Decentralized autonomous organization: development status, analytical framework and future trends

Abstract: Distributed autonomy is not a new concept. Self-organizing phenomena in nature, dynamic netizen group organizations on the Internet, and distributed artificial intelligence can be regarded as their early manifestations. In recent years, the rapid development of blockchain technology has spawned the Decentralized Autonomous Organization (DAO), which is a way of coding the management and operational rules of an organization in the form of smart contracts on the blockchain so that there is no centralized control or The form of organization that operates autonomously in the case of third-party intervention. Therefore, DAO is expected to become a new and effective organization to deal with uncertain, diverse and complex environments. However, DAO is in its infancy, theoretical research is still in the blank, and it is difficult to achieve large-scale application. This paper firstly defines the concept and characteristics of DAO. Then, the DAO five-layer analysis framework is systematically proposed for the first time. Based on this, a typical DAO application case, Aragon, is analyzed in detail. After discussing DAO's current situation, The problem and possible next research directions, in order to provide useful reference and reference for future research.

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Keywords: decentralized autonomous organization; intelligent contract; intelligent management; parallel blockchain

Citation format: Ding Wenwen, Wang Shuai, Li Juanjuan, Yuan Yong, Ouyang Lizhen, Wang Feiyue. Decentralized Autonomous Organization: Development Status, Analysis Framework and Future Trends[J]. Journal of Intelligent Science and Technology, 2019, 1(2) : 202-213.

1 Introduction

With the development of information technology and the increasing complexity of organizations, the employment relationship and management model of traditional organizations have been difficult to adapt to the complex and changing environment and the requirements of a new generation of individuals. The decentralized au- tonomous organization (DAO) combines decentralization, autonomy, autonomy and evidence-based economic incentives, and uses various elements of the system as assets to make monetary capital, human capital, and other factor capitals sufficient. Convergence, which better stimulates the performance of the organization and realizes the value transfer, provides a good idea for solving the existing organizational management problems. However, DAO is not a new concept, self-organization in nature, cyber movement organizations (CMOs) in the Internet, and important branches of artificial intelligence—distributed artificial intelligence (DAI), etc. Can be considered as the prototype of DAO, which laid the theoretical and practical foundation for its emergence.

The self-organization phenomenon is a very common phenomenon in nature, which is caused by the synergistic interaction between biological individuals. In the process of interaction, each individual spontaneously tends to move from disordered movement to coordination and cooperation caused by association between individuals [1]. For example, colonies, colonies, flocks and colonies, etc., are concentrated in biological systems, such as aggregation, migration, cooperative foraging, etc. [2], which is the result of local interactions, and there is no centralized control.

The full openness, self-interaction, decentralized control, complexity, diversity and emergence of self-organizing phenomena not only laid the foundation for the emergence of DAO, but also promoted the development of various disciplines. For example, in 1959, Grasse studied the nesting and foraging behavior of ant colonies [3]. He called this phenomenon "stigmerge" and was later used by many other self-organizing systems [4]. Self-organizing systems are currently used to solve problems that are difficult to solve with centralized control, such as massive data processing for ubiquitous computing [5], service spoofing and node resource abuse in P2P networks [6], data storage in database management. Question [7] and so on. The self-organizing theory group and system provide a theoretical basis for the later DAO landing. Since the 1970s, Professor Prigogine of the Free University of Brussels has studied the relationship between the absorption and dissipation of self-organized system energy and organizational order from the perspective of thermodynamics, and created the theory of dissipative structure [8]. It is of great significance for understanding the self-organization evolution of complex organizational systems. Later, people studied the self-organizing phenomenon from different angles, and formed a self-organizing theory group represented by dissipative structure theory, systematics, super-circulation theory, chaos and fractals.

At the Internet level, the popularity of mobile Internet and mobile smart devices has made the virtual world of the Internet an important space for people's daily activities, and has spawned large-scale CMOs [9]. CMOs are groups of online netizens who are led by events or goals and who come together in a short period of time to participate, discuss and jointly implement certain social behaviors [10]. Human flesh search [11-12], Shuijun [13], crowdsourcing [14], etc. are typical CMOs. Unlike self-organizing phenomena in nature, CMOs in virtual space are not limited by the space of the real physical world. The evolution process is driven by events or targets, rapidly formed, propagated, and highly interactive, and automatically dissipated as the target disappears. For example, the crowdsourcing phenomenon is a local center driven by tasks, which appears in the network at a certain time and has obvious interaction structure and target guidance. As the task is completed, the center disappears and is replaced by other local centers and many structures. Loose actor. The evolutionary trajectory of CMOs is extremely consistent with the characteristics of DAO's virtuality, weak center and autonomy, which provides a network reference model for the birth of DAO.

