Ethereum creator Vitalik Buterin was writing on decentralized autonomous organizations, or DAOs, as far back as May 2014 when the launch of the Ethereum mainnet was still over a year away.
At the time, Buterin argued “all in all, it is safe to say that ‘DAOism’ is well on its way to becoming a quasi-cyber-religion.” Six years later that prediction has proven quite prescient, as a range of DAO projects are now blooming on Ethereum and attracting fervent early users.
Of course, the infamous hack of “The DAO,” a specific for-profit venture DAO that was attacked in 2016, necessitated controversial, emergency maneuvering by Ethereum’s core developers and chilled innovation in general around DAOs for years to come.
Three years on, however, and the landscape looks considerably different thanks in no small part to the recent ascension of “steal this code” organizations like Moloch DAO and MetaCartel, as well as to the continued maturation of Ethereum in general.
Now, DAOs along with DeFi, or decentralized finance, seem to be Ethereum’s two aces in the hole. Let’s explore some of the top threads in this DAO scene to get a better grasp for this rising, unprecedented sector.
The Rise of Moloch and MetaCartel
Last March, SpankChain co-founder and CEO Ameen Soleimani did much to renew interest in the space in launching Moloch DAO, an on-chain organization where members can pool ether and vote on grassroots funding of Ethereum development efforts.
The DIY initiative quickly became a hit, as its ranks and guild bank, which currently holds more than $1.25 million worth of ETH, have since grown into respected and productive forces in the Ethereum ecosystem.
Moreover, Soleimani has expressly welcomed other projects to adopt Mololch’s code for their own ends, a dynamic that has driven the recent Cambrian explosion of DAOs. Industry insiders like the OpenLaw team have hailedg Moloch’s v2 smart contracts as akin to the ERC20 token standard but for blockchain governance, suggesting plenty more v2 clones are coming.
Speaking of clones, the first Moloch fork, MetaCartel, has also gone on to become a productive and recognized orce in the ecosystem. Launched as a dApp incubator in June 2019, MetaCartel has since spawned more than a handful of child projects and dispensed over a dozen grants to dApp and DAO projects like rDai and PokéMol.
MetaCartel hasn’t shown any signs of slowing down, and alongside Moloch DAO has notably inspired a host of new projects to step forward with their own spins on decentralized organizations.
MakerDAO Continues Maturing
MakerDAO is a decentralized community that uses on-chain governance via MKR tokens to steward Maker, a crypto lending protocol that has become DeFi’s reigning dApp to date, and Maker’s associated dollar-pegged stablecoin, the Dai.
After the Dai launched on the Ethereum mainnet in December 2017, MakerDAO’s biggest milestone yet was the activation of the Multi-Collateral Dai (MCD) system last November, which now allows users to access automated Dai loans with crypto collateral beyond just ETH.
Accordingly, MakerDAO has set the tone in DeFi and steered the Dai on a early trajectory toward becoming an accepted world currency, feats which show how much ground decentralized organizations can cover.
Aragon and Other DAO-Makers Advance
Aragon is a dApp platform built on Ethereum — although a stand-alone Aragon network, Aragon Chain, is also in the works — that allows users to readily create and organize DAOs.
Presently, more than a few projects use Aragon’s streamlined infrastucture to manage their operations. Though the platform is hardly alone making in customizable DAOs possible.
For example, other platforms like Colony, Daohaus, and DAOstack also provide smart contract infrastructure through which teams can organize and collaborate on-chain. Taken altogether, it’s getting increasingly easy to summon your own DAO, so new waves of projects are undoubtedly right around the corner.
Return of the Venture DAOs
The 2016 hack of “The DAO” chilled interest in explicitly for-profit DAOs for years to come. Not anymore, though.
For instance, in December 2019 the MetaCartel group unveiled MetaCartel Ventures, a new DAO that will be coupled real world limited liability company so that the decentralized organization can readily enter into legal contracts.
“If paired with relevant investing experience, we will be able to identify high value early opportunities that other investors are oblivious to,” the group’s creators said.
For-profit DAOs can take other shapes and sizes, too. Consider the example of Raid Guild, which is like an on-chain worker cooperative that deploys its specialists for raids, or gigs, as needed. The more work Raid Guild gets, the more its members get paid. Or consider MetaFactory, a fashion label crowdfunding platform that lets unique brands start their own DAOs. And these are just the firsts of many more to come, it would seem.
DAOs for Communities
Another interesting trend that’s been picking up steam around the Ethereum ecosystem lately is turning to DAOs to hand control of a project over from a team of builders to a wider community of stakeholders.
A textbook example played out last December when Parity Technologies, the team behind Ethereum’s popular Parity client, declared it was moving on from its maintenance of that client to focus more on its own in-house blockchain, Polkadot. To ensure the Parity client could live on, the company announced a plan to hand over maintenance duties to a new DAO dubbed OpenEthereum.
We’ve seen similar plans announced in other sectors, too. The Kyber Network, a DeFi liquidity aggregator dApp, recently unveiled KyberDAO, which will be used to govern important elements of the dApp, and the virtual world project Decentraland also just revealed its own community-led governance DAO.
DeFi ETFs? Welcome PieDAO
Crypto ETFs have proven elusive in the U.S. to date. But where mainstream finance is rigid and slow, DeFi is flexible and fast. Here, cue in PieDAO.
Indeed, one of the newest and most intriguing projects on the DeFi scene is PieDAO, which was recently introduced by Alessio Delmonti as an “asset allocation DAO for decentralized market-weighted portfolio allocations.”
In short then, PieDAO members will be able to able to coordinate and create ETF-like assets on Ethereum. And it’s yet another interesting example of what DAOs can do.
“With PieDAO, anyone can participate in the creation of a tokenized portfolio allocation which might include exposure to digital & traditional assets (via synthetic asset), we call these allocations PIEs,” Delmonti has explained.
New Experiments to Watch
Variety in the DAO sector is increasing as new innovators step to the plate with fresh ideas.
One project that’s doing something different and interesting at the intersection of DAOs and DeFi is Rocket, a lending project that offers Dai loans backed by non-fungible tokens (NFTs), also known as crypto collectibles. The project just dispensed its biggest loan to date — 20,000 Dai backed by 421 parcels of LAND, the virtual real estate of Decentraland — so it’s off to a hot start.
Another innovative project announced this year was MetaClan, the first eSports DAO. Its members earn loot from blockchain games like CryptoKitties, Axie Infinity, and Gods Unchained and share the ensuing proceeds together, and that’s all managed on-chain.
These are but two examples that show how DAOs can enable new kinds of enterprises that were never previously possible. Accordingly, expect a lot more experiments to bloom across the DAO scene in the years ahead.
