Metis Presents DACs the Evolution of DAOs Pavel Sinelnikov

the positives of using linux all right how's everyone tonight or today this morning it's it's just a whole experience how is everyone good just good can you oh you got it yeah yeah perfect okay today i'll be presenting dax the evolution of dallas so just brief disclaimer not legal advice you know i'll i'll be listing some token prizes so don't don't uh don't be worried uh who i am my name is paval i'm the integration lead at metis and i'm welcome to your mouth perfect thank you i'm the in-between for tech and business so hopefully i can speak both languages today and educates every one of you on the benefits of daos and dax as well so today we're going to go over the past the descriptions on daos the alternatives to coin governance as well as the decentralized autonomous corporation before we go into it raise of hands who here knows what a fork is okay majority not everyone well this this is a fork so for those who didn't wait raise their hands no what i want to specify is a fork in a blockchain so just to go over the principles of a fork we have alice and bob two users in a blockchain alice has 50 tokens bob has 50 tokens i bob then transfers 25 tokens to alice and alice receives 25 tokens and gets bob gets 25 tokens deducted from his balance now in the next case this is a double spend attack alice receives 25 tokens from bob but bob doesn't get the 25 tokens deducted from his balance so in this case this is the double spend attack this you know at a protocol level this never happens unless it's like a 51 attack but in this case this is the wrong state so what it makes sense to do is to do what is known as a fork a fork that copies the correct state and makes a fork and a copy with the balances changed correctly so in this case alice receives the hundred and bob correctly gets 25 deducted from his balance so why is this important well let's look at the past or past examples of places where forks were used so we're going to look at the history very brief of the dao the dao was a big fully autonomous crowdfunding platform raised over 150 million dollars the biggest in the world and with the biggest in the world it had the largest downfall where over 3 million eth was unfortunately stolen from the protocol there was three options that the entire ethereum ecosystem had number one was no action so in this case i let the hacker keep the three million eath and let it go on its business and that's what heath classic is there was another proposal a soft fork and what the soft fork did was that the investors would still have their three eth or three million each missing but the hacker was prevented from using it but this introduced some more vulnerabilities and some more you know nuances and stuff more discussion needed to be done and in this case the hard fork was chosen the hard fork basically reverted history and said and gave the investors back the money so hard fork was chosen by the majority of eth holders so in this case take a look now this is probably more like a degen look at things but we look at the token price and we see that the price of eth is more than the price of each classic because the protocol is being used more now let's take a look at steam and hive now steam is a dpos blockchain don't worry about dpos it's uh it's it's a delegated proof of stake but basically you have things called witnesses witnesses can produce blocks and how they're voted in is they're voted in with tokens what happened with steem is that new witnesses were voted majority of token holders and it came from centralized exchanges so majority of witnesses were voted in using the tokens from those centralized exchanges and some members of the steam community didn't like this they disagreed so what did they do they created hive hive is a hard fork of steam and in this case the accounts that participated in the centralization of steem they didn't get the airdrop tokens of hive so the results of the hard fork again another degen example so hive is being used more than steam what is the key lesson here in both instances it's not the protocol that governs the community it's the community itself it's the community's choice of legitimacy that's what wins now let's take a look at some just dao's brief overview of that so koopa troopa highly recommend that you follow him he's basically the the guru on daos he summarized things in very effective tweet daos are internet communities with a shared capitalization table and a bank account so in summary it's like a discord channel with a smart contract and you know everyone owns the funds and and uh it's a whole process with that before i go into more explanation of daos i want to describe my vision of decentralization now everyone's is different if you ask any different person they'll give a different explanation so in my case the state of which an entity does not have the ability to influence the results of an action even if that entity's sole goal is to influence that result so in this case if you pointed a gun to my head and you said hey revert this transaction and i wouldn't be able to do it that's decentralization moving forward what problems does the dao solve well first it's distributive so what this means is that anybody with an internet connection can come in and connect and participate in adele it's inclusive it's not role-based or restrictive anyone can come in anyone can contribute it's also multi-disciplinary so anybody with any range of skills can come in and participate whether you're a developer or content creator produce articles anybody can come in anybody can participate and finally you get incentives in the form of tokens so you get rewarded for your contributions there are certain problems with this mechanism some of the problems is first is that it's inefficient and this more so has to do with the governance processes so a lot of the things have to be done through a coin governance vote everyone has the right to vote everyone has the right to propose different things now of course their different things might require more attention different things might need to be processed faster if there's for example a security vulnerability how is that handled is it offset to the developers or is it offset to the community saying hey you know here here's the security thing here's how you exploit it and uh you know we're going to fix it in like three weeks next is the voter apathy so this is a problem not just for taos this is a problem for all communities in general so voter apathy is essentially the case where you know i i am i'm uh you know i don't participate in the governance process either i'm not in engaged enough or or whatever reason but in this case there needs to be a quorum and sometimes it doesn't be it's not met and this was seen in the dao as well so there's not enough knowledge as well so who gets to make the decisions that's key for the entire community who gets to hire the developers who gets to hire the the specific people that are working with the code you know is it the community decision or is it more of the cto and whatnot there is an alternative to coin governance and three alternatives so first i want to mention the power of the protocol so again it's not the protocol that governs the community it's the community itself so in this case there's three alternatives there's