6 ms·

I do believe DAO's are one of the best parts of crypto so far...

by tough 5y ago

arcticbull 5y ago
ConstitutionDAO was literally a kickstarter. They handed out tokens that gave you no rights, no ownership, no voting - no nothing. Just tokens of appreciation. The people who collected the crypto deposits would have been the sole beneficial owners the constitution. Just a donation. Any DAO that wants to do anything of any meaningful complexity ends up registering as a Wyoming entity which isn't really any different than an LLC. DAOs are an attempt to separate the crypto nouveau riche from their tokens. You can achieve anything you want to from a DAO with a corporation plus a twitter poll or SurveyMonkey thing - except the issuance of unregistered blue-sky securities. Anyways, what's going to get really interesting is when we inevitably have see some legal challenges around this. I strongly suspect we'll see some personal liability materialize and this is going to take a lot of the fun out of this new grift.
- halpert 5y ago
  > You can achieve anything you want to from a DAO with a corporation plus a twitter poll or SurveyMonkey thing. How would accept money from thousands of people without being public? How would those ownership stakes be easily transferred?
  - arcticbull 5y ago
    DAO tokens do not convey ownership, so, a kickstarter campaign. If DAO tokens do convey some ownership interest, then they'd have to be registered as securities - which is why DAOs are very clear that you get nothing but their appreciation in exchange for the tokens. In which case you'd sell them the same way you sell any other securities. Reg A+ and Reg CF allow the sale of equity for crowdfunding contributions, btw. There are even some marketplaces that sprung up around them.
    - berberous 5y ago
      You are speaking categorically when that is not the case. If a DAO token is a security, it does need to be registered: it either needs to be registered or have available an exemption from registration. There are DAOs that try to fit within an exemption from registration. See the LAO, and it's offshoots, like Red DAO, Flamingo DAO, etc., which sell LLC interests to a limited number of accredited investors. [0] https://medium.com/openlawofficial/the-lao-a-for-profit-limited-liability-autonomous-organization-9eae89c9669c https://medium.com/openlawofficial/the-lao-a-for-profit-limi... [1] https://www.flamingodao.xyz/ https://www.flamingodao.xyz/
      - arcticbull 5y ago
        > There are DAOs that try to fit within an exemption from registration. See the LAO, and it's offshoots, like Red DAO, Flamingo DAO, etc., which sell LLC interests to a limited number of accredited investors. Ok, but that's just an LLC with extra steps no? If you're only accepting accredited investors then you're required to validate that they are accredited meaning that you have to pierce the veil of anonymity. It imposes legal control over the transfer of these tokens which means there's no reason whatsoever for them to be decentralized, permissionless and on the blockchain? Accredited investors were always welcome to buy whatever toxic garbage they wanted.
        berberous 5y ago
        I think you are treating DAOs as a single monolithic idea, when it is more like an infant design space. I would say the core idea of a DAO is this: how can we organize a disparate group of people around a common goal, more easily than in the past? Whether you think they are a joke or not, ConstitutionDAO, SpiceDAO (which I think is the worst example in this space given their lack of diligence or thought on IP issues), OrangeDAO, FlamingoDAO, etc., are all unique in that they have organized a disparate group of people more quickly than in the past, and enabled them to more efficiently work together towards a shared goal. There are many ideas being explored: 1. Can we have better laws (like Wyoming is exploring) or regulations? 2. If the DAO is decentralized enough, are the tokens still (or should they be) a security? Are there better ways to regulate something like this globally? 3. How do you coordinate a disparate group of people? How should you let in new entrants, or weight votes? How should a DAO manage its treasury? 4. What happens if all voting proposals are public and verifiable on the blockchain? Is that good or bad? At it's core, yes, I think you can say that a DAO is basically the idea of a corporation, except with most of the discussion on Discord and with on-chain voting, and plus some securities laws issues that are at best gray areas and at worst, in some cases, clear violations. But I think that is ignoring that something worthwhile might come out of that design space.
  - garrickvanburen 5y ago
    If you’re just asking about accepting money; PayPal, Stripe, Venmo, etc. To date: few DAOs are actually selling equity…more of a donation with a fancy membership / receipt. As equity requires a poking the veil of the DAO and setting up an LLC.
- berberous 5y ago
