There is No Central Authority, Only DAO
While DeFi is definitely a boiling pot and the Web3 go-to use case right now, a paradigm shift created by the whole decentralized movement led to research and experiments in other domains. One of the questions was: if we are about to build a truly decentralized network of independent agents, how would it work in reacting to change and external stimuli? Sounds complex? Let’s break it down with some examples.
Several groups of people emerge around any network:
- Users: those who actually use it for the value it provides, inside this group, there are usually several subgroups. Some users just come and go, while others stay, accumulate value, and are more engaged in the various activities around the network.
- Maintainers: much fewer than the first group their job is to keep the network operational (think miners).
- Builders: a network usually goes with a toolbox and an ecosystem, so there are plenty of people building some additional functionality and apps (games, wallets, swaps, exchanges — you name it).
- Developers: the creators of the original protocol and ecosystem tools. After the network launches, they tend to stick around and keep making stuff, or improving the thing altogether.
- Then there are also the haters, but we won’t be wasting any of our time on them.
The Ethereum ecosystem has all of those groups. Its builders even build additional protocols and sidechains (Polygon is a great example). There are several challenges these groups have to solve because each of them has its own agenda and goals, sometimes they align, but most of the time they don’t.
For example, users obviously want a better experience, and fast transactions with lower fees, which developers and builders are willing to provide tools for, yet they come with some tradeoffs they’d have to solve. Some developers would be more concerned with building the next thing, than improving the existing ones, also almost all of them would agree that having money to build things is great, that means the services provided by the network can’t be free.
Unfortunately, we can’t make everyone equally happy (haters don’t get that) so we have to make decisions like: how do we determine the size of fees? What should be the compensation for miners? Some of them consider aspects like social equality: do we introduce a cap on how many tokens one can have to prevent them hoarding all for themselves in order to manipulate the crypto economy of the network (economy solves this by progressive taxation rates)?
Moreover, the ecosystem is never a thing on its own. It exists in a multiverse of other ecosystems. Things happen in geopolitics, world economies, technology — should a network react to that and if yet, then how? Ultimately, who makes the final decision? Should we trust it with one particular group?
Seems fair if that should be the users, but then the builders, maintainers, and developers will have no control over their own thing. If only the original builders have their say — then there’s a centralized authority regulating a decentralized network.
In an attempt to fix all of these at once in a true Web3 way, the concept of DAOs had been born. Decentralized Autonomous Organisations are true to the spirit of democracy, they provide toolsets and mechanisms that allow multiple groups with different goals to reach a consensus and deliver a common solution that would (in an ideal scenario) benefit all.
There are different approaches to the concept of DAO, how it should work, which tools it should have, and how exactly it should work. If you’re about to jump into the rabbit hole of DAOs, try googling DAO Canon and Primers, and researching some of the most popular ones.
The beautiful thing is that it works on multiple levels: a network could operate as DAO (all groups have their say in what changes should be introduced into the network), a team of developers (everyone has a vote on what to build next), a group of investors (deciding where to put their money using DAO mechanisms).
Super Protocol will also operate as DAO — you can read more about how we’re planning to govern it here