Coordination Summit | A History of DAO Coordination: From science fiction origins to today

[Applause] [Music] well joining us again for uh our second talk uh this year and uh i'm excited for this topic too because when i get a history lesson in how things have maybe gotten better asterisks so i'll let we'll take over from here and uh welcome yeah i didn't i didn't intentionally uh scale the talk very much that was my interpretation but i think i think it'll go in that direction i hope we'll see i'm in a hotel so lighting's not excellent but uh we'll work with what we have um so i'll uh screen share some um slides and then we can dive in from there okay great um so i'm going to talk about a history of dial coordination um from science fiction origins to today um i personally um i'm well i'm a co-founder of syndicate we helped set up investment dows we have over 25 000 investment dials created on our platform um and i've personally been in the crypto space since 2013 um i got into ethereum in 2014 um i took the ten dollars i got for free from coinbase and put in the ethereum pre-sale um i invested in the dow in 2016. um and i want to share some of the insights of seeing all this crypto history and how it how it's changed as today um and um this is going to start with um the fact that dowser science fiction actually relatively recently um and uh go to where we are right now as the crypto community so um pre-2016 was before there were um before daos um again people will debate what a doubt is i personally demarcated as 2016. um and we actually have the starting point for the idea of dao's it came from a book called daemon by daniel suarez that's referenced in the ethereum white paper so damon was written in 2006 before bitcoin was created and damon focused very heavily on how this kind of autonomous system could run so there was this computer code that essentially would replicate itself and run itself and coordinate people and damon being written part of bitcoin focused very heavily on how this code stayed online how this code operated because in 2006 the science fiction interpretation was that keeping code online in a decentralized way was an extremely difficult task one that was nearly impossible and the book talks about how essentially uh difficult it was for this kind of decentralized network to remain online in damon interestingly it's a very heavily automated autonomous automated definition of dows um where daos um and daemon were essentially coordinated by this one central entity using automatic computer code and everything was pre-programmed into branches so there was not any governance there was not any voting there was not a concept of sub-daws in a significant way people had very little autonomy in these systems and it's a very pessimistic vision of daos which is interesting it didn't use the word dao's used the word daemon to refer to them um but um it was it directly inspired daos in the ethereum white paper the second book uh was freedom which was written in 2010 and freedom is very interesting because uh you can see in real time um 2006 the ideas described in damon were science fiction 2008 to this last tuesday 2009 bitcoin started to emerge and um the ideas started to become reality and then 2010 freedom um the things that were impossible in 2006 were suddenly not only possible but easy in 2010 so freedom is a much more optimistic vision of dows and it focuses heavily on these semi-autonomous groups essentially having really broad goals set by the daemon the computer program that coordinates everything but all of these groups operate pretty independently there is some lightweight version of governance but it's not heavily focused on it's much more these highly autonomous sub-diaz that have their own internal economies and can coordinate um and uh or or operate independently so one thing that's really fascinating is that in daemon and freedom governance was not a main focus of dallas um uh it becomes a main focus later on um but uh the science fiction that inspired dows does not cover governance a lot it covers it a bit um but the core feature was the autonomous nature of these computer programs that define taos not the ability to vote um so that was that was essentially where we were in 2010. we have some kind of sketchup dowels they look kind of viable still science fiction but starting to look more and more possible um 2013 was when dows were defined in the ethereum white paper and that was this is where the definition was laid out formally for the first time so daos as many of you likely know here stand for decentralized autonomous organizations um decentralized being there's no central party there's no essential actor autonomous being that it can run without needing human intervention and organizations pretty straightforward people coordinating around some shared goal um the ethereum white paper specified what a dao could do it said that a dow can vote a dow can spend funds and now can modify its own code often via governance um this is very interesting um because um when you take this interpretation you realize that a lot of things that we call dows um might not be daos under a strict definition of the ethereum white paper the definitions evolve over time that's perfectly fine and some of the things that we don't view as daos actually meet the textbook definition of daos so the one example is um uh unislop as a protocol not talking about uniswap dao and the uni token but una swapped the protocol which can execute automatic swaps as an automated market maker that looks like the vision that the ethereum white paper laid out of a decentralized autonomous corporation essentially um a structure where um one token equals one vote and it's a entity that is not necessarily profit seeking but um structured similar more similar to a corporation that might otherwise see profits um and um the very interesting part about this definition of a decentralized autonomous corporation that the ethereum whitepaper had is that the in a swap protocol itself by this definition is a doubt um uh it is a it is um something that can operate autonomously the unit swap protocol can modify its own code by choosing to flip a fee switch or not