Not everything is a DAO


#1

Too many things are being referred to as DAOs. In this post I’d like to discuss what constitutes a DAO, and what we should refer to other concepts as.

Smart contracts

Smart contracts are a foundation of Ethereum. They allow a contract to be executed and all aspects of their execution to be verified by any anonymous observer. With this being a major difference between Contracts and Smart Contracts, I think it is reasonable to use “Smart” to refer to this in other terminology.

DAOs

A DAO is a Decentralized Autonomous Organization. There are three simple requirements for something to be a DAO: It must be Decentralized, it must be Autonomous, and it must be an Organization.

Decentralized

A DAO must be decentralized. Many organizations that try to call them self a DAO are organizations with a centralized leadership that must be trusted to provide a service. Even if everything that the organization does is verifiable on a blockchain, if the organization itself is hierarchical, it cannot be a DAO.

Autonomous

Organizational autonomy is not the same as robotic autonomy. Just because an organization is expected to continue existing on its own forever, does not mean that it is autonomous. An autonomous organization must be autonomous from, or independent from all other organizations. The most obvious offenders are subsidiaries of other organizations. The offender which is most often called a DAO is a for-profit organization. If your organization has a fiduciary duty measured in a currency, it is not autonomous from the issuer of that currency, even if that currency is managed by a DAO.

Organization

A DAO must be an organization. It has to be a way for multiple people to decide how to expend their labor. A contract is not an organization. An account is not an organization.

Other DAOs

One requirement that I did not list was to have anything to do with a blockchain. Blockchains have created new and exciting ways to create DAOs, but the concept has been around for hundreds of years. I plan to talk in the future about how the Rochdale Pioneers created an early DAO in the 19th century.

Other terms to use instead

Smart Organizations

Aragon allows people to create organizations where all operations of the organization can be verified by an anonymous observer. This is the same advancement that turns contracts into smart contracts, so I would argue that it should also turn an organization into a smart organization. It can also be used to refer to things as Smart Corporations, Smart Non-Profits, and Smart LLCs.

Accounts

Another major use for Aragon which is not DAOs is the creation of individual accounts with more security features than simple public/private key accounts. These should probably be referred to as smart accounts rather than personal daos on account of not being decentralized, and not being organizations.


Smart accounts using aragonOS
#2

Shifting the narrative on decentralization will be tough, given that centralization isn’t always apparent (Tweet Storm: https://twitter.com/SarahJamieLewis/status/1029212002953060352).

Its also pretty hard to quantify - there’s definitely been many attempts (https://news.earn.com/quantifying-decentralization-e39db233c28e) but I’m not sure if there is a consensus in the community, much less a consensus in the media, leaving most people to assume decentralization based on their perception of a project of protocol. I’m sure you hear it every day too - it seems everything and anything is “decentralized” these days.

I definitely agree with you - there should be an effort for detailed categorization of these entities and this is an awesome place to start that discussion - I just wanted to point out that blockchain narratives are sticky, and blanket statements are easy.


#3

I look forward to hearing about this! I’ve always looked at DAOs as distinct from past organizations in part because they operate on the blockchain, where organizations of people can collectively control funds without a trusted custodian of those funds. This is one feature that allows DAOs to be “autonomous” from trusted third parties / central authorities such as banks or governments.

I generally agree with the rest of your post! Great topic.


#4

Great post! I specifically agree that something like Accounts should be used instead of Personal DAOs, and I specially feel bad about that one since I think I coined the term, for a lack of a better one.

I like Accounts but it lacks more context, accounts per se doesn’t tell me a lot. Maybe Advanced accounts or Smart accounts is better.

Also I like the term Smart organizations for smart contract-powered organizations that aren’t DAOs.

As a final thought, I think we may need a name for an aragonOS-powered smart contract system, since it’s not necessarily a DAO – it can be an account, a smart organization, etc.


#5

Even if everything that the organization does is verifiable on a blockchain, if the organization itself is hierarchical, it cannot be a DAO.

I don’t really like this distinction because I find it is very difficult to quantify decentralization (or lack of a hierarchy ) in a particularly meaningful way.

My working definition relates the autonomous nature with the tactical decentralization of the organization – in other words the organization is able to achieve autonomy through decentralization and therefore an organization can be considered a DAO if it has decentralized sufficiently as to to prevent an external force from disrupting its autonomy.

Aragon allows people to create organizations where all operations of the organization can be verified by an anonymous observer. This is the same advancement that turns contracts into smart contracts, so I would argue that it should also turn an organization into a smart organization. It can also be used to refer to things as Smart Corporations, Smart Non-Profits, and Smart LLCs.

Agree with this and like the nomenclature. There is a lot of value in leveraging Aragon to more efficiently manage a traditional legal form. These organizations can be made to be fully compliant, however, they cannot really be considered autonomous relative to whatever jurisdiction their associated legal entity resides.

Another major use for Aragon which is not DAOs is the creation of individual accounts with more security features than simple public/private key accounts. These should probably be referred to as smart accounts rather than personal daos on account of not being decentralized, and not being organizations.

Also agree very much with this – and find that Personal DAOs is generally confusing naming. I tend to prefer Smart Account or Smart Wallets as a way of differentiating this type of “organizational structure”

EDIT:
One additional thought, I think it might make sense to think of “Smart Organizations” as an umbrella category for all of these things (even smart wallets/accounts) and would love to see Aragon Core be reframed/branded as a platform for all of these things (moving somewhat away from the “unstoppable organizations” branding which is really only applies to DAOs) We could then have specific messaging for these different use cases.


#6

Thank you for linking this. Decentralization is absolutely a much deeper topic, and by far the hardest of the three requirements to define. Fortunately even though there are fuzzy borders on decentralization, the border for autonomy is much clearer.

I think if we are willing to stretch the idea of accounts being sort of comparable to smart sole proprietorships, we can bundle everything under the umbrella term Smart Organization.


#7

Agree with the Smart Accounts instead of Personal DAO. It didn’t “feel” accurate other than for communication purposes, i.e. It’s easy to understand for the general public when you refer to the term in the context.

A personal DAO borrows all the features you can expect from an Aragon DAO, but it isn’t an organization comprised of multiple people

Not sure about Smart Organizations term.


#8

Nice post, some ideas on the Naming scheme:

For organizations:

  • SAO = Smart Automated Organization

For individual Accounts

  • PAL = Personal Automated Ledger or Personal Account Ledger
    or PAR = Personal Automated Registry or Personal Account Registry

I choose automated because something can be automated but not autonomous, so it makes more sense in this context.