DAO, rises in 2020

Production / CoinVoice

Text / Linghe

"Even if the loan is paid, I don't think the company will last for three months." Northwest chairman Jia Guolong first issued a distress signal.

Immediately after that, Haidilao lost 80 million yuan a day, and Jiu Maojiu continued to close the store … In the past, every day, enterprises are facing the risk of closure, and catering, entertainment, and tourism have become the hardest hit areas. On the other hand, the glory of online education and the misery of offline education are overprinting new choices of capital under the cold winter.

The epidemic of new coronavirus pneumonia swept across the country in just a few days, spreading everyone by surprise. In response to this disaster, stopping was the way to make the pain go faster. Internet giants responded extremely quickly. In the early morning of February 9th, Tencent once again announced that it would extend the office hours at home and tentatively set the date for resumption of work as February 24th. Byte Beat internally decided that foreign employees need to return to Beijing as soon as possible from February 12 to 16, and quarantine for 14 days in accordance with government requirements. The resumption of work is tentatively scheduled for March 1.

And another emerging industry, blockchain, has also been able to think further in the face of the worst disaster in human history.

DAO is an application that has existed since the blockchain entered the public view, but at the beginning, it was a controversy and hope. On the one hand, the failure of The DAO has made it questionable. On the other hand, Dash's success makes it full of hope. Today, although people have not seen more progress on DAO. But because of the epidemic and economic form, the concept of distributedness has once again been discussed.

Can DAO help the outbreak? Can companies hit by the outbreak consider the DAO governance model? What can we learn from it? In this article, we consider the possibility of DAO going forward.

DAO and the outbreak

In the face of a major disaster, many people are used to discussing the power of management because chaos often makes the situation worse. Whether it was the continuous fire in Australia for four months or pneumonia in Wuhan, China, which infected more than 10,000 people, the situation has since evolved beyond the initial expectations, which has caused people to think ahead. From the perspective of the blockchain, we will think about the differences between the epidemic situation under the decentralized and centralized management structure, and explore whether the epidemic development will be different under the blockchain model.

DeFi, IEO, DAPP, etc. are innovative applications launched after people's research on the blockchain over the past two years. However, in the epidemic situation, another earliest application, DAO, a distributed autonomous organization, is to be discussed. Originally written by American writer Ori Brayman in a book called "Starfish and Spiders". He compared the centralized organization as a spider and the distributed organization as a starfish, and explained in detail the difference between the two.

He wrote in the book: The spider is a centralized (cellular) tissue, and if the head is cut off, the entire tissue will not survive. Starfish are made up of a group of cells that are peer-to-peer (centerless), and each tentacle torn off by a starfish can grow into a complete starfish. Starfish and spider represent two kinds of decentralized and centralized organizations in the real world. When starfish-type organizations encounter setbacks and conflicts are broken down, their organizations will become smaller decentralized organizations and continue to play a role; spider-type organizations will not be able to continue operations after the head is cut off. In contrast, starfish-type decentralized organizations have strong vitality.

In the face of major public emergencies, DAO, as a distributed autonomous organization that keeps running through smart contracts and encodes transactions and rules on the blockchain to achieve openness and fairness, unattended intervention and autonomous operation What can it do in management?

The most prominent problem for the rescue in Wuhan during the epidemic was that the supply and demand sides could not reach directly. For example, the news of the lack of resources in Wuhan Hospital has been flying all over the network, and all parties have quickly raised many materials through their efforts. However, due to the process and personnel of the middle party, it often takes a long time for the materials to reach the hospital, and the medical staff also As a result, there is no protection and the epidemic cannot be alleviated. But under the DAO model, people, as a community of interests, have highly unified goals. Participants conclude contracts through smart contracts, and deliver materials to the target hospital efficiently point-to-point, giving hope to medical staff as soon as possible. In this, the parties continue to optimize the contract and continue to change, so as to find the optimal path. Of course, this is only an ideal state, and there will be problems in its implementation. However, compared with the original method, DAO may be faster and more emergency.

The spontaneous power from people is not necessarily weaker than the highly concentrated power. But the problem with DAO is that this is a completely free market, and all collaboration is carried out through incentives (whether major public emergencies are limited by this need to be considered), so how to make people have a sense of belonging, a sense of faith, and go beyond the market The law plays an active role, and the real role in disasters is the next step that needs to be clear.

The inspiration of DAO incentive mechanism for enterprises

After the so-called gunshot, there was no winner. In this war, the other hardest hit area is business.

February 1st is the first day of resumption of work after the Spring Festival holiday. If there is no virus, everyone should return to their posts as scheduled. Due to the epidemic, this time was postponed to February 3, followed by the 10th, 17th, and even longer, and the losses of the company increased day by day.