it can choose to spend funds if it does decide to flip that fee switch and it can vote users can vote to um turn that free switch on or off so that's one very interesting example where a lot of protocols um in uh meet this 2013 definition of taos and most people today would not refer to them as taos um likewise a lot of um groups today um their daos can't necessarily for example modify their own code or maybe they don't have voting um maybe they don't even necessarily spend funds maybe there's no treasury um and some of those things are called dallas today so i highlight this because definitions evolve and if someone says like there's a real doubt there's a fake doubt there's a true doubt there's a like false doubt um a lot of the things that people don't view as doubts are dials under the white paper definition a lot of the things that people do establish are not dials under the white paper definition so um definition's available over time that's great if anyone tries to do a really hard line the definition um uh remember that most protocols follow this definition um yet we don't call them jazz today um the ethereum white paper in addition to laying out decentralized autonomous corporations where one share equals one vote and they look kind of like businesses they can possibly make profits um there's also decentralized autonomous communities which is laid out in the ethereum white paper where one member equals one vote um and this is very interesting because um the ethereum white paper um didn't really cover how these decent-sized autonomous communities can be formed um because of the risk of civil attacks um a civil attack is when you essentially create a lot of fake identities and then like if it's one member equals one vote you can overwhelm anything with your fake identity um and that's very easy to do in the crypto space if an identity is a wad address because it can generate millions upon millions upon millions of wallet addresses um it's harder to do with things like um with with various systems that become identity systems that try to prove your humanity in various ways or try to create verifiable track records verifiable credentials um the very interesting thing is that the ethereum white paper essentially said decentralized autonomous communities are one member equals one vote and you can enforce membership somehow via ensuring that everyone was human and it kind of uh left the implementation details out for that um and that's still an unsolved problem today nearly a decade later but there is something that's really fascinating about this definition of decentralized autonomous communities which is that um the decentralized autonomous communities one member equals one vote looks kind of like nft projects today um nft projects are not one number equals one vote because we have not solved the problem of civil resistance um and fake identities but instead it's often one nft equals one vote so this is another really fascinating example where some nft projects um um you know don't uh have treasuries that are accountable to communities um some do um and those nft projects that um are accountable to communities or those treasuries um can be uh can be can be voted on um by the members of it um those also look kind of like a pretty traditional white paper definition of doubts um not exactly we haven't solved civil resistance um maybe in another decade we will um but um this is just all the highlight that uh this history is very interesting because um all of these concepts evolve over time what we view as thousands 2013 is different than what we view us does today um what reviews does today will also be different a decade later um so a lot of people have different definitions of dows that's okay those definitions change over time um and i think this is a really fascinating dive into this part of the history um because um the definitions uh don't align with what we call dows today um even though it is the truest definition we have i don't believe that they're true or false definitions but some people do um and uh and these definitions are are what stated in the white paper so 2016 um was the dow um it uh was um the first dow on top of ethereum um depending on how you define um a dao one of the earliest ones and the dao was super interesting because it was an investment down on top of on top of the ethereum network and it essentially was structured to fund projects in the ethereum ecosystem every time a project would come up for a vote you could say yes if you wanted to allocate your funds to it you could say no if you didn't and projects would be funded via via this community um and it was super exciting at the time it attracted 14 of all ether in existence 150 million in 2016 prices it was 32 billion in pre-crash dollars pulled these stats a little while ago so they might be a little outdated um but it was like 32 billion um in uh in in pre-crash east prices um uh so um that was an absolutely fascinating time and the thing that was very interesting about the dow um was that it was really seen as this um incredible bottom-up initiative um where like it just captured everett's imagination of well we can all fund things together we can all make these decisions together we can all create this ecosystem together um and that's part of the reason why it attracted 14 of all ethereum existence um another reason that's under discussed but relevant um for the time is that the dao uh also was one of the only things you could really do on the ethereum network back in 2016. um there really wasn't much um that you could do um and like the dow was cool you just sent ether to the address you got some dad tokens back um and uh there wasn't much to do so a lot of people were like oh an opportunity to use my ether with smart contracts that's cool um so um i think that's also an under discussed aspect of the dow history like did it attract 14 of all ethereum existence because people were incredibly excited by the idea of funding the ethereum ecosystem together in such an early stage yes that it also attracts 14 of all ethereum existence because nothing else was really going on um yes um that's also true um so if we replicated the doubt today i very