The theoretical model of CMOs further deepens the foundation of DAO implementation. In 2004, Professor Wang Feiyue proposed the ACP theoretical framework consisting of artificial societies, computational experiments, and parallel execution, providing a systematic approach to computational modeling and experimental evaluation of dynamic netizens. Research ideas and solutions [15-16]. CMOs combined with knowledge automation [17] and other means can be used to predict the current situation and calculate the macro social phenomenon, and then provide knowledge-based intelligent recommendation and decision-based intelligent services to achieve the automatic implementation of the whole process of social management [18] This also provides a good reference for DAO to achieve intelligent management.

From the perspective of the development of artificial intelligence, distributed artificial intelligence not only represents the future development direction [19], but also provides the basis for the intelligent management of DAO. Distributed artificial intelligence mainly studies how intelligent or physically dispersed intelligent systems solve problems in parallel and in collaboration. In a distributed system, there is neither global control nor global data storage, and various paths and nodes in the system. Distributed information processing can be done concurrently and solve problems in parallel, so distributed artificial intelligence systems are more open and flexible than centralized systems [20]. In addition, the distributed artificial intelligence system is not a closed system, which can be connected to the Internet, blockchain, etc., to achieve an exponential expansion of the system scale. This not only improves the flexibility of the system, reduces the cost of solving the problem, but also provides a means of implementation for intelligent management. Facing the future, DAO must be combined with artificial intelligence, from automation to intelligence. Each individual in the future DAO will be an intelligent agent with perceptual, inferential, and decision-making functions, which can partially or completely replace the individual's participation in the organization's operation, management, and decision-making, thus solving the traditional principal-agent problem (principal). –agent problem)[21].

The true landing of the DAO concept has benefited from the emergence of blockchain technology [22]. The blockchain integrates technologies such as distributed data storage, point-to-point transmission, consensus mechanism, and encryption algorithm. It has the characteristics of decentralization, trust, non-tampering, and collective maintenance, and can realize information transmission and value transfer safely and efficiently [23] -twenty four]. In addition, open source public blockchain development platforms with smart contract capabilities (such as Ethereum) enable individuals and organizations to construct decentralized applications (DApps) with the help of blockchain technology. And the operational rules may be coded in the blockchain in the form of smart contracts, so that they operate autonomously in accordance with pre-defined business rules without third-party intervention, enabling distributed, automated, and autonomous governance. In 2016, the first DAO, The DAO, was developed and became the largest crowdfunding project in the world at the time. Since then, a series of DAOs have been introduced, such as Polkadot, Aragon DAO, DashDAO and so on. However, DAO still faces some problems in the process of actual landing, such as security issues, legal issues, technical immature and intelligent governance problems.

DAO is expected to become the fourth organizational form outside the country, market and company, maximizing the efficiency and value of the organization and forming new business changes. However, throughout the academic world, the search for "distributed autonomous organizations, distributed autonomous companies, decentralized autonomous organizations" in Google Scholar and HowNet, after removing irrelevant literature, DAO-related research There are very few. In view of the fact that the current DAO field has shown obvious development trend driven by technology and industry innovation, there is no unified definition and analysis framework in the industry. This paper is devoted to systematic analysis and discussion. First, define the concept and characteristics of DAO; then, for the first time, systematically propose a five-layer analysis framework for DAO, and introduce the components of each layer in detail. On this basis, a typical DAO application case, Aragon, is analyzed in detail, then the problems and challenges faced by DAO are outlined, and the future development trend is prospected, in order to provide useful enlightenment and reference for future research.

2 DAO concept definition

2.1 The concept of DAO

There is no uniform standard for the definition of DAO. The ideal result of the cryptographic revolution, DAO was originally derived from the theme of decentralized organization mentioned by Ori Brafman in The Starfish and the Spider [25] and the “peerproduction” proposed by YochaiBenkler in The Wealthof Networks [26]. With the advent of encrypted digital currency, in 2013, Daniel Larimer first proposed the concept of DAO-like decentralized autonomous corporation (DAC). The difference between DAC and traditional enterprises lies in decentralization and distribution [22]. . In 2014, Daniel Larimer added the concept of DAC again. Subsequently, Vitalik elaborated on the understanding of DAC [27] and inspired DAO in Daniel Suarez's book to propose DAO in the context of blockchain. The DAO concept was first officially presented in a smart contract called DAO on the Ethereum blockchain in 2015. At this time, DAO is a smart contract, that is, a technical framework and tools, which are often understood as self-organization similar to non-profit organizations. With the development and application of blockchain technology, the definition of DAO is more diversified: digital currency, systems/institutions, business models and even unmanned car platforms can be called DAO.

The more representative concept is pointed out by Wikipedia: DAO is an organization embodied in open and transparent computer code, and its financial transaction records and procedural rules are stored in the blockchain [28]. Gong Ming pointed out that DAO is a fully automatic company, anyone can join and withdraw at will, and equity (tokens) becomes the only currency in the system, so that the concepts of income, profit, etc. completely disappear, with the organization of ecology The development has grown and the participants have benefited from the appreciation of tokens (equity) [29].

