well, the thing that changed is the incentive to be anti-collaborative, in some cases, went beyond the incentive to stay collaborative; we are talking about corruption, veto power, insider trading, nepotism and many more. This is because the CEOs and COOs had sweeping powers and in many cases, their decisions were hardly visible to the world. Besides, there is one more aspect to the entire equation – in many countries for accounting purposes, corporations are viewed as “Going – Concern”, which means they have a life of their own and so do a legal status. It is, therefore, difficult to expect a CEO to be the chief and yet realize that he himself is dispensable, depending on the needs of the organization. If that is the case, then wrong-doing, in a wrong-way, had a justifiable reason. Realizing this reality, corporations therefore implemented a Board of Directors over and above the CEO to keep them in check as much as guide them. This is governance structure over a governance structure and yet we know that they too are prone to corruption. This, in a nut shell, is the issue with corporations today.

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What is the Solution?

The solution obviously is to give a lot many reputed individuals the option of voting in decision making. That way concentration of power in the hands of few can be kept in check. But do we have such a system working in the first place?

If we look closely, there are two such solutions, for lack of a better word, that are already in operation around the globe. The first is the internet where every individual having access to it has an equal power to make changes or add/delete items. But there is no governing structure over here. What do I mean?

Okay, if I were to ask who is responsible for Facebook, many would say Mark Zukerberg, at the same time, if I were to ask who is responsible for the internet, no one would have an answer. In fact, the internet is so free and liberating that when governments, like in China, puts restrictions on data flow, it is considered as restrictions on the natural rights of an individual. So, the internet gives freedom of data flow but not much of governance.

The second solution available is the blockchain. The blockchain is a decentralized and immutable solution available on the net. Which means, its inherent capability of allowing decentralized user access and yet the ability to maintain one view of the truth, ensures that it is one of the most capable modes of ensuring governance.

So, if a solution can bring together the benefits of the internet for its reach and the blockchain for its ability to give powers to individual users with a good reputation in decision making, that solution will be one of the best in governance.

And we seem to have such a solution!

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DAOstack - what’s this all about?

DAO stands for Decentralized Autonomous Organization, attempting to achieve decentralized governance as we had discussed so far. However, even the DAO organization has its limitations where the reputation of few voters can change the decision in favor of the few; of course, the reputation itself could be brought by few through the token system.

The DAOstack tries to build on the advantages of the DAO while having a solution mitigating the known issues with current DAOs.

Let’s understand DAO stack as described in their whitepaper:

“DAOstack provides the foundational tools for the creation, operation, and governance of DAOs, internally and externally within a broader ecosystem. In a nutshell, it can be regarded as an analogue of Wordpress for DAOs — it does for blockchains what WordPress has done for the web. This vision is made possible with the following stack of components in place.”

DAOstack provides the base material for creating the DAO governance structure which is both scalable and resilient. A brief description of each of the above element follows:

The DAOstack ecosystem is made up of multiple distinct DAOs which can operate with each other to maximize the aspect of distributed collaboration.
Arc is the medium through which all smart contracts enabling the DAO are deployed
Alchemy is the collaborative DApp enabling anyone to create a user interface to start using the chain and collaborating with other DAOs
Alchemy, in turn, relies on the Arc.js, a JavaScript library designed to enable JavaScript developers to develop collaborative applications on top of Arc without needing to interface with the Solidity code or Ethereum blockchain
The ArcHives is where the network effect will build up and is the place where the public set of registries will be hosted curated by the DAOstack community for the global ecosystem.

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How does all this work?

In the simplest form, as we understand governance in the normal world of politics or corporation, is what is needed. More individuals taking decisions which is for the collective good while ensuring that all proposals that come forward for a decision are looked at effectively by all parties is what will make governance effective. Now, the real world cannot easily bring about scalability in terms of people taking decisions nor can it ensure that all who have decision power do look through proposals intently (resilience).

DAOstack, on the other hand, can handle both of the mentioned highlighted aspects with ease, especially with the unique voting system.

DAOstack Voting System and Countering Corrupt Practices

The traditional methods, even among blockchain based solutions, is to allow the voting rights to few based on their reputation or voting power. This, in turn, allows the aspect of corrupt practices to creep into the decision making process. Not only that but also the fact that scalability will always be a victim of such system which will be played by the power concentrated in the hands of few agents or participants.

