A type of [[Organizational Structures]], governed by automatically-executing smart contracts on a [[Blockchains]]. > A DAO is a Decentralized Autonomous Organization. Its goal is to codify the rules and decisionmaking apparatus of an organization, eliminating the need for documents and people in governing, creating a structure with decentralized control. This is obviously insane as it attempts to solve social problems with pure process, enforced by technology. It's the "If everybody would just do as I say, it would all work out" problem, but mixed with [[Technology Solutionism]]. ## Code is Law The phrase "Code is law" is often used when talking about DAOs. Proponents of DAOs see this as a good thing and that fixed rules will enable fairer organizations than the "human-run kind", where leaders sometimes make unilateral decisions that affect the entire company. This is a bad idea on many levels. At the core, organizations are fundamentally social constructs. Trying to solve these with fixed processes won't work because there is no room for disagreeing perspectives. In "human run" organizations processes are constantly discussed, evaluated and - if found necessary - circumvented to get to an agreeable result. Cases where processes where blindly followed historically led to tragedies. Secondly, formal rules can only get close to an original intent, but will inevitably include biases by the authors of said rules. See also [[Artificial Intelligence#Transparency]]. Finally, the way DAOs want to get around this problem is to allow owners of tokens voting rights on the direction of the DAO and its projects & actions. However at this point a DAO is simply a stock company where the majority shareholders have more power than minority shareholders. The more money you have, the more tokens you can buy, the more directional control you have over the DAO. As seen by the centralized distribution of wealth in cryptocurrencies. See [Study: Whales still dominate Bitcoin, Litecoin and Ethereum (crypto-news-flash.com)](https://www.crypto-news-flash.com/study-whales-still-dominate-bitcoin-litecoin-and-ethereum/). And if you limit the number of shares / tokens / votes an individual can have, we are back at "voting pools". And if you limit those, you have arrived at the [Tragedy of the commons](https://en.wikipedia.org/wiki/Tragedy_of_the_commons). ## The DAO The original DAO was announced in May 2016, based on a smart contract on [[Etherium]]. It managed to attract 12.7M Ether, roughly 15 percent of all Ether at the time. Stephan Tual, one of The DAO’s creators, announced on June 12th that a “recursive call bug” had been found in the software but that “No DAO funds are at risk.” On June 17, 2016, a hacker exploited the bug in the contract, draining 3.6 million ETH from the DAO. See [Understanding The DAO Hack for Journalists | by David Siegel | Medium](https://pullnews.medium.com/understanding-the-dao-hack-for-journalists-2312dd43e993). The DAO was considered “too big to fail” from the point of view of the Ethereum ecosystem and after some "discussion" Vitalik Buterin and the Ethereum Foundation made the decision to hard fork the [[Ethereum]] Blockchain, with the nodes happily following along to preserve their income and interests. See [Ethereum Hard Fork Explained | Currency.com](https://currency.com/ethereum-hard-fork). Besides being proof that Blockchains are not censorship resistant, it also proves that code is not law and even smart contracts are ultimately social constructs. ## Automated MMO Experiment., Here is a thought experiment: * The Molten Core raid in World of Warcraft Classic is a well known, well explored environment * Write a number of procedures and rules in a formal language that supports a group of 40 beating the instance * Give this smart contract to a raid group that hasn't been in the instance yet and let them start the dungeon * Every desired change in the procedure has to be codified in the smart contract, based on democratic vote This can be applied to let the participants beat the instance or starting to self-organize to get there. The typical example from he real-world would be to achieve something simple like implementing a DKP system. However, it will likely not lead to any meaningful outcome, even within the known environment. Running the experiment will uncover edge cases and out of bound situations, requiring constant changes and additions to the contract, breaking it eventually. The self-organization will be required faster than the governance process for all participants to stay engaged. Essentially it all eventually replicates a social legislative system, where some rules will be explicit, while others will be implicit - meaning they will live outside the contract and thus fail the experiment. Also, there is a reason that social legal systems had centuries of improvements and ended up the way they are. ## Articles & posts [The DAO: How to not fuck it up.. For the last fortnight, we, the… | by Colony | Colony | Medium](https://medium.com/colony/the-dao-how-to-not-fuck-it-up-5d57f354d0e7)