This article proposes the following definitions for DAO: DAO is to gradually encode the management and operational rules (consensus) of the organization's iterations in the form of smart contracts on the blockchain, so that through the third-party intervention, through intelligent management methods and The economic incentives of the certificate enable the organization to achieve self-operation, self-governance, and self-evolution according to pre-set rules, thereby realizing the organizational structure of maximum efficiency and value transfer.

2.2 Characteristics of DAO

(1) distributed and decentralized (distributedand de-centralized)

There is no central node in DAO and a hierarchical management architecture [30], which achieves organizational goals through interaction, competition and collaboration between bottom-up network nodes. Therefore, the business dealings between nodes and nodes and between nodes and organizations in DAO are no longer determined by administrative affiliation, but follow the principles of equality, voluntariness, reciprocity and mutual benefit, and each other's resource endowments, complementary advantages and interests. Driven by a win-win situation. Each organization node will effectively cooperate under the influence of the incentive mechanism of the certificate according to its own resource advantages and talents, thus generating powerful synergies.

(2) autonomy and automation (autonomousandauto- mated)

In an ideal state of DAO, management is coded, programmatic, and automated. "Code is law", organization is no longer pyramidal but distributed, power is no longer centralized but decentralized, management is no longer a bureaucracy but community autonomy, organization is no longer running Companies need to be replaced by highly autonomous communities. In addition, because DAO operates under operational standards and collaboration models defined by stakeholders, internal consensus and trust are easier to achieve, minimizing organizational trust costs, communication costs, and transaction costs.

(3) Organized and ordered (organized and ordered)

Depending on the smart contract, the operational rules in the DAO, the rights and responsibilities of the participants, and the reward and punishment mechanisms are all transparent. In addition, through a series of efficient autonomy principles, the rights and interests of relevant participants are accurately differentiated and dimensioned, that is, individuals who pay, contribute, and take responsibility are matched with corresponding rights and benefits to promote industrial division of labor and rights. Responsibility and equal interests make the organization work more harmonious and orderly.

(4) intelligence and tokenization (intelligence and tokenization)

The underlying DAO encapsulates all the infrastructure supporting DAO and its derivative applications—Internet basic protocols, blockchain technology, artificial intelligence, big data, and Internet of Things. It is supported by digital, intelligent, and chain-chain collaboration. Governance as a means of governance has changed the traditional bureaucracy and man-made management methods, and realized the intelligent management of the organization. As an important incentive in the DAO governance process, tokens digitize and certify various elements of the organization (such as people, organizations, knowledge, events, products, etc.), thereby making money, human capital, and others The integration of factor capital is fully integrated to better stimulate organizational effectiveness and achieve value transfer.

3 DAO analysis framework

In view of the lack of a unified definition and analysis framework for DAO in the industry, this section proposes a five-layer architecture reference model for DAO, namely, the basic technology layer, the governance operation layer, the incentive mechanism layer, the organizational shape layer, and the presentation layer, as shown in Figure 1. .


Figure 1 DAO's five-layer architecture reference model

3.1 Basic technology as the underlying infrastructure layer

The underlying technology layer encapsulates all the infrastructure that supports DAO and its derivatives, including Internet infrastructure, blockchain technology, artificial intelligence, big data, and the Internet of Things.

(1) Internet Foundation Agreement

DAO is generally built on a peer-to-peer network (P2P) to participate in the organization of nodes scattered around the world, so the Internet infrastructure is the lowest infrastructure of DAO.

(2) Blockchain technology

The most notable feature of DAO is decentralization and open autonomy [31]. Blockchain is the core technology for DAO to realize its functional characteristics. The consensus mechanism of the blockchain makes the nodes in the decentralized system with highly decentralized decision-making effectively reach a consensus on organizational governance, thus solving the problems of information asymmetry and adverse selection in the traditional bureaucracy and pyramid management structure. [32]. The intelligent contract records the operation and management rules of DAO in the blockchain in the form of computer code. The parties complete the work according to the contract and distribute the benefits according to the contribution, and finally realize the intelligent management of “code is law”. ]. Asymmetric encryption, time stamping, etc. are used to ensure security requirements and ownership verification during DAO operations.

(3) Artificial intelligence

With the rapid development of artificial intelligence technology represented by deep learning, reinforcement learning, and generative adversarial networks (GAN), each individual node in DAO will become an autonomous and autonomous agent (software agent or software robot). ), it is hoped that some or even all of humans will replace the functions of reasoning, decision-making, and collaboration [34]. In addition, smart contracts are no longer limited to automatic execution according to the predefined “If-Then” statement. They will also have “What-If” intelligent deduction, computational experiments and autonomic decision-making in unknown scenarios, making DAO truly A distributed autonomous organization that combines description, prediction, and guidance.

