This document’s table of contents:
Legislation might officially restrict the definition of DAO to a legal test but originally the word DAO literally meant Decentralized Autonomous Organization.
The word DAO has quickly become a neologism for an organization that engages with the by-corpus asset class defined below, often as a method of signaling to consumers that the organization engages with Non-Fungible Token “NFT” commerce.
Phenomenologically, these definitions of a DAO seem to be more derived from market pressures than from fundamental insights through careful a posteriori deconstruction.
The Internet is continuing to mature its life cycle by solving harder and harder behavioral wealth network effect problems with each generation, and this time the problem is generating and managing consumer grade liquidable assets on the Web.
In the 1980s and 1990s, Web1 figured out how to generate( read ) behavioral wealth network effects.
In the 2000s and 2010s, Web2 figured out how to generate( read, write ) behavioral wealth network effects.
And in the 2020s as well as perhaps 2030s, Web3 is figuring out how to generate( read, write, own ) behavioral wealth network effects.
Web3 infrastructure uses Turing complete Distributed Ledger Technology “DLT” that networks together a public access World computer.
Using a corpus-classification analogy, each personal computer is like a cell in a human body and a World computer is like the human body.
The most public DLT layer of a public access World computer is also its floor layer, and is a single Virtual Machine DLT “VM-DLT” computational state shared by all personal computers on the network.
For the right price, aspects of the “VM-DLT” on a public access World computer can be permissionlessly modified by any personal computer with a variety of cryptographic constraints.
The more publicly arms-length, numerous and distributed-consensus the plurality of personal computers in the network, the more mechanistically trustworthy the VM-DLT as well as the more free market the VM-DLT.
However, the mechanistic trustworthy free market advantage of a VM-DLT is exponentially more costly to run than traditional networks because it requires far more steps to complete the same outcome, and each of those steps must be multiplied by byzantine fault network redundancy.
So, the most mechanistically trustworthy VM-DLTs are best used when conveying only the legal title and title state change for the high value assets virtualized by a public access World computer, just the basics compared to more complicated privity such as beneficial rights.
Legal title in this context includes traditional legal title concepts as well as tokenomic innovations about the types of objects that have title, for instance the NFT sui generis IP discussed below.
If the proxied market is a niche market, VM-DLT provides an opportunity to trade assets from that niche market in an exchange with a much more open ended liquidity potential.
For instance, a token that only exists on a VM-DLT must exist on that VM-DLT.
Memes, especially if the by-proxy copyright is explicitly CC0 licensed into the public domain, offer an interesting example of how a by-proxy and by-corpus asset compilation on a VM-DLT provides a lucrative and prosocial business model.
Prompted by the DAO moniker, a multitude of more fundamental organizational innovations in computer science and jurisprudence are being developed but have not yet been fully deconstructed into the standalone value they offer beyond a DAO stack, including:
A few thought leaders have already noted that multisignatory treasuries are one of the most important fundamental DAO innovations, an innovation that is clearly an intersection of computer science and jurisprudence.
For instance, this bear market has shown that Web2 account passwords for login to Twitter, Discord and other shared ( read, write ) network communication assets integral to most DAO stacks are a weak point when human relationships break down.
In these events, all parties who know the shared password have the power to strike first and take control of a Web2 account by unilaterally changing the shared password.
This is a bad faith strategic option easily made unavailable to our lesser moments by using Web3 multisignatory possession of account login instead of Web2 login.
The Mirror platform this document was originally published on is an example of a user-friendly account login that relies on Web3 signatures rather than Web2 passwords.
Comparing the Ethereum fork of Ethereum Classic with Ethereum Classic, the market signals that code-is-law has its exceptions in practice.
With material public access to domestic-law recognized liquidity, Ethereum VM-DLT is definitely a successful enough first mover example of a free market held together in practice by an Internet code-virtualized cyberdermis alternative to what previously could only be manually administered by very expensive domestic-law professionals.
Looking to a related discipline for insight, at some point mathematicians decided that they wanted to automate some of their work and use calculator machines to do calculations for themselves and other people using math, where possible.
Lawyers and people using law have much the same opportunities as mathematicians but for the automation of legal calculations rather than mathematical calculations.
As logical as law is, math is entirely logical and so mathematicians outsourcing mathematical calculations to machines avoid an appeal to humanity base layer of complexity compared to lawyers outsourcing legal calculations to machines.
This appeal to humanity layer of complexity is the extent the entire legal profession recognizes legal calculations outsourced to machines, including prosocial estoppel concerns.
COALA has posited that DAOs more than fulfill regulatory disclosure requirements because they are ledgers more open than required, and so they should not have to take on the additional administrative burden of duplicating efforts only to meet traditional legal information fixation methods.
Functional-equivalence might not be nearly as lofty a goal as converting an organization’s operating agreement into effectively a specific purpose virtual operating system on a personal computer, but this minimum ask is still a substantial value add.
Getting functional-equivalence recognized by the entire legal community is well worth the effort considering how much it can improve cumbersome and often expensive manual requirements such as securities law information asymmetry mitigation.
Code-deference is a legal philosophy still in development but here are some guiding principles.
Legal engineers are members of the legal community who believe in the latent potential of outsourcing legal calculations to machines a Goldilocks amount, and are actively building machines that do this kind of work.
Legal engineers have the long-term expectation that the emergent outcome of developing legal calculation machines will rhyme with the continued deepening symbiosis of mathematicians and calculator machines.
