6 ms·

I don't see this often discussed, but the DAO always seemed pretty shady, even prior to the hack. This was a system meant to function as an autonomous investmen

I don't see this often discussed, but the DAO always seemed pretty shady, even prior to the hack. This was a system meant to function as an autonomous investment platform, but I couldn't find any details that explained exactly how the recipients of the investment funds were meant to be held accountable for the money they received. Ultimately, the eth would have needed to be cashed out into spendable money so that the business could pay for expenses and grow the company, but an eth contract is incapable of forcing the company to put fiat money back into the DAO and it's not a stretch to imagine a situation where the recipients do not agree to use the money in a fashion that is entirely inline with the intent of the investors or even fulfill any of the obligations stipulated as conditions of the investment. This was a scam waiting to happen even if the contract did function as intended by the authors.

will_brown 10y ago
>This was a scam waiting to happen even if the contract did function as intended by the authors. I have said this from the beginning. From a purely logical point as a potential investor, you should ask yourself, why would an autonomous investment platform (borrowing your phrasing) require all the funds up front? In other words, look at kickstarter/gofund me, how skeptical would everyone have been if they asked for investors money before there was even an investment opportunity? Even with the fork, I think they should have returned everyone's money to them, and allow them to buy membership/voting right to the DAO for a nominal fee that would allow them to invest in future investment opportunities.
- vectorpush 10y ago
  Indeed. It seems to me that the only concern was building hype for the DAO (in order to solicit further investments) and ethereum in general. I kept seeing claims about how smart contracts would enable autonomous corporations to pay employees and run factories and other clearly impossible things, everyone was so excited about the possibilities that nobody sat down to critically examine what is actually possible.
EdHominem 10y ago
That wasn't insurmountable. First, most people thought of small kickstarter projects where social pressure would be enough and if the contract lost a few k$ here and there it wouldn't matter. But the ultimate answer is that the company receiving the money could be bound by their country's law to do whatever they said they'd do. Presumably people would only vote to give them large amounts if they were accountable.
- vectorpush 10y ago
  Right... that's precisely my point. The smart contract aspect adds no value to the arrangement, all it does is increase complexity and add the risk of stolen funds.
  - EdHominem 10y ago
    Meat-space is no guarantee of contract-performance. It replaces one set of risks with another. There's risks of theft and mismanagement of funds in crowd-funding companies. Payment has risk - Paypal has frozen and seized many individual and project accounts, credit card companies are forbidden to let you donate to Wikileaks, etc. And hackers could still steal or burn some or all funds. And there's essentially no useful recourse here either. Sometimes the courts get revenge for us, but we're still usually out of pocket. And a smart-contract with shares would offer a ton of features "for free". People could transfer ownership of their support (and the perk it represents), for example. And users could have total control of their promised funds until each phase comes due, via an escrow with an agent they trust. As many people have noted, there was no need to pre-fund a crowd-funding site - it was just a novelty that people got silly with. A serious cloud-funding site could be a separate contract for each project. Without a single fat target and without any of the split-the-contract complexity. This DAO bug-bounty is encouraging simple contracts more amenable to proof.
    - vectorpush 10y ago
      >Meat-space is no guarantee of contract-performance. It replaces one set of risks with another. This is a false equivalency. "Meat-space" contracts aren't executable programs that can unexpectedly, anonymously, and irreversibly drain your bank account of 100 million dollars based on a legal technicality. In "meat-space" the legal system would have very easily halted this insanity instead of forking the entire banking system to evade the consequences of a single agreement. Smart contracts provided no benefit but severe consequences when the risks materialized. There's risks of theft and mismanagement of funds in crowd-funding companies. This is another false equivalency, "theft and mismanagement" is always a risk when you're lending people money, that's not the problem; the issue is smart contracts which add the additional risk of random hackers stealing all your money with impunity, a risk not present in "meat-space". >* Paypal has frozen and seized many individual and project accounts* Irrelevant. > credit card companies are forbidden to let you donate to Wikileaks Irrelevant. > And hackers could still steal or burn some or all funds. And there's essentially no useful recourse here either. Sometimes the courts get revenge for us, but we're still usually out of pocket. This is totally wrong. That kind of thing just doesn't happen. If a hacker steals your money the bank has an obligation to make you whole and the courts will absolutely see to it that you are made whole, especially if we're talking about hundreds of millions of dollars. > And a smart-contract with shares would offer a ton of features "for free". People could transfer ownership of their support (and the perk it represents), for example. And users could have total control of their promised funds until each phase comes due, via an escrow with an agent they trust. I've already explained why it's not "for free", but you haven't demonstrated "tons of features". Escrows and agents already existed long before smart contracts, so that's not a useful feature. The bottom line is, smart contracts are an absurdly complex solution looking for a problem, of which some probably exist, but the DAO was not an example of one.