(4) Big data

Based on the big data and open source intelligence analysis methods, the state data, intra-chain transaction data and system operation data of DAO nodes running in the blockchain system can be collected in real time, so as to grasp and predict the evolution law and development trend of DAO. In addition, the blockchain itself is also a guarantee of big data security, desensitization, legality, and correctness.

(5) Internet of Things

The blockchain can be combined with the Internet of Things technology to form blockchain ofthings, so that the intelligent devices and physical assets in the physical space under the chain can be digitally transformed and integrated into the blockchain [35]. As a trusted IoT service platform framework, DAO will monitor the entire life cycle of smart devices in a secure and trusted manner, realize independent collaboration and transactions between devices, and use intelligent contracts to achieve intelligent interoperability.

3.2 Intelligent management as the main means of governance

DAO governance is an intelligent autonomy. According to the nature and objectives of the organization, the series of open and fair consensus systems are coded through intelligent contracts, with digital as the starting point, artificial intelligence technology as the guarantee, and chain-chain collaboration as the governance. Means, as well as the creation of borderless group values, to achieve self-governance and self-evolution of the organization.

(1) Consensus contracting

Companies often get business or achieve good operations on the basis of a consensus contract. The purpose of establishing a contract is to rely on the binding force of the law to protect the interests of the organization and individuals, and even the benign operation of the society. However, since the performance of the contract is not only related to the parties but also affected by the external environment, the contract performance itself is very large. Uncertainty. For example, it is difficult to judge the validity of a contract, it is difficult to achieve a change, and it is difficult to pursue a breach of contract. As a result, the degree of trust between organizations and organizations, organizations and individuals is reduced, and communication costs are increased.

DAO is based on a smart contract built on blockchain technology. The smart contract in a broad sense is a computer transaction protocol that does not require intermediary, self-verification, and auto-execution of contract terms [36]. It essentially procedurizes the legal agreements between people and organizations and the complex relationships between networks, using protocols and users. The interface completes all steps from negotiation to fulfillment. DAO establishes consultations between participants through contracts of various attributes, representative nodes, professionals, and technicians, and clarifies the rights, responsibilities, and interests of all parties.

Identify consensus standard contract texts, program and validate the text to obtain standard contract codes, then distribute, validate, and automate the coded contracts. DAO has the ability to automate and enforce contract terms.

DAO puts forward the consensus/contract preposition, trust lock, and law embedding, and solves the contract problem of "Coase Theorem-Contract Theory-Property Theory-Transaction Cost Theory" in traditional economic management, which greatly reduces the cost of bookkeeping (transaction). The problem of information asymmetry is solved, which makes the organization move from negative and zero-sum game to positive and negative game in the process of governance and business development.

(2) Starting from digitization

Smart contracts provide trust protection for DAO governance, while fuel for DAO governance is digital. DAO governance starts with digitalization as a starting point. IT is divided into three phases, namely, old IT (industrial technology), old IT (information technology), and new IT (smart technology). In the traditional information age, IT focuses on the task flow, workflow, and information flow model, connecting people's work environment and work flow through the office system to achieve business and work coordination. At this stage, on the one hand, it still stays in the typical top-down bureaucracy management system; on the other hand, the processing of information still relies on personal expertise and does not reach intelligence.

The essence of digitization is to collect data, analyze data, and apply it to business model innovation, business ecology reconstruction, and improve user experience. The foundation of digitization is based on information technology, big data technology and Internet technology. Information technology and big data technology constitute digital technology, including data collection, access, database construction, processing, analysis, mining, model prediction and data representation. As a bridge, Internet technology combines people and machines to continuously “feed” the digital construction of the organization.

Digitization is not an end. The purpose is to describe, predict, and guide digitally, providing a foundation for DAO to break boundaries and levels, while providing a reference for intelligent matching, management, and decision making. In addition, the development of digital to "digital quadruplets" [37] is the basis for promoting DAO intelligence.

(3) Intelligent docking match

DAO running on decentralized processing and storage carriers utilizes relevant AI technologies to match and interface any combination of people, organizations, knowledge, events, products or services, which is DAO to reduce communication costs, improve efficiency and achieve scale. The core of theization. For example, intelligent matching of people/characters: by digitizing the information and behavioral data of individuals and organizations, matching the position or role of the individual DAO according to contributions and abilities. Intelligent matching of events: Through the node portraits, task identification, recommendation, matching and docking are automatically realized, thus solving the problem of information islands and quickly mobilizing organizational manpower and intellectual capital. Matching knowledge: Matching and recommending according to node information and behavior data (such as click, search, browse), knowledge recommendation is a relatively mature technology. Intelligent evaluation/assessment: Multi-dimensional evaluation of the process and results of individual completion tasks. The evaluation results represent the level of the individual in the DAO honor system, and different levels enjoy different interests.