Machine implemented law is prioritized over human implemented law all else being equal in part because machines lack bias, can leverage nanoscopic scale for immense macroscopic scale speed, follow the letter of instructions to a fault and can stack automation on top of automation many times over.
Regardless of how far the automation branches out into the æther, code-deference recognizes that humans remain at the center with machine final outcomes only lawful if they produce reasonable outcomes for humans.
Applying code-deference to operating agreements and governance documentation in general, this is similar to as many parts of a board game’s rules being administered by a computer rather than the uncertain variation found in repetitive interpretation of rulebooks by people such as dungeon masters.
When the computer runs the rules and people interact with them, this arguably provides a virtualized environment on-rails in which consistent interaction guides behavior rather than the no-rails expectation that parties have correctly deciphered and will properly implement documentation each and every instance.
Though DAOs are a technology at the very beginning of their life cycle and as such cannot yet go very many places, the code-deference philosophy will give them authority to be built out as much as possible while keeping them away from absurdity.
When DAOs are built out more fully, we might look at organizations without DAO reliance as no-rail solutions that recklessly allow stakeholders to drive their car off the cliff.
Code-deference rather than code-is-law allows DAOs to switch into no-rail mode if continuing to run on-rail would culminate in the train being driven into a brick wall.
This especially important during the early stage of DAO development as we quickly learn to vastly improve the technology into commercial grade products and, as such, we still often need to go off-road at unexpected fog of war moments.
Compare this with functional-equivalence where the most radical ask is that a DLT is considered an alternative to codified-requirements if functionally equivalent without addressing situations of conflict between code-is-law and codified-requirements.
A very interesting implication of code-deference is that contract law can be extended past privity for by-corpus sui generis IP such as no term limit creator royalties for NFT resale.
In practice, MV-DLTs are allowing arms-length developer teams to build legal calculations on top of each other without the need to sign whatsoever, creating long forking chains of impressive automation.
Traditional business reliance often requires protracted conversations and signed agreements with clearly articulated privity.
But because VM-DLTs are public access, a party can for instance unilaterally build a protocol on top of an existing protocol and this derivative path could be but the most recent in a long line of extension.
Indeed, to ensure protocols integral to a VM-DLT continue being maintained and remain public goods with sufficient and as headless as possible upkeep is a dominant reason DAOs have developed in the first place.
For protocols, a DAO is an Internet community culture that often through tokenomics includes private entity incentives where required while remaining as public access as possible.
These protocol DAOs are the dominant proven DAO use case other than multisignatory treasuries, and help solve tragedy of the commons without falling into tragedy of the anti-commons.
A soul-DAO is a DAO that is controlled by only one human being, and represents that person’s persona on a VM-DLT.
It might be curious why a technology built for the collaboration between different people offers a lot of value as a technology designed for just one person.
But compare this idea with the soulbound NFT movement.
Using a corpus-classification analogy, a computer is the organism and an Operating System “OS” is from where sentience emanates.
Not all computers have an OS, computers can run without sentience.
Since the only true sentience in the system are human beings, this definition means that at some point eventually in the OS stack there is a human being at the end of it doing the cybernetic navigation.
An OS is the interface designed for the least deterministic most human randomness driven events that initiate processes within a computer.
A computationally efficient OS might separate a kernel of its logic that has hardly any opinion out from the rest of the OS.
An app child within an OS parent is also hardly deterministic but much more so compared to its parent; the child app includes more opinion than the parent OS.
At times an app might be considered an OS, such as a webapp that is an OS for a remote personal server computer machine without its own display port.
And though no DOA at this point can be considered a finished OS, general purpose computers existed for decades before a consumer grade graphic user OS became a fully developed product.
Using sentience as the common thread, DAO and wallets are both candidates for what might eventually be considered the OS of VM-DLT computers.
Because a DAO is designed to consolidate operations within an organization, DAOs will likely always do well adhering to OS structure.
Wallets are more like webapps, where on occasion their design should adhere to OS structure but also on occasion their application will require quite a bit of opinion more along the lines of an app within an OS.
Regardless, DAOs are the multisignatory layer and wallets are the signatory layer of the World computer VM-DLT user experience.
A human can have multiple signatures, and must have multiple wallets if engaging with multiple L1s.
It makes sense for DAOs to start as community programs, given they are the multisignatory layer.
But there are a lot of advantages to developing DAOs for just one person as well.
A person can use a personal DAO to consolidate many personal wallets in one place.
A person can invite other people into a personal DAO to do executor and other agent work.
Perhaps the most important reason to have a personal DAO is the recognition that balance sheets are very powerful accounting tools which can be improved on by adopting relational database management concepts.
With relational management, a table can pull information from other tables.
This means, for example, that a personal DAO has a total token supply in the amount of time in minutes the person has remaining from the time the DAO is summoned to the time the person turns 100 years old:
The value of this is that the most scarce resource each person has is time.
By transferring their personal DAO tokens that reflect their time scarcity to a community DAO they sacrifice their time to, the liability in sum of taking time from each person is recognized as in balance with a community DAO’s token assets.
This definition of whether a soul-DAO token is a liability or the community DAO’s token is an asset is relative, and the idea of a multitable balance sheet is only the starting point of understanding how this tally system will unfold and scale over time.
Celebrity is much like a meme, and we naturally put fetishize celebrity faces on tokens.