Carl Amorim: DAOs will be featured in the crypto economy in 2022.

A few weeks ago, I published in the January 2022 issue of Blockchain Business Review my first article on DAOs, predicting that in some half of 2022 the newest fad of the crypto economy, the Decentralized Autonomous Organizations, would start.

I don’t know if that was the trigger, or just pure luck to get out first, but the truth is that I see several columnists venturing into the topic. Most following the self-promotional content producer’s basic primer to explain the basics on the topic. And to offer a critical opinion to assume the position of expert, since you have no idea what you’re talking about.

New, this is not, and shouldn’t be, a problem. Were it not for the fact, as I detail in the article, that there is a vast misunderstanding about what an Autonomous Organization is decentralized and unlike its almost homonymous, but totally opposite in principle, concepts and examples, the Autonomous Organizations distributed.

Here’s the first alert: yes there are two concepts, their names are similar, but from that, only the use of blockchain and smart contracts remain common. Everything else is completely different, they do not combine, nor can they be compared or confused.

Prepare for a barrage of DAO content

The second alert is: get ready for a flood of texts, videos and podcasts on the topic. In them, we can find types like legal experts declaring that DAOs are not possible. The reasons are the lack of a formalization model, regulatory difficulties, the legal system and the typical chatter of someone who has read a book or two, jumped to a hasty conclusion so as not to lose editorial timing, and went about naming the horse, having no idea of ​​the size of where are you getting into.

There are also techies and enthusiasts who believe that code is capable of anything. Thus, they see in DAOs the opportunity to fulfill their dream of an organization without human interaction, where the perfection of their programs, Apps and APIs will make the world fairer and fail-safe, despite never having been able to deliver anything that fulfills the latter. promise, causing terrible damage over decades.

Finally, after an extensive analysis of their monitoring tools, marketers and producers of paid content will come, trying to take a peek at the trend to sell their companies’ products. The “academys” will launch their DAO Programs, the universities will create “decentralized” research and studies departments and the dependent media, that is, content producers commanded by a commercial group, will explore the theme trying to convince the public that their patrons are in this direction. new wave before everyone else.

There are relevant DAO projects already happening

There is a difference between decentralized and distributed organization.

It is clear that in this environment there are good people, with relevant projects, who study the subject seriously and, therefore, did not manifest themselves for the seriousness that the theme requires, and for believing that their projects have not yet presented sufficient results to establish the certainties that have already begun to appear there.

As with everything that involves the crypto economy, it is important to look for people with participation in solid DAO projects, recognized in the market for their achievements in the area and keep an open mind to the principles of DAO. Therefore, despising the harbingers of difficulties or carriers of solutions based on old models, capable of making any initiative unfeasible.

Over the five years of efforts to develop a whole theory about Distributed Autonomous Organizations (DAOs), countless hours of discussions and interactions with people all over the world and several initiatives perfected on the basis of trial and error, we were able to establish some solid principles enough to be considered the foundations of a DAO.

DAO Principles

From these principles it is possible to identify the great myths present in all the contents on the subject. His approach here will help to separate the wheat from the chaff on the big stage of self-proclaimed leaders, who are starting to force their way into the DAO debate:

  1. THE formalization, foundation, incorporation of a DAO as a legal entity, following the traditional model, immediately kills the DAO and turns it into a common organization. It requires a centralization of responsibility.
  2. The use of processes governance by election, of any kind, centralizes the DAO in the long run and transforms it into a common organization. For the electoral decision-making process tends to be concentrated in the hands of a few.
  3. the formation of centralized funds for investments in projects, in addition to being extremely risky – see several examples of deviations, including that of The DAO -, it requires an electoral process of choice, centralizing the organization as discussed in item 2.
  4. Replacing a people-centric structure with a decentralized structure with a smart contract in the center is to exchange six for half a dozen electronics. This puts the entire organization hostage to the developers of the code, exposing the organization and its members to enormous risk.
  5. There are no positions, functions or fixed roles in a DAO, there are no founders, councils, nuclei, curators or any other classification capable of ranking a DAO. As well as centralizing its governance or requiring admission or selection processes. Everyone can join or leave a DAO at any time without barriers.

DAOs are a fairer economic model

There is no doubt that DAOs represent, today, the best bet for the future of work and a new, fairer economic model, capable of distributing wealth, in an evolution of the current capitalism, which accumulates and generates inequality.

But to fulfill that promise, you have to start exploring new avenues. That’s because since attributing The DAO’s failure to a technological failure, the discussion about the flawed business model has been aborted. An entire theory was built on a flawed and proven ineffective principle, preventing the emergence of alternatives and sacrificing error as the only way to be studied.

I was hoping that we would have the opportunity to better explore DAOs, from their fundamentals, to successful or unsuccessful cases and projects with plenty of room for learning and questioning. Unfortunately, the discussion got off to a bad start, for the wrong hands and reasons. It will take a lot of critical thinking not to get lost in the noise of the reckless lacradores that is forming on the horizon and will occupy social media in the coming months.

*Carl Amorim, columnist for Blocknews, is an engineer with an MBA in Finance and a postgraduate degree in Marketing. Serial DAOpreendedor, co-initiator of Prospera, the first Brazilian DAO, co-editor of the book “Blockchain Revolution” and executive of the Blockchain Research Institute in Brazil.

Another article by Carl Amorim:

NFT, another innovation that Brazil missed

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