In addition, AI effectiveness is based on an effective data model that “feeds” large amounts of data to train its intelligence, but data silos and privacy issues severely constrain the development of AI. DAO essentially encourages sharing, especially under the control of no single entity, it can break the centralized data islands and provide data for AI accurate recommendation and matching.

(4) Collaborative governance on the chain and under the chain

Different from the traditional organizational management model, DAO has changed the centralized management mode of the past few controlling shareholders' interests or creditors' interests first through the coordinated management of chain and chain.

Governance on the chain is to identify, update and maintain the consensus mechanism in the form of smart contracts. The essence is to create a credible system in the environment of mutual distrust and ensure the rights and interests of stakeholders. The consensus mechanism is that the nodes that do not trust each other finally achieve the consistency of data by following the preset mechanism, that is, the multi-party participation seeks a relatively balanced benefit sharing mechanism and changes the previous corporate governance model. Consensus mechanisms include practical Byzantine Fault Tolerance (PBFT), Authorized Byzantine Fault Tolerance (DBFT), Workload Proof (POW), Proof of Equity (POS), Proof of Share (DPOS), and other hybrid consensus algorithms [38]. Under-chain governance is a collaborative approach to ensuring the establishment, recognition, diffusion, and renewal of a consensus mechanism. Similar to the governance structure of other non-profit organizations, most adopt the governance structure of “foundation + entrusted company + expression form”.

Due to the limitations of current technology, DAO governance adopts the mode of “small part of chain management + main chain management”. As the technology matures, it is gradually shifting to chain management. In addition, the fork is an effective means to solve the DAO governance deadlock. The fork includes soft fork and hard fork (if the newly generated block after the fork can be accepted by the original miner, it is called soft fork; otherwise Hard fork). The divergence has a lower market impact than the traditional corporate governance differences, and it also reflects the advantages of the stakeholder governance model based on the consensus mechanism.

3.3 The main incentives for the pass-based economy based on blockchain

Pass is a tradable digital asset and proof of equity [39-40], real-world stocks, bonds, options, points, etc. can be digitized in the form of a certificate. It is generally believed that the certificate contains at least the equity attributes (value added, long-term gains), property rights (representing the right to use, goods or services) and currency attributes (which can be circulated within a certain range).

DAO's sponsors, developers, and other stakeholders share ownership of the system in a shared form, while the main economic incentives of other participants are blockchain-based certification. The new economic model created by the universal certificate is called the generalized economy [41]. Specifically, it refers to the financial property of the encrypted digital assets through the certificate, and the mapping of goods and services is carried out, so that it can be realized on the blockchain. Low cost or even zero cost trading and cutting. The current common types of certificates include payment-type certificates, functional certificates, and asset-based certificates. The general economy is a systematic approach to behavior management and incentive tools. The combination of blockchain and citation can achieve “value conversion” and “value transfer” between different value systems [42].

Each DAO can issue a certificate, and usually can set the relevant elements of the certificate model such as the circulation quantity, circulation, lock period, and distribution mode of the certificate according to the project attributes [43]. The design of the certificate model is essentially a mechanism design problem. The goal is to promote the incentive compatibility of the participating entities and achieve a win-win situation. On the one hand, a good certificate model can combine monetary capital, human capital and other factor capitals, change the relationship between people and organizations, reduce the operating costs of the organization, and at the same time serve the early capital needs of the project; on the other hand, due to the certificate Anchored by the project itself, high-quality projects have enabled the market value of the certificate to be continuously improved, and to better motivate the participants.

3.4 The main organizational form of mixed stereo

As a product of history, organizational form has a great relationship with the economy, culture and environment of the era. With the development of technology and the advancement of economy and society, the organization abandoned the traditional single-line competition and linear thinking in the process of evolution, no longer limited to internal and bureaucratic management systems, and broke the mechanical model of separation of value activities.

DAO based on value network is a multi-center ecological three-dimensional network structure of mixed, flat, parallel (virtual and reality), human-machine integration, which breaks the functional organization structure based on division of labor and realizes vertical cooperation. The transition to parallel synergy, from orderly to mixed order, from the pursuit of stability and solidification to the pursuit of relative stability and dynamic balance, from a relatively single form to a diverse form, is as follows.

1 Flat: Break the upper and lower levels of the organization. The relationship between people, people and organizations is redefined, which can fully utilize the flexibility of independent individuals and achieve the efficiency of transparent vertical management.

2 Open: Break the boundaries inside and outside the organization. DAO adjusts at any time based on specific projects, needs, and tasks, and can be fissile, disbanded, and dying as the mission is completed.

3 Parallel: Establish a parallel virtual person and organization outside the real people and organizations, realize the decision-making optimization and parallel tuning of organizational governance through the virtual interaction, closed-loop feedback and collaborative management under the chain. [44].

