DAOs Might Be On to Something

I can see them getting a lot of things done in the future that governments could not.

Good morning! I think my take is probably naive (which is what makes it so optimistic) but here are some quick morning thoughts on the whole ConstitutionDAO thing.

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First, a couple of points on what a DAO is.

A decentralized autonomous organization (DAO) is a group organized around a mission that coordinates through a shared set of rules enforced on a blockchain.

- A beginner’s guide to DAOs by Linda Xie

Got it? No? Doesn’t matter, keep moving.

Last week, a group of investors formed something called the ConstitutionDAO with the purpose of purchasing a copy of the U.S. Constitution at a Sotheby’s auction. In less than a week, over 17,000 individual investors managed to organize, raise and deploy over $40M. That’s remarkable!

They ended up losing the bid in hilarious fashion to a hedge fund manager who is an archnemesis of sorts to everything ConsitutionDAO represents. In short, many investors feel he’s responsible for the halt on Gamestop trading during the infamous mania in January which cost many retail investors a lot of money. That part isn’t relevant though.

ConstitutionDAO, despite not achieving its goal, showed that DAOs have the potential to make world-changing things happen on a big scale if properly executed. Crowd-funding is nothing new, but I’ve never seen such a large network of complete strangers with no physical presence move so swiftly and efficiently. And with such magnitude — $40M in less than a week!

Granted, I think the goal of buying the U.S. Constitution was silly (imagine if they had a more noble purpose!) and very poorly executed; beginning with the bold strategy of letting the whole world know (repeatedly) how much money they had raised before the auction even started.

In my imagination, though, I saw so many other more reasonable and impactful possibilities.

I even found one!

Companies and countries aren’t making the changes you want to see? Make it more expensive for them not to change!

I’ve really only just started looking into DAOs so I don’t know much, but I expect there are many more just like KlimaDAO all quietly plugging away at their niche goals. This is an exciting prospect because niche goals attract niche investors and stakeholders who not only bring money to the table but passion too, which means a higher likelihood of actual change rather than mere talk of change.

As with anything new and innovative I’m sure there are plenty of kinks to work out on the blockchain or whatever (I still don’t know where it is btw), but I can see DAOs getting a lot of things done in the future that governments could not.

TL;DR: Decentralized autonomous organizations (DAO) give ordinary people the opportunity to influence real-life change.

If you want to learn a little more about DAOs — here and here.