much see what we do at syndicate as a spiritual successor to the dao um in in many ways um uh probably wouldn't attract fourteen percent of volley ten existence but hopefully uh hopefully hopefully quite a bit um and uh the dow was very interesting because the dough was the first time the ethereum community as a whole was faced with a massive coordination problem um so um some of you may know this um the dow was hacked um the 14 of ether was drained by some blackout hackers who were stealing the money some white hat hackers who um were saving the money for other people um and uh that was hacked before it even got off the ground um it was hacked due to a bug um that is now uh well known today a known as a reagency attack um but um security best practices were not as developed at the time so um re-entrancy bugs were um well something that existed back then um not something that was uh in as common knowledge as today um and the ethereum community had a choice uh they had to coordinate and decide do we want to um do we want to essentially undo this hack and give back the ether to the people who originally put it in or do we want to um keep the hack in place um and uh 14 of all ether is now in the hands of mostly hackers and you know like that that that that could drastically affect the network down the road but um maybe maybe it is what it is um the code had a bug um and uh the bug uh was exploited and coded as law so um so so that bug um should stand and this was the center of a very significant ideological debate in the ethereum community at the time which is that there was a code as law debate so um essentially uh some of the community thought um that uh anything that was in a smart contract was essentially like what people should be bound to um if the smart contract is written correctly when everything operates correctly the smart contract has a bug that's still what people chose to put money into that's what people agreed to so they agreed to the bug as well code is law um and therefore it shouldn't be changed the other part of the community thought that the intention of the creators mattered and that a bug is not an intended functionality um a bug is an accident and the bug should be essentially um undone because it wasn't what we meant to happen [Music] so that was a very significant um split the people who thought that code is law did not agree to fork the chain they chose to stay on the old version of the chain now known as ethereum classic would still exist today and the people who thought that the bug should be undone thought that the agreed with the new version of the fork and undid the hack and that's ethereum that's what we used today so there are two versions of ethereum in existence one um where they believe in this code and law code is law principle one the one that pretty much all of us sees today where we do not and we believe that bugs are um accidents and not but not not not what people are um are are are signing up for so to speak um and this is very timely to discuss because um there's another debate in the ethereum community right now about a chain fork between ethereum proof of stake and euterior proof of work um and that will also lead to a fork in the chain and um it could play out like ethereum and ethereum classic where ethereum ends up gaining all the usage and all the value in ethereum classic um is you know mostly uh mostly not used very much um or it could play out where um there is some significant uh group of people who agree to adopt ethereum proof of work i personally think it looks more like an ethereum and ethereum classic situation um where most people will move to ethereum state and that will be the version new ethereum we all use um and that ethereum proof of work um won't um won't uh won't be likely to be significant but that's just my own personal opinion and we'll know in a week um how it plays out and this is interesting because um there's both like the high level like what the fork did for the ethereum community which was um helped people um settle the debate over koda's law that is a very important piece but then there's also a personal and practical aspect which is a lot of the people who were who put money in um were also people who had significant um uh significant adoption of the network as minors for example um and some of the people who put money in um lost money and wanted to get that money back so like when people talk about 2016 solve the koda's law debate um because we all use ethereum native theorem class today is that true yes it is also true that a bunch of people chose to use ethereum instead of ethereum classic because they got their hacked money back in full-on ethereum and they got only a portion of their hacked money back the amount of money that was returned by white hats on the carrying classic so just like how the dow getting 14 of all ether in existence was partially a function of the excitement and partially functional the fact that there just wasn't much to do back in the days um us using ethereum over either in classical day it's partially a function of this belief in uh that code is not law and that bugs are not bugs are not part of agreements but also it was people who lost money and won their back so there's always this uh this like in the moment is very different than how people look back retrospectively um in the moment there's usually a lot more motivations at play than just one high-level principle and that's very important to keep in mind when thinking about the history of crypto because um it's not all a smooth journey um and there's uh there's lots of like personal factors that can influence people at various points of time 2017 to 2020 um was like the next phase of essentially dow coordination um uh so just like how we went from science fiction where um dao started out as these like sub dow looking kind of entities without much governance to the white paper which focused heavily on voting to the dow fork where there wasn't even any voting you just decided whether to fork or not fork um the next stage of doubt coordination is generalizable dow tools started to merge 2017 to 2020 is how i demarcate the era um aragon was uh was was was started in 2016.