4 Human-machine integration: With the advancement of technology, the future DAO will further evolve into human-machine integration. The intelligent agents/software robots in DAO will be replaced by humans to carry out business activities and compete and cooperate with each other.

3.5 Diverse forms of expression

DAO's performance is diverse. Depending on the services provided, it can be either a digital currency, a system or organization (such as the application platform Ethereum), or even an interconnected smart machine (such as driverless). According to the control of the organization, DAO can be either distributed and centralized (such as the public chain form) or multi-center (such as the alliance chain form). Each DAO has its own unique consensus and agreement. Each node has the right to view the tokens it owns and receive the corresponding dividends, but DAO still relies on the existing legal framework to conduct business activities. Therefore, in the legal structure entity, it usually draws on the form of “non-profit foundation + entrusted company + performance” (such as open source community), specifically “the fundraising, distribution, management and management of funds by the foundation as the issuing body of the certificate” Supervision, etc., while entrusting some companies to carry out technology development, marketing and operations, fund investment and management, and other legal services." Then, it is presented in the model of open source community or other organizations, and promotes DAO to carry out collaborative management on the chain and under the chain. In addition, some organizations will use offshore entity holding foundations. The DAO legal structure entity is shown in Figure 2.


Figure 2 DAO legal structure entity

4 Typical applications

At present, there are many applications in the industry about DAO, but there are few representative cases, such as The DAO, Steemit, Digix DAO, Aragon, etc. Based on the five-tier architecture model presented in Section 3, the Aragon case is selected for detailed analysis.

4.1 Aragon

Aragon is a DApp that is easy for users to create and manage various types of DAOs (companies, non-profit organizations, open source projects), enabling users to freely create unrated systems across borders and rely on organizations that work together. Each DAO exists based on a series of smart contracts, which specify the shareholder composition of the organization and the corresponding rights and obligations. The smart contract system built on Aragon is called AragonOS. AragonOS guarantees that only authorized accounts and contracts (unified entities) have the right to perform specific actions. Each AragonDAO has several apps, and basic apps include pass management, voting, and finance. In addition, any individual can develop their own apps and add them to their DAOs, which extend the functionality of the organization, as shown in Figure 3.


Figure 3 Aragon process

4.2 AragonDAO framework analysis

Based on the DAO five-tier architecture model presented in Section 3, the relevant elements of Aragon are analyzed as follows.

(1) Basic technology

First of all, Aragon is based on Ethereum. Ethereum is a global public blockchain platform that never takes the opportunity. Second, built by Aragon Core, AragonCore is composed of DAO and DApp in Solidity language. Aragon currently implements the basic functions of the shareholder roster, token transfer, voting, job appointment, financing, accounting and other organizations. The behavior of an organization on the Aragon chain can be defined by modifying the charter. Finally, the Aragon organization can be extended with third-party modules that connect to smart contracts.

(2) Governance operation

Aragon is mobile and democratic, governed by the Aragon network. The Aragon network is the first DAO in the platform and its goal is to act as a digital jurisdiction. It starts with a simple constitution that has been voted through, and when it needs to be supplemented with new governance mechanisms, it is deployed on the chain through proposals and voting. This mechanism allows Aragon to upgrade the governance mechanism through proposals, as follows.

First, Aragon has an Aragon governance proposal (AGP), each of which details the changes that need to be made to manage, distribute, and use Aragon's network shared resources. All AGPs must be consistent with the goals and values ​​of the community. The purpose of AGP is to provide a structured decision-making process for changes to Aragon's network shared resources. For the adjustment of shared resources, DAO participants are required to jointly decide to agree/reject access, or approve/reject the proposal.

Second, AragonDAO can specify which addresses can be used to implement specific behavior on behalf of the organization, which is achieved through an access control list (ACL). The address on the list can be either an external account or a contract account. By bringing together multiple smart contracts, you can define complex criteria that limit the behavior within your organization. For example, if a DAO wants to mobilize a fund, it must satisfy: 1 ​​proposed by a member within the organization; 2 approved by the majority of members; 3 within a budget. As shown in Figure 4.


Figure 4 Aragon DAO decision process

Finally, when a dispute arises, Aragon has a court protocol to provide dispute resolution services. Specifically, when a dispute arises, a jury is formed (the members of the organization can become a juror by depositing a deposit in advance, and receive a remuneration after the dispute is resolved), and the jurors need to The dispute is submitted to a ruling within a certain period of time, and the final ruling is based on the opinions of the vast majority of jurors. As shown in Figure 5.


Figure 5 Aragon DAO arbitration process

(3) Incentive mechanism

The native pass on the Aragon network is called the Aragon net- work token (abbreviated as ANT). ANT represents the size of the pass of the user in their DAO. Members of the DAO can initiate a proposal for the organization's rules and governance, after which other members vote based on the size of the vouchers they hold to decide whether to accept the proposal. It should be noted that the sponsor of the proposal also needs to pre-exist a certain ANT as a collateral to encourage the sponsor to initiate a useful proposal.

