Peer Production on the Crypto Commons

Version 0.8

Toward a Commons Based Economy

DAOstack

DAOstack pitches itself more directly as a platform and toolset for creating DAOs, “An operating system for collective intelligence”.

DAOSTACK POWERS DECENTRALIZED COMPANIES, FUNDS AND MARKETS TO MAKE FAST AND INNOVATIVE DECISIONS AT SCALE.

Allowing these DAOs to operate at scale is central to DAOstack’s approach. To this end prediction markets are used to facilitate decision-making that represents the majority’s perspective, without requiring the majority to participate. This is referred to as Holographic Consensus.

Within a DAO, members are assigned voting tokens and the DAO can perform certain operations when proposals are approved by a majority of the voting tokens. Some DAOs also allow GEN tokens to be exchanged for reputation (voting power), e.g. dxDAO. Ordinarily proposals require a majority of all the voting power for approval and have a long voting period. GEN tokens (issued by DAOstack in an ICO) can be “staked” to predict the outcome and “boost” the proposal such that its voting period is shortened and only a relative majority is required for the proposal to be approved and implemented.

The rationale for this system is that DAOs cannot scale to many decisions involving many people if all of the people must participate in all of the decisions. GEN holders who stake their GEN to predict the outcomes could in principle allow the DAOs to make decisions that reflect the majority opinion without having to involve a majority of participants. DAOs effectively pay for this service by offering rewards to GEN stakers. GEN stakers operate by learning what a DAO values and how it operates so that they can accurately predict the outcomes of proposals.

This is an interesting concept which addresses a legitimate issue for DAOs that wish to make decisions at a high degree of granularity. Information overload and the scarcity of stakeholder attention are significant issues for any DAO that reaches a large scale. Low voter participation means that outcomes are more easily swayed by direct beneficiaries or others who have a vested interest. High voter turnout from a large scale decentralized entity with many members is difficult to achieve and maintain. Participation must also be thoughtful or is likely to result in poor decisions.

On a DAOstack commons the DAO’s voting members are the controlling entity, people who would stake GEN to predict outcomes and in so doing expedite the DAO’s decision-making form an interesting kind of supporting constituency. Members of the GEN predictor constituency compete with each other to more accurately predict what the voters want and in so doing earn a greater share of the rewards. Collectively, they provide a service which the DAO pays for.

It will be interesting to see how the dynamic between DAOs and their GEN predictors develops. If predictors are adequately incentivized they may put effort into detailed analysis or investigation of proposals, using this information to make a better prediction then revealing it to the DAO’s stakeholders. On the other hand, without a long-term tie to the DAO’s success the predictors may also try to use misinformation to push decisions in the direction they had predicted. It remains to be seen how well this kind of arrangement will work in practice, as DAOstack has only seen limited use so far.

DAOstack is also an example of a project which is oriented towards addressing issues of scale that are likely to arise in the long term. The first challenge for these projects is to reach a scale of participation where their solutions can be demonstrated and tested.

Unlike Aragon, DAOstack DAOs are created manually by the project team. People who wish to form one first initiate contact with the project team. This allows for greater flexibility in how these DAOs are configured, but the gatekeeping results in a smaller total number of DAOs using DAOstack’s Alchemy (11 in June 2019). DAOstack plans to allow for direct creation of DAOs by users in future.

Last updated on 11 Sep 2019
Published on 11 Sep 2019
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