Web3 & DAOs
Introduction
Separating Hype from Substance:
“The good news is, the underlying protocols can be used for so much more. It is not an exaggeration to say that they can revolutionize some of the biggest industries in the world.”
https://medium.com/swlh/what-web3-is-and-what-web3-is-not-my-trip-down-the-rabbit-hole-78bf84f4f546
Looking beyond NFTs and Bitcoin
Beyond media attention and rampant fraud, what is the substance of blockchain technology? Looking at Web3
Who is building Web3?
“If we take a look at the web 3.0 ecosystem and the different people building it we get a funky mix between blockchain evangelists and activists. There are old school crypto anarchists, as well as investors, bankers, libertarians, founders, artists, NGOs and activists”
https://medium.com/hackernoon/how-the-utopian-vision-of-web-3-0-clashes-with-reality-60a8dfb2fb3b
IMPORTANT
Understanding how different dynamics drive the development of web3 (big tech, VC capital, speculation and idealism), how diverse the motivations of the developers are and how the visions of web3 are often conflicting.
This important to contextualize the work of Lorenzo and Akasha team, since they are actively fighting for the community not to repeat the same mistakes with Web3 as with Web2.
Below some examples of Web3 critique to set context:
Can Web3 change the system without changing the existing economic system? Opinions:
In fact, when the whole logic of the economy revolves around the needs of capital, it's those very needs that exercise the gravitational pull that turns these numerous seemingly emancipatory decentralized platforms into invisible enforces of the hyper-capitalist project. 3/5
— Evgeny Morozov (@evgenymorozov) January 24, 2022
On existing implementations. Can Web3 actually distribute trust? Opinions:
We should accept the premise that people will not run their own servers by designing systems that can distribute trust without having to distribute infrastructure. This means architecture that anticipates and accepts the inevitable outcome of relatively centralized client/server relationships, but uses cryptography (rather than infrastructure) to distribute trust. One of the surprising things to me about web3, despite being built on “crypto,” is how little cryptography seems to be involved! […] We should try to reduce the burden of building software. At this point, software projects require an enormous amount of human effort. […] I think changing our relationship to technology will probably require making software easier to create, but in my lifetime I’ve seen the opposite come to pass. Moxie Marlinspike, Signal founder
https://moxie.org/2022/01/07/web3-first-impressions.html
Collaboration: Historical and social context
Dunbar Scale Social Circles
“If you live in a hunter-gatherer band, you probably won’t hit this limit. Your social circle is a few dozen people, so you can easily keep track of who’s kind, who’s generous, who cheats, who steals, who shares their food. A repeated game. Webs of trust form organically. You scratch my back, I’ll scratch yours. These reputations get shared through gossip, and the result is a high-trust context, where people can cooperate without really thinking about it.
Beyond 150, you start to run into problems. You can’t keep track of all the players, so free-riders get away with it. Sociopathic behaviors become personally advantageous. This isn’t just true for hunter-gatherers. We see it in contemporary communities, too.”
https://subconscious.substack.com/p/dunbar-scale-social?s=r
We have evolved our social systems to enable collaboration beyond our small-scale tribes. But it has been a messy process and it came at the price of centralizing power. (Notes from Chris M.)
Explicit and implicit contracts in society
“Though the sovereign’s edicts may well be arbitrary and tyrannical, Hobbes saw absolute government as the only alternative to the terrifying anarchy of a state of nature.”"
https://en.wikipedia.org/wiki/Social_contract
Centralized power was historically needed as a way to ensure collaboration beyond the Dunbar-scale. Vertical hierarchies were necessary to ensure mutual trust. This included banks, judges and police, backed by governments, currencies and, ultimately, military power. Through this, a contract with a stranger could be enforced or persecuted if breached. Supported by a shared framework of narratives around nations, culture, religion and law, this enabled collaboration to scale to the size of empires.
Can decentralized enable anonymous collaboration at scale without a central authority?
Blockchain: The Technical Foundations
How distributed ledgers work? (Video)
https://www.euromoney.com/learning/blockchain-explained/how-transactions-get-into-the-blockchain
What do all these things mean? “Nodes, Wallets, Tokens, Transactions, Blocks and Blockchain”
https://consensys.net/knowledge-base/a-blockchain-glossary-for-beginners/
Simplistic analogies to get started:
- Wallets > Bank accounts
- Tokens > Money
- Blockchain > the bank’s big excel chart, etc…
Blockchain generations: 1st, 2nd and 3rd
“First-gen blockchains are designed to improve the financial systems in place by offering a decentralized monetary platform that puts the control back in the hands of the people. Second-gen blockchains add a layer of “conditions” to transactions so that people can agree on terms in smart contracts rather than relying on intermediaries. Third-gen blockchains aim to resolve fundamental flaws including scalability and interoperability which means blockchain can sustain mass adoption and not suffer problems like slow transaction time and closed systems.”
https://www.ledger.com/academy/blockchain/web-3-the-three-blockchain-generations
“Contextualizing Bitcoin, Ethereum and other blockchains in the crypto ecosystem, each one with their own challenges. While Bitcoin is widely adopted, even by traditional financial institutions, it has severe limitations in scalability and capability. Ethereum is working hard to address both problems with a very active developer community, but is not as widely adopted. 3rd generation protocols, such as Cardano, are aiming strike an optimal balance between security, speed and functionality, but are just ramping up to relevant adoption rates.” (Notes from Chris M)
How do Smart Contracts work?
“With conventional contracts, a document outlines the terms of a relationship between two parties, which is enforceable by law. If one Party A violates the terms, Party B can take Party A to court for not complying with the agreement. A smart contract fortifies such agreements in code so the rules are automatically enforced without courts (or any third party) getting involved.”
https://www.coindesk.com/learn/how-do-ethereum-smart-contracts-work/
“When we think back to how explicit and implicit contracts govern almost everything around us, we can image that smart contracts can be used for much more than just sending money. For example, they can be used to vote, to lend money, to exchange services and to organize groups of people, so-called DAOs.”"
DAOs: Implementations and Implications
Fundamentals
“These smart contracts establish the DAO’s rules. Those with a stake in a DAO then get voting rights and may influence how the organization operates by deciding on or creating new governance proposals. This model prevents DAOs from being spammed with proposals: A proposal will only pass once the majority of stakeholders approve it. How that majority is determined varies from DAO to DAO and is specified in the smart contracts. DAOs are fully autonomous and transparent. As they are built on open-source blockchains, anyone can view their code. Anyone can also audit their built-in treasuries, as the blockchain records all financial transactions.”"
From DAO to DAA
Decentralized Autonomous Association, Making DAOs legal in Switzerland:
“DAA experiment on Ethereum has uniquely merged technology and law to create and run organizations which are both, decentralized and legally compliant”
https://www.mme.ch/en/magazine/articles/decentralized-autonomous-association-daa
Understanding the implementation.
What a token? A token as more than a store of monetary value: voting, participation and staking
Entry-level example: Running an anonymous art collector group
Evolving Implementations: Running digital companies:
https://coopahtroopa.mirror.xyz/_EDyn4cs9tDoOxNGZLfKL7JjLo5rGkkEfRa_a-6VEWw
https://banklessdao.substack.com/p/state-of-the-daos-3-overview-of-the?s=r
In theory: Understanding the scalability. Running a full administration:
https://medium.com/@Borderless/decentralized-autonomous-organization-dao-the-future-of-governments-4417622db76c
OPEN TOPICS
- Reimagining the definition of “value” for society
- Highlighting also the dangers and pitfalls, educating critical thinking.
Photo by Phoenix Han on Unsplash