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How was this different from any other fund raiser? Some guys set up an LLC, raised funds and attempted to do something with the funds. They call it a DAO, but

by lottin 5y ago

How was this different from any other fund raiser? Some guys set up an LLC, raised funds and attempted to do something with the funds. They call it a DAO, but there's nothing 'decentralised' or 'autonomous' about it. It was a CO —centralised organisation— that managed the funds and placed the bid. And this is how it has to be if you intend to interact with anything else other than imaginary tokens on a blockchain, you need to be a legal person, which is antithetical to the idea of a DAO.

theplumber 5y ago
People could contribute "anonymously" without to go through banks and payment processors. Now eth fees are not that low and transfers not as fast as we want but if we can cut the middle man(banks) I think it's worth it(for some people).
- rvz 5y ago
  Not only that, They have to refund the ETH to everyone. (minus the high gas fees that were paid) It is perhaps due to the high gas fees with the ETH price volatility and showing the total amount funded publicly which costed them since they were unable to afford the additional auction costs. Perhaps better alternative blockchains that are designed to scale with very low transaction fees and support smart contracts with EVM compatibility, would have been better for this use case. Clearly Ethereum has let down the web3 crowd once again on this occasion. What a shame.
  - theplumber 5y ago
    Yes, but the banks are worse because they are run by bad people. ETH will only get better.
    - rvz 5y ago
      Never mentioned anything about 'the banks' but regardless, they are still around because everyone needs to eat and you can still pay for your groceries with your card linked to your bank account which payments provide very low transaction costs and it is still fast. Unlike Ethereum which it has gotten worse to use over time to the point that it is useless to pay for your groceries. Perhaps there are other blockchains that are better for both for setting up DAOs and paying for your food. Oh dear.
  - connorproctor 5y ago
    They don’t have to return the ETH, they agreed to return the ETH. 9 of 13 of the leaders of the (centralized) org have to agree to be able to move funds back to the people, there’s nothing technically forcing them to do so. Beside maybe a legal obligation that people would have to take them to court over to sort out, no better than a gofundme/kickstarter.
thisisbrians 5y ago
it was basically free to set up.
- deleted 5y ago
  [deleted]
- koboll 5y ago
  But very very expensive to contribute to.
berberous 5y ago
You are very short sighted. Yes, due to current laws and customs, they had to form an LLC as a workaround. But the laws will continue to adapt over time to support DAOs that don't need such workaround. From the great Daily Gwei newsletter: "To do this sort of capital formation in the traditional finance world, you’d have to use centralized payment processors (who would most likely censor you), it’d be extremely slow, the money raised would be much less and the raise itself would be very exclusionary. You also couldn’t create a DAO out of it and have it be governed by token holders - the traditional system is just not set up to do this in any practical way. ... In saying all of this, it’s not just the rapid capital formation aspect of DAOs that fascinate me - it’s also the rapid social coordination that can form around a common goal. It has a flywheel effect to it too: more capital raised > more social credibility/marketing the DAO obtains > more capital comes in because of that and so on and so forth. This is why ConstitutionDAO has gone from $0 to over $40 million in less than a week - this is really the true power of a global, decentralized and censorship-resistant internet-native economy - built on Ethereum and powered by humans." If you don't agree or see that this is qualitatively different from "any other fund raiser", I don't know what else to say. What other examples do you have of spinning up $40M in short order for something like this? It's a qualitative difference in speed, scale, decentralization, etc., that will continue to grow. This is just the start.
- arcticbull 5y ago
  I mean, where to even begin. > "To do this sort of capital formation in the traditional finance world, you’d have to use centralized payment processors..." Oh no. Anyways. > "... (who would most likely censor you) ..." Got any examples top of mind? I sure don't. Unless you're on the OFAC list which again, shrug. > "... it’d be extremely slow ..." Would it? Wires seem to be faster than Bitcoin by a country mile. Faster than ETH last time I ran one too, and with RTP and FedNow, that bar goes down further - should be as fast as Solana if not faster. > "... the money raised would be much less ..." Because it would be real money, not play money. Tokens are closer to frequent flyer miles in people's minds. > "... and the raise itself would be very exclusionary." If you mean "open to accredited investors" well, I'm ok with that. > "You also couldn’t create a DAO out of it and have it be governed by token holders - the traditional system is just not set up to do this in any practical way." You can't govern the same way via a set of non-binding twitter polls? Or like a SurveyMonkey thing?
a1371 5y ago
Because the cost of a contract initiation on a DAO is much less than that expensive lawyer you must hire to make that LLC a reality. Your LLC collects the funds but in exchange, you can't issue a security that easily. Selling shares to random online folk isn't easy either. But the most important thing is convincing people. DAOs are now an initiated concept. A centralized version of that needs to emerge again and find its stable model over many years, just like DAOs. This will hopefully happen.
- imustbeevil 5y ago
  Having a DAO doesn't eliminate the need for a lawyer. If you get sued over claims of ownership, the trial won't be taking place on the blockchain.