ANT was originally created and distributed in the form of public token sales, with an early sale of ANT worth 275 000 Ethereum. If you add ANTs sold at the time of pre-sale, ANTs donated to Aragon Foundation/Association, and ANTs donated to Aragon creators and early contributors, the initial total supply of ANT is 39 609,523, 523, 523, 809, 54 Ethereum. The distribution ratio is shown in Table 1.

In addition, Aragon DAO uses a reputation system, and all business collaborations can be scored on each other, such as the organization can judge the contractor, and the contractor can also judge the company. The audit trails of all judgments can be traced back to their authenticity, further motivating Aragon DAOs. Reputation values ​​are very valuable in the Aragon network.


(4) Organizational form

The Aragon network provides infrastructure and services for users to create and manage DAOs (such as AragonOS). Aragon's decentralization is relatively high. On the one hand, Aragon's founders did not retain the board position, but AragonOne is responsible for technology development, Aragon Black is responsible for operations, Aragon Forum is responsible for discussion and supervision, and Aragon Association is responsible for the entire project's finances. The community representative takes office; on the other hand, the user can define the purpose, type, and incentives of the created DAO. The extent to which DAO is decentralized is up to the creator himself. As of July 9, 2019, the number of DAOs created by the Aragon platform was 604. As the technology matures, Aragon will gradually transfer control of the project to the user, thus achieving the decentralization of its own governance. The ultimate goal of the Aragon network is to develop itself into an autonomous organization that is jointly maintained by members who want the community to thrive. Therefore, for the moment, Aragon is in the stage of “small basic team + large-scale community autonomy”.

(5) Form of expression

Aragon is currently represented as a public development platform that enables anyone to create and manage DApps for any organization (companies, open source projects, NGOs, foundations, hedge funds, etc.).

4.3 Summary

The five-tier architecture model does not mean that every DAO system has all the elements, but a five-tier architecture. Aragon DAO is the industry's typical DAO application platform designed to address people-centric governance issues in DAO. Analysis of AragonDAO shows that the underlying infrastructure is based on Ethereum, an open source, public-blockchain platform with intelligent contract capabilities, and freely combines DAOs through AragonCore and functional modules. At the governance level, Aragon is a typical chain governance. Voting, proposals, constitution initiation, arbitration, etc. are all done on the Aragon network. However, Aragon's chain governance generally faces the problem of insufficient voter turnout, and the community is prone to divergence in some key decisions (such as the AGP42 proposal – whether it should focus on Ethereum/Ethereum and Polktot's choice). As far as the incentive layer is concerned, ANT is the only token of Aragon. All the actions of the nodes on the Aragon network (such as proposal, voting, arbitration, transaction, etc.) are all based on ANT, and the human capital, monetary capital and other capital elements are very It is well combined; the allocation of ANT is determined by the community, greatly mobilizing the enthusiasm of the social nodes for co-construction. In terms of organizational form, Aragon adopts a typical "small basic team + large-scale community autonomy" model. For example, Aragon is maintained by a subsystem (or DApp) of the platform to maintain the basic operation of the system. In expression, Aragon is represented as a public open platform, and Aragon DAOs can be presented in any form.

5 issues and further research

DAO is still in its infancy, and it faces many challenges while iteratively upgrading its previous organizational forms, business models, and management methods. At this stage, from the perspective of theoretical research and practical application, DAO still has some problems, and it has a long way to go from large-scale applications.

5.1 Theoretical research

DAO theoretical research is still in its infancy. Although self-organizing theory groups, ACP theoretical frameworks, polycentric governance theory, and self-governance theory [45] provide theoretical guidance for DAO's landing, but directly related to DAO寥寥Few. DAO is a new upgrade and change to the organization based on the traditional organizational structure, and puts forward new requirements for the organization's technical support, governance mechanism and incentive model. People expect to be able to adopt more autonomy ideas in the design of organizational systems, but there are very few studies on the theoretical basis and model validation of DAO system design. The study of basic theory is very important for the design of DAO and will provide a theoretical basis for the practice of DAO and the research of tools.

5.2 Reality application

(1) Security issues DAO is based on blockchain, smart contracts, artificial intelligence and other basic technologies. Due to the immature nature of these technologies and potential security risks, DAO is currently facing serious security problems. In the case of smart contracts, in 2016, the world's largest crowdfunding project, and the first DAO built on the Ethereum blockchain, The DAO was soon hacked, and hackers used smart contracts. The reentrancy vulnerability in the code launched the attack, causing more than $50 million in the theft of the Ethereum, and the community had to recover the funds in a hard fork. However, this violated the "code is the law" principle, causing huge controversy. Other known smart contract security issues include transaction ordering dependencies (TOD), timestamp dependencies, mishandled exceptions, etc. [46-47], which greatly restricts the development of DAO. solve.