The DAOstack counters these concerns by following voting process:

An agent or participant can forward a proposal on which other participants can vote with a yes or a no
The votes are weighted with the reputation of the voter
Once such a proposal is boosted and if it comes forth then it is kept open for a larger quorum of members to vote on for a defined time period. Once the period closes, the consensus arrived at based on the reputation of the voters is considered to arrive at a decision of “yes” or “no”.
One more level of check is that if there is surge in voting during the last day of voting and the consensus seems to change from a yes to a no or vice-versa, then the system in the interest of avoiding gamble votes, can keep the voting window open for a day more or for a defined period. This will remain so until there is no drastic change in the decision trend up to the closure window.

This, therefore, disallows the interests of few from overbearing the interests of the larger community and hence bring about transparency and open collaborative approach to governance and decision making.

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Well that’s great but where can this system work?

1. UNSC’s Decisions

The way the United Nations Security Council (UNSC) is structured at the moment is that there are five veto members and a larger number of non-veto members. Obviously, the veto members have an overwhelming power of striking down a proposal which may even include those with a larger participation. Such a system also inherently assumes that the non-veto members do not have the intellectual bandwidth to make the right decision. The repercussions of such a system is already seen in terms of war – the most recent one in Syria - where the veto members are actually supporting opposing armies on the ground and hence leading to significant loss of life.

It is in such system a DAOstack governance solution will play an important role. The non-veto members are also countries which are doing their bit for humanity on many counts. Therefore, their reputation can be hinged at par with the ones with veto power. This therefore, allows the correct voting mechanism, without fearing repercussions or coercion, and therefore lead to an outcome which is not contradictory in nature; in most cases there is a lot of incentive for it to be a peaceful solution. Imagine the number of wars that can be avoided. Also, this could be the best and fastest way towards World Peace!!

Peace has incentives too. The countries which voted in favor of the majority earns tokens which can be used to increase its influence in general voting in the future. This therefore keeps the reputation of countries in check while also distributing power, giving due regard to the past work of the country.

2. Vehicular Pollution

The increase in vehicular pollution has led to companies doing their own R&D to implement green technologies – this can be as varied as fuel cell driven vehicles or electric or hydrogen powered, but there is hardly any incentive for the companies to share their own R&D with the competition. The fear being that the competition will gain access to technology and compete with them for the same customer.

If a system of Governments as DAOs across the globe are identified as certifying bodies for these technologies, then they can vote on those technologies which show promise of curbing pollution. On being selected for their technology, all countries will then allow the company to sell its vehicles at subsidized tax rates to their respective citizens. A second level of tax subsidization is provided if the company shares its technology with competition. In other words, even if the company shares its R&D the cost of its vehicle will be lesser than competition because of the second tax subsidy that is doled out for it. The second subsidy won’t apply to the ones adopting the technology from this company.

The best part is that the companies can choose to get part of the benefits as GEN tokens and improve their reputation as those supporting clean technology. This will allow them to gain advantages such as preference as being the first to be heard in case of a new technology, real-world reputation improvement, access to government-run programs benefiting car manufacturers and many more such schemes.

Well, these were a couple of used cases and it can be easily cascaded to other areas with similar ideas. I mean, vehicular pollution example can be cascaded to industrial pollution, water pollution, nuclear medicine R&D, etc. while the example of UNSC can be extended to cover countries following democratic ways of electing leaders and so on and so forth.

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Parting Words:

The DAOstack is indeed a well thought out governance framework and its success can be foreseen but what will be more exciting is to see how far and wide can it be adopted and bring about changes across known boundaries. The solution itself is a great leveller and thereby brings about effective decentralization by rewarding good players and good behaviour!

With the adoption of DAOstack globally, it will be a matter of time for the virtual good behavior to spill over to the real world and vice-versa!!

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So, who are the great minds behind DAOstack?

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DAOstack GEN Tokens

The GEN tokens are the DAOstack economy works on GEN tokens.

GEN allows users to place a "stake" in a given project proposal to be built atop the DAOstack. To avoid the corruption of the network by a few holding the majority of the wealth, the projects have to be approved by "reputation" holders as well. Reputation cannot be bought or sold, but is earned by actively participating and contributing to the network.

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What’s the Plan Ahead?

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It is also recommended that readers understand more about DAOstack through any of the following informative resources.

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This article is written in response to originalworks’ call on authors’ thoughts on DAOstack. It can be read here.

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Image Courtesy: Pixabay, United Nations website, and DAOstack Resources

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