um so it's not it's not a perfect definition but um it's a it's it it it's it's when these generalizable dow tools started to come to prominence um many of you likely use gnosis um it's a multi-signature wallet and it's typically used for off-chain governance so you have a small number of signers who are essentially the ones who can execute transactions to move funds or upgrade the dao's code and a large number of people who can vote about how um those uh funds should be spent um some people will tell you that gnosis safes are not real dows but they're fake dads um one thing that's interesting is like they know so safe does meet the definition of a dao in the ethereum white paper it can vote it can spend funds it could modify its own code the votes are being done by the multisig siders not being done by all of the token holders um so under some definitions of daos uh no safe and a multi-stick is a dao under some definitions of taos if you view it as it must be on chain token voting it's not viewed as a doubt so um these definitions are always a bit tricky and and that's something that you'll definitely see occur throughout the history of doubt coordination that these definitions and ideas change over time in my opinion no safes are downs can be considered daos um and that ancient governance is not a critical feature of doubts but other people disagree um moloch and aragon are two solutions of this era for um uh on chain governance um moloch is uh is used by um the mog framework is used um was was set up to fund public goods in the ethereum ecosystem um and to help solve coordination problems moloch comes from the idea of moloch the god of coordination failure and everyone tries to get together to slay moloch to essentially solve coordination problems and that is um that's uh moloch uh dao's are used today in metacartel and similar groups um and they rely on on-chain governance um and voting via token holders um aragon also is a tool more focused on dow communities and down discussions um and it also uses on-chain governance um in addition not exactly um in addition to this is also compound based governance um compound governor alpha and bravo which is a voting framework as well um and that tends to um that that that tends to be used alongside other systems for example like tally for unchained voting um so these were very generalizable dow tools they tried they they they didn't try to take an opinion on anyone use case they tried to be um be very broad um and um foreign governance was not the critical feature and it was broader than just a doubt tool a multi-signature wallet can be used for all sorts of things um more than just those it can be used to also secure your own funds secure your friends funds hold that um and and and there's a lot of things um that you can uh do with gnosis that um are beyond dads and then moloch and aragon um specifically um we're focused on on on daos in particular um and this era um uh ran through 2020 pretty much through the end of d5 summer um 2021 saw the rise of vertical specific dow tools so instead of one generalizable framework um there are started to be tools for specific types of daos um so syndicate for example for investment dows juice box and mirror for crowd funds party down coupe for group group buying nfts coin shift and parcel treasury management utopia payroll llama accounting guild token kitty lobby knowledge management um this list could easily be double triple quadruple the size um 2021 saw this huge explosion of tools and it was because people viewed people realized that specific dow use cases were best served by specific tools built for them and people uh began to migrate to those tools for example at syndicate we focus a lot on flexibility for investment dows some investment dows want to have a fixed price for their investments some of them want to be able to change the price some that want to have membership based entirely on deposits some of them want to be able to select their members in advance and um and allow in members i think are really helpful and kick out members who are who are problematic um and and may be unhelpful or disruptive um and uh and the investment dial frameworks um that we're building at syndicate are built with a particular use case in mind likewise juicebox for example um has uh is built for essentially like uh they call it transparent treasuries where um you can uh put money into a juice box fundraise you can also get refunds back from that fundraise um if the dow has more capital than it needs um daos can also make access funds redeemable for end users at any point with this refund functionality as well party dow operates on top of the protocol formerly known as fractional um and it like directly fractionalizes the nfps on a protocol layer so that they're held by a specific smart contract that can handle auctions for those nfts so these vertical specific data tools um started to rise up in 2021 um and that is where we are today so that is the history of dial coordination um from science fiction to today probably have time for one or two questions um if there are any in the chat yeah um maybe uh this is a question for me and uh i'm gonna apologize for being you know getting a for putting on the spot but did you notice any kind of trends as you were looking at this evolution in terms of like why some of these things didn't take off like is there something common here or is it just that we changed the goal post then we had to then adapt to how the tools would get us to accomplishing a different goal yeah yeah um i think that um as the ethereum network uh gains more users what those users look for and what they care about and and don't uh and care less about starts to uh starts to change pretty dramatically so for example in 2016 um gas fees were very low um on-chain governance cost barely anything there was no reason not to use it everything was on chain and there weren't browser-based wallets so you had to use desktop wallets with um with direct smart contact interactions so having everything on chain made sense because you couldn't have like often interfaces