(2) Technical limitations

Although DAO yearns for code-based legal code management, it is difficult to implement in practice. This is because there is a huge semantic gap between the legal terms in traditional paper contracts (also known as wet code) and the rules written in DAO smart contracts (also known as dry code): the former is more High versatility, usually drafted at a high level of abstraction using a simple, inclusive, and flexible natural language; the latter, as a semantically explicit code, must accurately describe the rules in a rigorous and formal language. In the translation process, it is inevitable to introduce errors [48], and many situations (such as some edge cases) are difficult or even impossible to program, which restricts the application and popularity of DAO to some extent.

(3) Legal issues

Because DAO has the characteristics of decentralization, cross-border, and membership anonymization, once legal problems arise in the actual operation process, it will lead to problems such as difficulty in accountability and lack of ex post relief. In addition, the current DAO has not been clearly defined at the legal level. Some people think that DAO is a pure partnership or joint venture, and there are also opinions that DAO is more like a replica of investment contracts or securities. Therefore, the future "Company Law of the People's Republic of China", "Contract Law of the People's Republic of China", "Securities Law of the People's Republic of China", "Civil and Commercial Law" and other legal provisions need to define DAO in order to clearly define the scope of use of the law, so that DAO bears the corresponding Responsibility and fulfill related obligations.

(4) Intelligent governance problems

The self-operation of DAO depends to a large extent on the degree of consensus and intelligent management methods achieved within and outside the organization. The establishment, stabilization, expansion, iteration, and modularization and process of collaborative processes are all built in the early stage. At this stage, DAO is less efficient than centralized organization, and the infrastructure supporting DAO and its derivative applications is not. Maturity makes the early stage of the organization likely to be in an inefficient, mixed state. In addition, due to the different DAO governance models, the existing accounting tools can not meet the individual needs of DAO. Most small DAO pre-bookkeeping can only be done manually. However, the clear division of interests is relatively weak, so that in the process of rapid development of DAO, it is not rare that the decentralized autonomous organizations are difficult to manage due to the lack of consensus among the core builders.

In order to solve the above problems and lay the foundation for large-scale application of DAO, DAO should be further studied in the following aspects.

1 Strengthen theoretical research. First, the concept and characteristics of the DAO organization are defined, and the clear definition of DAO contributes to the theoretical study of DAO. Secondly, the theoretical basis can draw on the nature and mechanism of DAO from both macro and micro aspects, such as economics, biology, human society, public management, etc., and lay the foundation for the design and verification of DAO.

2 In terms of security issues, the formal verification of smart contracts [49] and multi-party security audits, the development of smart contract terms conversion standards and regulatory sandboxing are effective ways to improve DAO security and privacy protection. In terms of legal issues, in view of the current lack of corresponding laws and regulations [50], strengthen the DAO's responsibility at the legal level and the legislation and jurisdiction of the law, thus confirming the rights, obligations and responsibilities of DAO.

3 DAO is combined with parallel blockchain to solve the problem of intelligent governance. DAO can be seen as a social system consisting of large-scale agent nodes through social network connections, with uncertainties, diversity, and complexity (ie, UDC). In order to achieve effective management and control of DAO, a parallel blockchain approach can be used [51]. Parallel blockchain is an organic combination of ACP [52] method and blockchain technology. The parallel blockchain will transform the DAO from the UDC system into a smart social system with agility, focus, and convergence (AFC) characteristics for specific scenarios and tasks. DAO can also draw on ACP's description of intelligence, predictive intelligence and guided intelligence in parallel loading and unloading systems [53] to promote DAO's parallel intelligence [54]. In addition, we must consider combining the existing corporate system with the advantages of DAO, not only to decentralize for decentralization, but to achieve better collaboration in a changing environment from more dimensions. In order to maximize the effectiveness of the organization, and ultimately achieve a decentralized autonomous society (DAS).

6 Conclusion

Based on the development of DAO development and research status, this paper clearly defines the concept and characteristics of DAO, and then proposes a DAO analysis framework (ie, five-layer architecture model). Then choose a typical DAO platform – Aragon for case analysis, and further discuss the problems that DAO is currently facing and the possible next research directions. With the rapid development of information technology and the complex and ever-changing environment, the disadvantages of organizational structure in the context of industrial civilization have become more and more obvious. DAO provides a useful reference for dealing with organizational failures. However, from the basic theory and the real environment, DAO has many shortcomings, and it is still unable to support large-scale applications. However, with the further development of theoretical research and the advancement of various technical means, these problems will be gradually solved, and DAO will also get more practical applications.

Note: This article is the latest masterpiece of the Institute of Automation, Chinese Academy of Sciences, Qingdao Intelligent Industry Technology Research Institute parallel blockchain technology innovation center team, the first author of this article worked at Beijing Jintong Network Investment Co., Ltd., this article has been published in Intelligent Science and Journal of Technology.