will_brown 10y ago

>This was a scam waiting to happen even if the contract did function as intended by the authors. I have said this from the beginning. From a purely logical point as a potential investor, you should ask yourself, why would an autonomous investment platform (borrowing your phrasing) require all the funds up front? In other words, look at kickstarter/gofund me, how skeptical would everyone have been if they asked for investors money before there was even an investment opportunity? Even with the fork, I think they should have returned everyone's money to them, and allow them to buy membership/voting right to the DAO for a nominal fee that would allow them to invest in future investment opportunities.

vectorpush 10y ago
Indeed. It seems to me that the only concern was building hype for the DAO (in order to solicit further investments) and ethereum in general. I kept seeing claims about how smart contracts would enable autonomous corporations to pay employees and run factories and other clearly impossible things, everyone was so excited about the possibilities that nobody sat down to critically examine what is actually possible.

EdHominem 10y ago

That wasn't insurmountable. First, most people thought of small kickstarter projects where social pressure would be enough and if the contract lost a few k$ here and there it wouldn't matter. But the ultimate answer is that the company receiving the money could be bound by their country's law to do whatever they said they'd do. Presumably people would only vote to give them large amounts if they were accountable.

vectorpush 10y ago
Right... that's precisely my point. The smart contract aspect adds no value to the arrangement, all it does is increase complexity and add the risk of stolen funds.
- EdHominem 10y ago
  Meat-space is no guarantee of contract-performance. It replaces one set of risks with another. There's risks of theft and mismanagement of funds in crowd-funding companies. Payment has risk - Paypal has frozen and seized many individual and project accounts, credit card companies are forbidden to let you donate to Wikileaks, etc. And hackers could still steal or burn some or all funds. And there's essentially no useful recourse here either. Sometimes the courts get revenge for us, but we're still usually out of pocket. And a smart-contract with shares would offer a ton of features "for free". People could transfer ownership of their support (and the perk it represents), for example. And users could have total control of their promised funds until each phase comes due, via an escrow with an agent they trust. As many people have noted, there was no need to pre-fund a crowd-funding site - it was just a novelty that people got silly with. A serious cloud-funding site could be a separate contract for each project. Without a single fat target and without any of the split-the-contract complexity. This DAO bug-bounty is encouraging simple contracts more amenable to proof.
  - vectorpush 10y ago
    >Meat-space is no guarantee of contract-performance. It replaces one set of risks with another. This is a false equivalency. "Meat-space" contracts aren't executable programs that can unexpectedly, anonymously, and irreversibly drain your bank account of 100 million dollars based on a legal technicality. In "meat-space" the legal system would have very easily halted this insanity instead of forking the entire banking system to evade the consequences of a single agreement. Smart contracts provided no benefit but severe consequences when the risks materialized. There's risks of theft and mismanagement of funds in crowd-funding companies. This is another false equivalency, "theft and mismanagement" is always a risk when you're lending people money, that's not the problem; the issue is smart contracts which add the additional risk of random hackers stealing all your money with impunity, a risk not present in "meat-space". >* Paypal has frozen and seized many individual and project accounts* Irrelevant. > credit card companies are forbidden to let you donate to Wikileaks Irrelevant. > And hackers could still steal or burn some or all funds. And there's essentially no useful recourse here either. Sometimes the courts get revenge for us, but we're still usually out of pocket. This is totally wrong. That kind of thing just doesn't happen. If a hacker steals your money the bank has an obligation to make you whole and the courts will absolutely see to it that you are made whole, especially if we're talking about hundreds of millions of dollars. > And a smart-contract with shares would offer a ton of features "for free". People could transfer ownership of their support (and the perk it represents), for example. And users could have total control of their promised funds until each phase comes due, via an escrow with an agent they trust. I've already explained why it's not "for free", but you haven't demonstrated "tons of features". Escrows and agents already existed long before smart contracts, so that's not a useful feature. The bottom line is, smart contracts are an absurdly complex solution looking for a problem, of which some probably exist, but the DAO was not an example of one.