Decentralized Autonomous Organizations

Decentralized Autonomous Organizations

A lot of people like to talk about the Great Resignation and alternative working models. Enter DAO’s and Web3. Decentralized Autonomous Organizations promise to make you your own boss and worker. They seem to appeal to folks interested in DeFi movements. So what are they and how do they work?

First, you join a DAO – usually by by purchasing a token. Then you can then start participating and contributing to the community forum (usually a discord channel) and voting (using Snapshot or similar). As one’s reputation grows, the DAO community may reward you based on their discussion and participation KPI’s. Once you prove your reputation, you might start contributing to the core DAO project. At this point, you might be able to participate in completing a bounty: a small task. After your reputation grows enough, you might even be picked up for a full or part time role. Part and full-time positions in DAO’s are still rare and people that earn money often participate in several of them at the same time. It’s similar to many other hustle culture jobs. This tweet fits the experience:

The draw is that you can quickly put together a community of like-minded people interesting in pushing forward an idea or project – and let people contribute to it and work on it as they can. You can work when you want from wherever you want.

There are some serious downsides besides the difficulty of making a living doing it. Many people are ok with low/no pay because they’re more interested in the community organization around an idea than the pay, but organization can be difficult. Coordinating work and incentives so everyone is focused towards a solution can be problematic. Further, there are no guarantees. You may never get paid. There is no retirement contributions, stock, employee gym, no medical coverage, no sick/maternity/paternity or annual leave. All the work you do is in a legal grey area of ownership since you are neither an employee nor contractor – but liability claims might apply to every participant. Harassment, discrimination, and other workplace issues can also become problematic as the DAO might exist in countless different countries and jurisdictions. Still, it hasn’t stopped them from forming.

The takeaway

I get the idea, but have serious doubts about these organizations – just like I had serious doubts about cryptocurrency promises. The reason we have laws about companies is to protect employees from unscrupulous bosses/exploitation, help resolve conflicts between owners that want to go different directions, protect a company’s hard work from competition, defend themselves from patent/IP/financial attacks, and to hold companies liable if they do harm. Their ideas and work could easily be stolen by others and it’s questionable that anyone could protect their IP. It would be interesting to see what happened if there were copyright claims against a DAO’s work if it was plagiarized. They could easily be infiltrated and overtaken by subversive elements. They could be run by competitors to destroy a competitor’s market or by foreign powers interested in subverting a government, legal system, or its financial systems to start a revolution/cause massive riots. The reality is that enabling people to overthrow existing systems can be used for evil just as quickly as for good – and we don’t seem to have nearly as many controls on the former to justify the latter.

I worry that, just like crypto-currency, we’re going to have to re-learn why these laws exist and just changing names doesn’t change human nature. Lets hope we have more skepticism and learn our lesson before another entire population of people get run through the ringers like happened with the completely predictable crypto collapse.

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