“It feels like a DAO renaissance.”
This is how Anastasia Andrianova, founder and executive director of the Akropolis blockchain-based financial protocol, described her experience at the Dappcon and ETHBerlin conferences this week.
Organized as parallel conferences for three days at the Technical University of Berlin, approximately 800 ethereum developers from around the world gathered to discuss, discuss and demonstrate how to build on the world’s second most popular blockchain.
Decentralized autonomous organizations, or DAO, are infamously difficult to execute well. In 2016, approximately $ 60 million was stolen from an early DAO application, called The DAO, and the effects of this event seriously affected the evolution of ethereum.
This year, the main thing for attendees such as Andrianova was the resurgence of interest in DAOs and a large number of specialized tools to make DAOs work.
The term “DAO,” as William Mougayer, a venture capitalist and author of “The Business Blockchain,” told CoinDesk, applies to all types of ethereum projects today.
“My observation [of the conferences] is that the term DAO is used too freely,” Mougayer said. “Some of these DAOs are really smart contracts with some rules that say,” Yes, then, that. ”
The distinction even between large and small DAO DAOs is important to convey the complexity and degree of difficulty in a DAO application, according to Mougayer.
However, at the most basic level, Jenna Zenk, former CTO of the blockchain startup Melonport, who now serves as vice president of the DAO that governs the Melon protocol, said:
“DAOs are a new way for people, groups, projects and companies to organize themselves in a decentralized fashion and also, very importantly, a transparent fashion.”
The time to start building DAO is now, said former Polychain partner Ryan Zurrer, who announced a new DAO initiative earlier this month.
Zurrer said that many things have changed since 2016:
“There’s been a lot of lessons learned. This isn’t the return of the original DAO.”
Progress from the DAO
From the original DAO, Andrianova, Zenk and Zurrer said that specialized tools to help facilitate the creation of DAO in ethereum have advanced significantly.
For example, Andrianova points out that the “anger abandonment” feature in the newly created MolochDAO application was a key innovation for user sustainability within DAO structures.
The anger abandonment approach basically allows any participant in MolochDAO to “withdraw immediately,” according to Adrianova, and withdraw funds without penalty.
“The [MolochDAO] anger abandonment approach was very important,” said Andrianova. “Unless you can disconnect at any given time, you are stuck in suboptimal terms, which leads people to create factions within the organization.”
For Zurrer, the cornerstone of his DAO initiative and its broader development has been the Aragon framework.
Aragón is an administrative platform through which users can easily create and manage decentralized organizations based on ethereum. It provides modules to help DAOs raise funds, create bylaws, manage membership and voting rights, among a number of other actionable elements that have to do with social governance.
“In our white paper, for example,” Zurrer said, “the [main] group at the top has the ability to cut any mandate at any time if any of the” leagues “are acting maliciously. This is only enabled in Aragon. ”
Calling this structure a “nested” DAO, Zurrer explained that granting several permits on DAOs above and below other smaller DAOs was a key “cornerstone” for the security model of a large complex DAO.
Zurrer considers Aragon Court, a decentralized dispute resolution tool currently being developed by the Aragon One team, as an important facilitator for increasingly functional and scalable DAOs.
DAO and DeFi
But it doesn’t stop there.
Zurrer said that several decentralized financial applications (DeFi) in ethereum have also been key to enabling new functionalities with DAO, including portfolio management.
If a DAO will keep cryptocurrencies from the participants and allocate this money to specific groups, it is likely that it should take advantage of DeFi protocols such as Kyber Network or Uniswap to exchange tokens and convert them into the desired asset.
In addition, it could have DeFi applications that require governance of a DAO to run
“There’s many interesting and creative ways to play around with [DeFi] and DAOs. For instance, a DAO can be the manager of a hedge fund. … You could also have a DAO govern code protocol. That’s the case for Melon protocol today.”
It is this “composibility” of different applications, according to Zurrer, that makes building on the ethereum platform so interesting and attractive to developers.
“We look at the defining trends of 2019 and, obviously, one of them is the DAO,” Zurrer said. “But another one that is not discussed so much is this idea of composibility. Perhaps the great network effect that ethereum has established at this juncture in its trajectory is a threshold of tools that can be combined to make synergistic improvements in old ideas. ”
According to Zurrer, Mougayer said:
“We need to see more of that. We need to see more of these [DAOs] talking to each other, connecting with each other. When the pieces are tied together, you see the magic. That’s when the magic happens.”
The entrance to Dappcon and ETHBerlin 2019, photo by Christine Kim for CoinDesk