  This comment is no different than the following infamous comments 1. “No wireless. Less space than a Nomad. Lame”; from Slashdot, dismissing the new Apple iPod. 2. "For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software"; from HN, on the launch of Dropbox. Yes, DAOs may be similar to corporations mixed with a SuveyMoney, and the above comments also have some truth to them. But all three entirely miss the forest for the trees, and miss that there are qualitative changes that make the impact of the new version much greater. DAOs allow a disparate group of people to raise capital and execute towards a shared idea far faster and greater than was previously possible. That is a qualitative difference worth paying attention to. And while you are correct that the legal frameworks backing DAOs currently have many problems, that is something that will change. And for the HN skeptics, over 1,000 YC founders disagree with you: https://techcrunch.com/2022/01/24/hundreds-of-y-combinator-alumni-join-crypto-collective-to-back-web3-startups/ https://techcrunch.com/2022/01/24/hundreds-of-y-combinator-a...
  - arcticbull 5y ago
    Selling unregistered securities is not a new concept lol. It went unbelievably poorly last time we tried it which is why we stopped. It was a major contributor to the Great Depression. So my question to you is: what has changed since last time we tried this? Why am I to believe that "this time is different." [edit] Your suggestion that an idea cannot possibly be bad because 1000 startups are chasing it holds no water, it's an appeal to authority. Worse than appeal to authority: it's an appeal to the wisdom of crowds. Crowds of course are notorious for making great decisions. Hundreds of thousands of individual investors thought that sub-prime mortgage backed securities were a brilliant plan.
    - berberous 5y ago
      I don't see this conversation going anywhere productive, but do you not think anything has changed since the Great Depression? Your arguments can (and have been) those that applied to Uber or AirBnB; namely, that the only value they had was in skirting regulations, and that eventually the regulations catch up such that Uber or AirBnB is no better than the predecessor taxi and hotel industries. And I think there is certainly a lot of truth to that, but I also think this is normal human progress. As times change, we try something slightly different, and where old pain points arise again, we re-regulate accordingly. You are left with something that is indeed quite similar to the older industry, but with a fresh coat of pain and some improvements. You can dismiss that as entirely worthless, but I see it as normal and part of progress: two steps forward, one step back. Similarly, I think having financial regulations that were created in 1933 be static forever is a mistake. As technology progresses, there can be room for changes. So I see DAOs and crypto in a similar light: yes, certain actors violate existing laws, but there is a freedom to explore a new design space, and then the regulators will catch up and reign it back to something more reasonable. As for my link to OrangeDAO, it is not about 1,000 YC founders with Web3 startups, but 1,000 YC founders that are members of a DAO that seeks to invest and help other Web3 startups. As for what's different, my answer would be scale. DAOs make it easier to coordinate large groups of people. Take a look at what OrangeDAO seeks to fund: https://orangedao.notion.site/0516999b88534575bf759323f5e9fe81?v=89f6de7f9d3c4b7f97859da4890adfa3 https://orangedao.notion.site/0516999b88534575bf759323f5e9fe... Many of them are targeted towards corporate infrastructure; replacing traditional processes with software-first functions, which allow a lot of disparate people to function together more easily, and reduces the friction of "a group of people working together towards a common goal" from that of an existing corporation.
- ShamelessC 5y ago
  Apparently many ConstitutionDAO participants have been screwed because in order to get their money back they've had to pay transaction fees which exceed 200$. Quite the racket.
  - leppr 5y ago
    These transaction fees are determined dynamically by the Ethereum network depending on network usage, and given to Ethereum miners, not the particular dApp with which one interacts or their developers. Anyone using ETH would presumably have been aware about the enormous fees involved.
    - ShamelessC 5y ago
      That doesn't make it any less absurd/off-putting.
      - gjs278 5y ago
      - deleted 5y ago
        [deleted]
      - smorgusofborg 5y ago
        I think this potential conflict of interest for miners to push DAOs and then maybe for raised beurocracy in a DAO for more gas money and questions of whether a seller in some of these auctions realizes they should become a large holder in DAOs that might bid 100X the valuation of their asset are the kinds of conflicting interests that make this kind of system less practical than a legacy system where the structure for regulators to subpoena whatever they need is part of the licensing, etc.
      - leppr 5y ago
        A racket implies intentional malicious activity, which is the accusation I'm clearing up here.
mountainriver 5y ago
Yeah I agree, overall I’m bearish on crypto, but DOAs are a really interesting idea. Transparency is the next fight for the workers and ideas like this could prove very valuable
- cuteboy19 5y ago
  Most DAOs are indeed DOA

I do believe DAO's are one of the best parts of crypto so far...

by tough 5y ago

I do believe DAO's are one of the best parts of crypto so far...