the removal of people so essentially you take away the governance and you say you know we have a smart contract and if you want to do anything you can make changes to it but it has to be a fork and it's not related to that now this is good if the protocol doesn't change but typically in the whole advancing d5 space it's a lot of things change a lot of things need to adapt to the environment that they're in another case is a slashing mechanism so you stake your tokens and you just hope that that the proposal gets passed and in this case you know if it doesn't then you lose the stake now unfortunately this does decrease the engagement as well and what we want is more engagement what we want is more effective decisions within the whole ecosystem as well and there's a third the inclusion of trust which we'll explore further the case for trust so in ethereum there's a lot of you know hierarchy of trust i trust that the that eth2 will eventually come out eventually you know it'll take time but i trust that everything is done by the book and i trust that everything is managed by the ethereum foundation and all the related developers with that i trust the ethereum client developers you know geth open ethereum i have an ethereum i trust that they've implemented their protocol successfully and they haven't introduced any type of vulnerabilities if they do they can actually they say they can patch it and then notify you later once they fix it i trust the contract developers if i don't trust the contract developers i trust the auditors for the contract developers and then you know the whole ecosystem of trust i can't go through all of the code and essentially pick out all the vulnerabilities i offload to more responsible people i trust the miners and validators now of course this is based off of game theory and token rewards and whatnot and i trust the users the users that will use the protocol as well so there's a whole hierarchy of trust that all you know it's like it's like a big pyramid and in this case i want to emphasize what the future of daos may look like now by there's a distributed autonomous corporation was defined by stan lorimer in 2013. so before ethereum before the ethereum was inceptionalized it's now this is a big paragraph i want to just summarize these rules are implemented as a publicly auditable open source software distributed across the computers of their stakeholders so in this case a smart contract and this stock may entitle you to the share of its profits participation and growth and or say on how it's run so you get basically tokens a modern day translation of this is protocols that are based on smart contracts that use governance tokens so in this case almost all of these daos can be considered distributed autonomous corporations now this just seems wrong right i think that the definition needs a revitalization so in this case i took this from ethereum from vitalik's you know blog post about dao's dax and just incomplete definitions guide so i want to complete more of so the definition of a dac or a decentralized autonomous corporation so a dac is a subset of a dao and if we dive deeper on what a dac can truly be is it's kind of like dao is like a twitter everyone has equal say everyone can can do whatever that they need to do to communicate and everyone's voice is treated equally of course you know you have more followers and whatnot you have more retweets and your voice is more impacted but in this case a dao structure is more like twitter a dac structure on the other hand it's more like discord there's role in permission based and it's open and transparent so discord i mean can you can make any sort of changes you can make it so that you know it'd be people can not see like specific channels you can set specific roles and permissions to give you more access to different types of content another version is just that a dao is like a flat organization well a dac is more of a tall organization so decentralized autonomous corporation is a legal entity which has a defined owner or group of owners which are responsible for the operation of the entity now i'll go into this definition but i'm unfortunately limited on time i want to describe what a dac would look like in terms of meetings first is access permissions you have access to specific smart contracts you can specify who can call functions you can specify who can make transactions you can specify who can modify the smart contracts there's also a data storage layer giving access to specific users that might need more sensitive information while still operating in a decentralized format there's also management capabilities governance you can assign voting power you can get to choose how much control you want to give to a specific set of people you can do it from fully dial governed anyone has any type of access and permissions to a fully permissioned system where only specific users or addresses can have these types of permissions can make sort of changes you also have a management framework that includes payroll finance administration investments communication reputation and much more capabilities you also have organizational templates again all organizations are different and the the goal of a decentralized autonomous corporation is to give users the volition the choice the choice to choose to have an organization which appeals to them that they can construct of their own just a brief look at the reputation power architecture that metis has developed specifically think of it as a linkedin profile attached to your address you can go to different types of docs and you can go and participate in different types of roles you may be a cto you might be a contract contributor you can do many different types of things as long as they apply to the interface all it is is that once you're introduced into the role you get an addition to your nft and you can carry that around with you across different organizations so instead of sitting three months into a specific dial and trying to get you know accustomed to all of the things you can immediately show that you've participated in these different organizations finally for scalability we have a layer to optimistic roll up so metis is metis andromeda is a layer to optimistic roll-up we basically offset offload the computation while still being secured by the ethereum layer 1 faster which leads to faster and cheaper transactions and what new that we introduce is the multiple chain architecture which allow permissions to be set per on a per chain basis and you have the ability to set specific amounts of permissions for your chains so in summary we took a look at the community decision making system so the dao and steam how both of them even though they're protocol level it was the community that came and made that decision that came and made that change to fork it and eventually for the better we saw that it led to a good result there was also a description we also talked about a description of what dows are as well as some alternatives to coin governance in this case we pick trust there's also a redefinition of the decentralized autonomous corporation and how that might look like and we also described the metis decentralized autonomous corporation so this is uh end of the presentation but thank you thank you everyone uh i guess i might have time for for a couple of questions