A nicheletter #5 from the Virtual Economy series. Literally the basic info you might need to decide if you want to go deeper.
DAO means a decentralised autonomous organisation
Photo by Victoriano Izquierdo on Unsplash
And it might be the most fascinating thing happening thanks to the blockchain. DAOs are still super new. Everything I found is imo just scratching the surface of how this idea will evolve in the future.
I found the following interesting example of a DAO
It’s an example to give a simple idea of how does/could/would it work. imagine a vending machine selling snacks. A customer comes to the machine, selects an item and touches her/his phone to make the payment. Simple. But not with this machine.
As a paying customer, you can tell the machine if you would like to have another snack added. The machine also knows which snacks it need to order and when based on the purchases made by customers. It also knows if there’s not enough demand for a certain snack. It makes an order from several snack producers, they send their vending machine refilling employees. All this without any other inputs. It could let customers vote about snacks and gather various other information helping it to make more money (or whatever is the goal). All these decisions are data-driven made solely by the vending machine(s) themselves.
When “our” vending machine makes enough profit it tells other vending machines about it. Other vending machines confirm their profits and it’s time to buy the next vending machine. You can also buy vending machine tokens. They will give you the right to make some bigger decisions like approval of buying a new vending machine or a different allocation of the profit. You just get a notification on your phone with a link to some vending machine stats and tap on yes or no. If the majority of votes are pro, vending machines will order a new buddy.
All decisions made by the vending machines are based on the votes of vending machine token holders and could be changed by a majority vote in the future. There are no CEOs, managers or any hierarchy within this vending machine enterprise. There are tokens and votes.
As been said, the vending machine is just an example used to make readers think about the possible use and implementation of such a governance model. It could be used for non-profits, local governments and basically anything that functions as some kind of an organism. I think an ant colony could be an example, too. If ants were robots. Maybe they are. Who knows. DAOs can replace the way how we run a business or a government in the future, that’s for sure. By now you have plenty of ideas, right?
The more official stuff
DAOs are organisations represented by rules encoded as a computer program that is transparent (every stakeholder has access to it) and controlled by the organisation members (token holders). Everything is kept on the blockchain.
At this point, we can say nobody really knows how will this idea evolve. I won’t expect already existing corporations to adopt it. It will be new, progressive startups that will start implementing the principles of DAO into the core of their business.
I admit I know very little about Virtual Economy. This series is me collecting some information to widen and deepen my knowledge. If you know more (I assume you do) and want to have a virtual coffee, I would love to talk. Also, we are building NicheStudio. If you like the idea, we definitely should talk.
Virtual economy simple series:
We are building a startup studio focused on niches; built on the principles of DAO. We are looking for a limited number of weirdos, enthusiasts and prodigies to join us. Discord or Twitter