ConstitutionDAO was literally a kickstarter. They handed out tokens that gave you no rights, no ownership, no voting - no nothing. Just tokens of appreciation. The people who collected the crypto deposits would have been the sole beneficial owners the constitution. Just a donation. Any DAO that wants to do anything of any meaningful complexity ends up registering as a Wyoming entity which isn't really any different than an LLC. DAOs are an attempt to separate the crypto nouveau riche from their tokens. You can achieve anything you want to from a DAO with a corporation plus a twitter poll or SurveyMonkey thing - except the issuance of unregistered blue-sky securities. Anyways, what's going to get really interesting is when we inevitably have see some legal challenges around this. I strongly suspect we'll see some personal liability materialize and this is going to take a lot of the fun out of this new grift.

halpert 5y ago
> You can achieve anything you want to from a DAO with a corporation plus a twitter poll or SurveyMonkey thing. How would accept money from thousands of people without being public? How would those ownership stakes be easily transferred?
- arcticbull 5y ago
  DAO tokens do not convey ownership, so, a kickstarter campaign. If DAO tokens do convey some ownership interest, then they'd have to be registered as securities - which is why DAOs are very clear that you get nothing but their appreciation in exchange for the tokens. In which case you'd sell them the same way you sell any other securities. Reg A+ and Reg CF allow the sale of equity for crowdfunding contributions, btw. There are even some marketplaces that sprung up around them.
  - berberous 5y ago
    You are speaking categorically when that is not the case. If a DAO token is a security, it does need to be registered: it either needs to be registered or have available an exemption from registration. There are DAOs that try to fit within an exemption from registration. See the LAO, and it's offshoots, like Red DAO, Flamingo DAO, etc., which sell LLC interests to a limited number of accredited investors. [0] https://medium.com/openlawofficial/the-lao-a-for-profit-limited-liability-autonomous-organization-9eae89c9669c https://medium.com/openlawofficial/the-lao-a-for-profit-limi... [1] https://www.flamingodao.xyz/ https://www.flamingodao.xyz/
    - arcticbull 5y ago
      > There are DAOs that try to fit within an exemption from registration. See the LAO, and it's offshoots, like Red DAO, Flamingo DAO, etc., which sell LLC interests to a limited number of accredited investors. Ok, but that's just an LLC with extra steps no? If you're only accepting accredited investors then you're required to validate that they are accredited meaning that you have to pierce the veil of anonymity. It imposes legal control over the transfer of these tokens which means there's no reason whatsoever for them to be decentralized, permissionless and on the blockchain? Accredited investors were always welcome to buy whatever toxic garbage they wanted.
      - berberous 5y ago
        I think you are treating DAOs as a single monolithic idea, when it is more like an infant design space. I would say the core idea of a DAO is this: how can we organize a disparate group of people around a common goal, more easily than in the past? Whether you think they are a joke or not, ConstitutionDAO, SpiceDAO (which I think is the worst example in this space given their lack of diligence or thought on IP issues), OrangeDAO, FlamingoDAO, etc., are all unique in that they have organized a disparate group of people more quickly than in the past, and enabled them to more efficiently work together towards a shared goal. There are many ideas being explored: 1. Can we have better laws (like Wyoming is exploring) or regulations? 2. If the DAO is decentralized enough, are the tokens still (or should they be) a security? Are there better ways to regulate something like this globally? 3. How do you coordinate a disparate group of people? How should you let in new entrants, or weight votes? How should a DAO manage its treasury? 4. What happens if all voting proposals are public and verifiable on the blockchain? Is that good or bad? At it's core, yes, I think you can say that a DAO is basically the idea of a corporation, except with most of the discussion on Discord and with on-chain voting, and plus some securities laws issues that are at best gray areas and at worst, in some cases, clear violations. But I think that is ignoring that something worthwhile might come out of that design space.
- garrickvanburen 5y ago
  If you’re just asking about accepting money; PayPal, Stripe, Venmo, etc. To date: few DAOs are actually selling equity…more of a donation with a fancy membership / receipt. As equity requires a poking the veil of the DAO and setting up an LLC.
berberous 5y ago