Therefore, in the face of the epidemic, most companies choose to work from home, that is, everyone opens a distributed office. For example, Tencent extended the resumption time to February 24, and the byte bounce extended to March 1, during which employees worked from home. This is much better than the catering, tourism, and entertainment industries that have stopped working across the board. Some of them have fallen in the cold winter.

Distributed office was promoted because of an epidemic. Although everyone still issues orders and completes work in a centralized organization, it is not the same as a distributed autonomous organization. But for enterprises, distributed governance can also be used for reference, that is, the impact of its model and incentive mechanism on management.

The distributed office work at home actually increases the management cost of the company. One is that the separation between home and office area is not obvious, which affects efficiency. The second is that remote communication is not as immediate and clear as offline, and the number of communication on the same issue increases. These are undoubtedly increasing the cost of the company. However, under the economic background of accelerated industrial integration and consumption upgrade, enterprises are required to have better innovation and faster response speed. Similar to DAO's distributed autonomous management model, it is actually a way to save corporate rent and labor costs, and it is also a sustainable direction for future office work.

In DAO's value network, the most important goal is the efficient allocation of resources. DAO's popular interpretation is a way for people to make collective decisions on a problem by organizations that operate in coordination with each other through trustless protocols. In order to be able to consume resources reasonably, DAO introduced an incentive model.

Generally speaking, DAO usually takes the project as the core, uses the token as the proof of value circulation and the incentive method, and then uses smart contracts to determine the member cooperation relationship and benefit distribution mode. There is no clear division of identities among members. For example, investors, developers, consumers, etc. will become part of the DAO because they hold the token, and participate in the construction and decision-making of the DAO.

Because of the characteristics of the DAO organization, compared with traditional organizations, DAO can grow at a high speed in a short period of time, but the internal collaboration costs will not increase simultaneously. Through continuous optimization of the contract structure, members can continuously seek the optimal path, so that the organization can continue to expand while still maintaining efficient coordination capabilities and a unified development direction, thereby improving efficiency and reducing costs.

For example, Bitcoin is the first application to run on the blockchain network. Combined with the characteristics of DAO, some people think that Bitcoin is the first DAO in history. It is an organization operated by miners and nodes, coordinated by Bitcoin. Then the motivation of miners to participate in "Bitcoin" is mainly to dig rewards. If miners produce valid blocks, it will receive participation contribution rewards and contribute to "Bitcoin".

To be realistic, participants will only actively contribute to the DAO if they are fully motivated. Bitcoin has proven the feasibility of allowing participants to continue contributing to the community, and the motivation to contribute to "Bitcoin" is immediate, without delay.

But how to do specific incentives is something that all DAOs need to consider. A big reason for the failure of Ethereum The DAO is that the motivation for participants to participate in voting is the return of project success and the rise in the price of tokens in the secondary market to achieve value enhancement, which is completely different from the motivation of Dash participants. The motivation for DashDAO voting is the long-term appreciation of the value of the Dash they hold because they vote for valid proposals and block bad ones, greatly saving incentive costs and people making spontaneous beneficial choices. Among them, the goals and economic models of the community of interest are particularly worthy of investigation.

DAO restrictions

Although because of the popularity of the blockchain and the changes in the epidemic, DAO has room for discussion. But at this stage, DAO still has many uncertainties.

The first is conceptually. From ancient times to today, whether it is a traditional enterprise or a new Internet enterprise, the organizational form has continued to evolve, but it has basically maintained the form of a centralized authority. A model like DAO that subverts from the management mode to the benefit structure as a whole and relies heavily on digital technology is difficult to be recognized by enterprises in the short term, and it will take time to gradually run in.

The second is the environment. The market, policy, and legal environment need time to mature. DAO is a model that is highly dependent on the Internet of Things technology. At present, most DAO models are limited to non-physical industries such as finance and culture, and the market is very limited. At the same time, laws and policies also need time to establish relevant systems. Today, DAO is still in a gray area in most countries.

Finally, at the technical level, the underlying technology of the blockchain is still being explored and iterated. There are still many gaps in processing performance, stability, security, ease of use, and other large-scale commercial applications.

In addition, the degree of decentralization needs to be reconfirmed. Blockchain advocates decentralization, but it is difficult to achieve 100% power in practice. There are also centralized services in decentralized organizations.

From the industrial revolution to the rise of Internet technology, trading rules between business societies have become increasingly free. Although from a low-level logic perspective, reducing costs and improving efficiency is the primary goal, but with the freedom and transparency of the trading system, transaction costs have gradually increased. Despite the many restrictions, the advent of blockchain and DAO has given new imagination to the business community.