by lottin 5y ago

theplumber 5y ago

People could contribute "anonymously" without to go through banks and payment processors. Now eth fees are not that low and transfers not as fast as we want but if we can cut the middle man(banks) I think it's worth it(for some people).

rvz 5y ago
Not only that, They have to refund the ETH to everyone. (minus the high gas fees that were paid) It is perhaps due to the high gas fees with the ETH price volatility and showing the total amount funded publicly which costed them since they were unable to afford the additional auction costs. Perhaps better alternative blockchains that are designed to scale with very low transaction fees and support smart contracts with EVM compatibility, would have been better for this use case. Clearly Ethereum has let down the web3 crowd once again on this occasion. What a shame.
- theplumber 5y ago
  Yes, but the banks are worse because they are run by bad people. ETH will only get better.
  - rvz 5y ago
    Never mentioned anything about 'the banks' but regardless, they are still around because everyone needs to eat and you can still pay for your groceries with your card linked to your bank account which payments provide very low transaction costs and it is still fast. Unlike Ethereum which it has gotten worse to use over time to the point that it is useless to pay for your groceries. Perhaps there are other blockchains that are better for both for setting up DAOs and paying for your food. Oh dear.
- connorproctor 5y ago
  They don’t have to return the ETH, they agreed to return the ETH. 9 of 13 of the leaders of the (centralized) org have to agree to be able to move funds back to the people, there’s nothing technically forcing them to do so. Beside maybe a legal obligation that people would have to take them to court over to sort out, no better than a gofundme/kickstarter.

thisisbrians 5y ago

it was basically free to set up.

deleted 5y ago
[deleted]
koboll 5y ago
But very very expensive to contribute to.

berberous 5y ago

You are very short sighted. Yes, due to current laws and customs, they had to form an LLC as a workaround. But the laws will continue to adapt over time to support DAOs that don't need such workaround. From the great Daily Gwei newsletter: "To do this sort of capital formation in the traditional finance world, you’d have to use centralized payment processors (who would most likely censor you), it’d be extremely slow, the money raised would be much less and the raise itself would be very exclusionary. You also couldn’t create a DAO out of it and have it be governed by token holders - the traditional system is just not set up to do this in any practical way. ... In saying all of this, it’s not just the rapid capital formation aspect of DAOs that fascinate me - it’s also the rapid social coordination that can form around a common goal. It has a flywheel effect to it too: more capital raised > more social credibility/marketing the DAO obtains > more capital comes in because of that and so on and so forth. This is why ConstitutionDAO has gone from $0 to over $40 million in less than a week - this is really the true power of a global, decentralized and censorship-resistant internet-native economy - built on Ethereum and powered by humans." If you don't agree or see that this is qualitatively different from "any other fund raiser", I don't know what else to say. What other examples do you have of spinning up $40M in short order for something like this? It's a qualitative difference in speed, scale, decentralization, etc., that will continue to grow. This is just the start.

arcticbull 5y ago
I mean, where to even begin. > "To do this sort of capital formation in the traditional finance world, you’d have to use centralized payment processors..." Oh no. Anyways. > "... (who would most likely censor you) ..." Got any examples top of mind? I sure don't. Unless you're on the OFAC list which again, shrug. > "... it’d be extremely slow ..." Would it? Wires seem to be faster than Bitcoin by a country mile. Faster than ETH last time I ran one too, and with RTP and FedNow, that bar goes down further - should be as fast as Solana if not faster. > "... the money raised would be much less ..." Because it would be real money, not play money. Tokens are closer to frequent flyer miles in people's minds. > "... and the raise itself would be very exclusionary." If you mean "open to accredited investors" well, I'm ok with that. > "You also couldn’t create a DAO out of it and have it be governed by token holders - the traditional system is just not set up to do this in any practical way." You can't govern the same way via a set of non-binding twitter polls? Or like a SurveyMonkey thing?

a1371 5y ago

Because the cost of a contract initiation on a DAO is much less than that expensive lawyer you must hire to make that LLC a reality. Your LLC collects the funds but in exchange, you can't issue a security that easily. Selling shares to random online folk isn't easy either. But the most important thing is convincing people. DAOs are now an initiated concept. A centralized version of that needs to emerge again and find its stable model over many years, just like DAOs. This will hopefully happen.

imustbeevil 5y ago
Having a DAO doesn't eliminate the need for a lawyer. If you get sued over claims of ownership, the trial won't be taking place on the blockchain.