This comment is no different than the following infamous comments 1. “No wireless. Less space than a Nomad. Lame”; from Slashdot, dismissing the new Apple iPod. 2. "For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software"; from HN, on the launch of Dropbox. Yes, DAOs may be similar to corporations mixed with a SuveyMoney, and the above comments also have some truth to them. But all three entirely miss the forest for the trees, and miss that there are qualitative changes that make the impact of the new version much greater. DAOs allow a disparate group of people to raise capital and execute towards a shared idea far faster and greater than was previously possible. That is a qualitative difference worth paying attention to. And while you are correct that the legal frameworks backing DAOs currently have many problems, that is something that will change. And for the HN skeptics, over 1,000 YC founders disagree with you: https://techcrunch.com/2022/01/24/hundreds-of-y-combinator-alumni-join-crypto-collective-to-back-web3-startups/ https://techcrunch.com/2022/01/24/hundreds-of-y-combinator-a...
- arcticbull 5y ago
  Selling unregistered securities is not a new concept lol. It went unbelievably poorly last time we tried it which is why we stopped. It was a major contributor to the Great Depression. So my question to you is: what has changed since last time we tried this? Why am I to believe that "this time is different." [edit] Your suggestion that an idea cannot possibly be bad because 1000 startups are chasing it holds no water, it's an appeal to authority. Worse than appeal to authority: it's an appeal to the wisdom of crowds. Crowds of course are notorious for making great decisions. Hundreds of thousands of individual investors thought that sub-prime mortgage backed securities were a brilliant plan.
  - berberous 5y ago
    I don't see this conversation going anywhere productive, but do you not think anything has changed since the Great Depression? Your arguments can (and have been) those that applied to Uber or AirBnB; namely, that the only value they had was in skirting regulations, and that eventually the regulations catch up such that Uber or AirBnB is no better than the predecessor taxi and hotel industries. And I think there is certainly a lot of truth to that, but I also think this is normal human progress. As times change, we try something slightly different, and where old pain points arise again, we re-regulate accordingly. You are left with something that is indeed quite similar to the older industry, but with a fresh coat of pain and some improvements. You can dismiss that as entirely worthless, but I see it as normal and part of progress: two steps forward, one step back. Similarly, I think having financial regulations that were created in 1933 be static forever is a mistake. As technology progresses, there can be room for changes. So I see DAOs and crypto in a similar light: yes, certain actors violate existing laws, but there is a freedom to explore a new design space, and then the regulators will catch up and reign it back to something more reasonable. As for my link to OrangeDAO, it is not about 1,000 YC founders with Web3 startups, but 1,000 YC founders that are members of a DAO that seeks to invest and help other Web3 startups. As for what's different, my answer would be scale. DAOs make it easier to coordinate large groups of people. Take a look at what OrangeDAO seeks to fund: https://orangedao.notion.site/0516999b88534575bf759323f5e9fe81?v=89f6de7f9d3c4b7f97859da4890adfa3 https://orangedao.notion.site/0516999b88534575bf759323f5e9fe... Many of them are targeted towards corporate infrastructure; replacing traditional processes with software-first functions, which allow a lot of disparate people to function together more easily, and reduces the friction of "a group of people working together towards a common goal" from that of an existing corporation.
ShamelessC 5y ago
Apparently many ConstitutionDAO participants have been screwed because in order to get their money back they've had to pay transaction fees which exceed 200$. Quite the racket.
- leppr 5y ago
  These transaction fees are determined dynamically by the Ethereum network depending on network usage, and given to Ethereum miners, not the particular dApp with which one interacts or their developers. Anyone using ETH would presumably have been aware about the enormous fees involved.
  - ShamelessC 5y ago
    That doesn't make it any less absurd/off-putting.
    - gjs278 5y ago
    - deleted 5y ago
      [deleted]
    - smorgusofborg 5y ago
      I think this potential conflict of interest for miners to push DAOs and then maybe for raised beurocracy in a DAO for more gas money and questions of whether a seller in some of these auctions realizes they should become a large holder in DAOs that might bid 100X the valuation of their asset are the kinds of conflicting interests that make this kind of system less practical than a legacy system where the structure for regulators to subpoena whatever they need is part of the licensing, etc.
    - leppr 5y ago
      A racket implies intentional malicious activity, which is the accusation I'm clearing up here.

mountainriver 5y ago

Yeah I agree, overall I’m bearish on crypto, but DOAs are a really interesting idea. Transparency is the next fight for the workers and ideas like this could prove very valuable

cuteboy19 5y ago
Most DAOs are indeed DOA