easily it just didn't exist at the time um and then 2017-2020 um those were really where there were very few dows before then um maker uh was the most um prominent pre-2017 dell and 2017-2020 was um an era of essentially um trying to define what daos are what they look like and using the concepts that we know from before um and uh and and very much trying to be unopinionated because who knows what those will look like um 2021 these tools can start to be more opinionated because we know what does look like more clearly they have now gone from um gone from pure science fiction to a few experimental examples to lots and lots of examples um and that uh that setup allows us to start to build tools that meet those specific needs that we know about so i think it's as knowledge increases in the space um that um and as users change in the space and as gas fees change and prices change these dive tools naturally adapt because ethereum network's not static either the people use it the cost to use it um how you use it whether that's from browsers or direct smart project interactions all changed over this time period as well no that's that's totally fair um another question uh we'll just make this the last one obviously as you can the last i talked about all the tools that are available right now for dallas to can operate and we're kind of seeing specialization here as well do you believe that these things remain unbundled or do you kind of believe that eventually this will be bundled together and sort of have you company contrast that to things going on syndicate yeah yeah i mean of course i have my own bias my bias is that i believe these will remain unbundled um um and that's that's what we're building towards we're building towards investment jazz specifically um my my own broadly speaking um my belief is that taos are a structure as transformative as corporations but likewise um the idea of a generic corporation is really hard to serve um like the industry i'd say it matters a lot the um types of people who run it matter a lot the goals that they have matter a lot like in the likewise just like how the needs of a small business of a single person consulting business to a small business in a local area to a fortune 500 company like they're all corporations but they all look very different at very different needs would not be served by the same tools i think guys are the same way um investment dows um of a few members look very different than investment dials of dozens of members and those look very different than investment thousands of members and those in addition look very different than community dows which might not be trying to make a profit but might instead be trying to uh seek out um a specific goal and bring out some bring about um some some some kind of thing they want to create um so i uh is it possible that there's some kind of dao super app that handles all these use cases um 10 20 years from now i don't view it as likely because um there's no corporation super app either um uh um the needs vary so widely between companies that i think that will be the same way i guess like for tooling to like help operate do you kind of believe that's more likely i mean this would be your analogy of kind of hr services and accounting and largely like the corporate account management as a as an industry exists for generalized organizations but we kind of still believe that treasury management and financing and payouts and payroll and all that will be offered more and more in a bundled form yeah i think that um i think that um uh we it's a little hard to say because um there's also this like metal of a question of do we even need dao specific tools at all um i think the answer is yes i build it i build i'm building them i invest in them um like i i i have a significant portion of my like career my time and my assets tied up in these a little bit about yes so i mean but uh but but it's also because i truly believe it um uh yeah um uh i i i i i have the belief first and then and then i uh and then i execute up i believe rather than you know the other way around um so uh so i think that um uh dao specific tools do need to exist and will exist i think that um uh there's a kind of like a a big question mark which is the regulatory situation for daos right now dao's from a regulatory perspective um look either like companies or non-profits um and a lot of what daos can do have to like contort to fit into these definitions um and if they're forced to fit in these definitions well if a dao looks like a non-profit and it's regulated doesn't non-profit then maybe it should just use non-profit tooling maybe it doesn't need dow tooling for nonprofits when you know it's forced to act like a non-profit but i think that the more crypto native experimental end of the spectrum is where doubt tools will likely thrive first um that's only a weekly held belief um said we're kind of on both aspects of some groups that are super experimental and totally obtained in some groups that are um using corporate entities and uh and and manage a lot of pain um so it it i i don't i only have a weekly health belief on that i wouldn't say it like i i formed a particularly strong opinion either way um but uh if taos are allowed to act like truly crypto native dows i think we'll also see more innovation emerge dows are forced to look like companies well then maybe dows won't look that different from companies so like the regulatory situation right now i think has hindered innovation um in a significant way um uh and i think that if that embraces the truly cutting-edge autonomous features of vows um that we'll start to see um the taos be able to like really like roam free and experiment more i think that's a perfect note to end this on so uh really appreciate this will and thanks again for taking the time today and if you can uh share the the slide deck we'll also make that available for the attendees thanks so much anyone can email me at will at syndicate.io or find me on twitter at willpaper definitely happy to chat about our new list amazing thank you so much thanks so much you