Peter Diamandis said in a tweet "If you don’t like your boss, simply create a DAO to acquire the company and make yourself the boss"
Few days ago, a group of crypto fans came together to buy an NBA franchise. These crypto enthusiasts organized under what's known as a Decentralized Autonomous Organization (DAO). Fancy eh?
A few technicalities for tech non-enthusiasts, before I venture into why DAO caught my attention.
DAO (decentralized autonomous organization) is an online entity with no central leadership, a collective bank account and a mission statement. Decisions get made from the bottom-up around a specific set of rules enforced on a blockchain. A small group of investors come together and decide to pull capital using a crypto wallet and fund the DAO’s mission collectively. ( Ahem…modern day ‘FreeMasons’ ?)
DAO’s work in 3 steps. A group of developers with an idea come together to create a smart contract. After the launch of the contract, they can only participate for changing rules set through governance system. Once the contract is created, tokens are sold to give holders of these token voting rights. Once the funding is done, DAO is deployed on the block chain the stakeholders decide on the future of this DAO and its action without any influence of its creators/founders. Imagine a Facebook without Zuck calling the shots. DAOs are apparently fully autonomous and transparent. As they are built on open-source blockchains, anyone can view the code and audit their built-in treasuries, as the blockchain records all financial transactions.
In a DAO the codes of smart contracts replace the C suites and the management that takes decisions in a traditional organisation. Equality for all DAO members to take part in decisions and in turn share the ownership of these decisions. Every decision within the DAO is pitched, discussed, voted on and documented publicly. Each DAO will have its independent rules & governance. You can also work for the DAO and earn ownership tokens or get paid in cryptocurrency. If crypto isn’t banned, entrepreneurs can create DAO and if that DAO excels at Governance, current Private Equity model wouldn’t exist in a few years from now! A community of token holders who will take the venture forward. All these, sound quite Utopian already!
Mark Cuban, a conventional investor called it ‘the ultimate combination of capitalism and progressivism.’
A major challenge with this Utopian sounding enterprise at this point of time is the lack of ‘regulatory clarity’. In a typical organisation you need to put a lot of trust in the people behind it to put your money in it, whereas in a DAO it is about the putting trust in the Governance Code of the DAO. It’s not the founder or creator who takes the decision once the tokens are funded, but the smart contract codes. So how would one regulate this organisation? If there are any legal issues with Facebook, you can call Zuck for a hearing, but what happens in a DAO, call the smart contract creator/founder? But there isn’t anyone helming the affairs of a DAO! Hacks in software smart contracts are absolutely possible and undeniable. Members of DAOs and the system itself is distributed over many jurisdictions, so there is no legal framework governing this crypto environment. Working in a non-hierarchical society is not natural human psyche, we are conditioned to be led.
The premise of DAO is to give more power in the hands of people than individuals and make it decentralised. Being the optimist, I am of the opinion that DAOs have the potential to change the way corporate governance and finance works. But that will happen only after Legal areas they operate in and what world needs changes.
So then, is this old wine in a new bottle? This is where I found myself thinking of the Chinese philosophy of religion and way of life- Dao or Tao as its popularly known.
Dao starts on the premise of uncertainty and embrace the futility of trying to understand or control the world and find it’s meaning. The way the universe works is ruthless just like when autumn comes 'no leaf is spared because of its beauty, no flower because of its fragrance'.
The unexplainable qualities of Dao prevent it from being defined or expressed, however it can be known and experienced. You can adapt to it by observing the flow of energy of this universe and practise to be a part of it.
In a Chi Running workshop that I attended, Col. Avdesh Kumar rightly put it saying Chi is about believing in ‘Letting things happen and not trying to make it happen’. You just have to observe the energy and practise alignment to ‘let it happen’.”
Banned in early 1900s, Dao is China’s only indigenous religion; you will find it in every aspect of Chinese life from medicines to politics and art. With China banning crypto currency, enforcing curbs on all tech companies and trying to bring back common prosperity of rerouting wealth and creating a sense of pride in nationalism, Dao is probably becoming a mainstream ideology for China again. Even the new Gen China that believes in ‘tang ping’ a movement, which I covered in my blog ‘A generation that is Lying Flat’, somewhere aligns with what Dao promotes of refuge from society and the trap of material success.
Dao allows the leaders of China to have a complete control of the people, which probably reflects well in Sun Tzu’s quote in Art of War: ‘The Tao causes the people to be fully in accord with the ruler’. Indirectly it means, more centralised and more control given to certain individuals or ideology.
One of the main ideas of Taoism is the belief in balancing forces, or yin and yang. Not opposites but complementing forces. Dao believes the universe creates itself out of a primary chaos of material energy, organized into the cycles of Yin and Yang. DAO is questioning the existing systems that govern the world to create a new way of life, whereas Dao believes in how the universe works and practises to be a part of it.
With human behaviour that follows trends and investments, I assume crypto may prevail and if it does, China and India won’t ban it for a long time, as eventually the law of “flow of money/transactions’ somehow dictates the “flow of the world’ along with ‘flow of energy'
Our universe heading into the future might just create itself out of this chaos into cycles of yang - a DAO, which is ‘confusingly’ rational; and yin - Dao that is ‘confusingly’ reasonable!