UK tech startup “Aragon” is bridging the gap between cryptocurrency Etheriums “DAO” and mainstream business with user friendly interface.
In 2015 the developers of Etherium, the second largest crypto-currency on the planet asked a simple question: If currency can be decentralized on the Blockchain, why not the entire administrative structure? If we can do away with expensive bureaucracy and somehow program an entire business to carry out the same mundane actions, than what are we waiting for? All this can be done faster, for less cost with decentralised applications which also means less barriers to entry for the burgeoning entrepreneur.
They proposed that a “Decentralized Autonomous Organization” (DAO) could be entirely automated, composed of the same code that made the Blockchain possible. They claim that an amorphous interlocking matrix of “Smart Contracts” governed by the democratic “chiming in” of a shareholder structure is more efficient than an immutable hierarchy. Proponents argue that this could solve a lot of concerns regarding abuse in power as well as free up resources for development and innovation. This is of course part and parcel to why Etheriums DAO campaign was the most successful crowdfunder in history.
With Decentralized Autonomous Organizations (DAOs) there’s no need for a physical “headquarters”. In the future they propose that a machine connected to one of these online “smart contracts” could take stock of its own supplies, relay the information to shareholders and even order its own repairs, eliminating the need for some sort of dispatch center. Imagine for example if Uber was a DAO. Every Uber driver could potentially own shares and vote on the direction of the company with a tap of their finger.
One can easily grasp how this technology may also come to influence any system where objective democracy is a vital and crucial element to successful operation. This is most certainly the case with national elections. As DAOs become more secure and reliable we may see their adoption by governments as well.
This all sounds great and with so many lucrative advantages one can’t help but ask why it hasn’t already been done. What is preventing Aethers Decentralized Autonomous Organization from breaking on to the scene? Well, open source also comes with disadvantages, as was demonstrated by the famous Etherium hack. Secondly, you still need to understand a bit of code in order to operate smart contracts or work in a DAO, alienating a large portion of potential adherents.
Enter Aragon, a visionary UK startup founded by Forbes “Best 30 under 30” tech entrepeneur Luis Cuende. This company first made headlines after it managed to raise a whopping 25 million dollars in just the first 15 minutes of their “initial coin offering”. Describing the company in his opening statement Luis contends that a lot of problems in the world can be attributed to obsolete management structures and that by decentralising ownership much of the controversy over abuse in power can be resolved.
“Much of the Etherium philosophy has been “grandfathered” in to Aragons user interface and Aragon itself IS a DAO. This can confuse a lot of people at the start but in a sense they have simply positioned themselves as a more user friendly conduit through which DAOs can interact with the Etherium network. What separates this from the traditional business hierarchy is the more easily navigable ERC-20 system that allows seamless exchange of a DAOs tokens for Etherium and vice versa. This is of course in stark contrast to expensive exchange rates and whatever exorbitant fees are change by your stock broker.
Luis has identified two main hurdles that we have to overcome before the Decentralized Autonomous Organization can reach it’s full potential. As mentioned earlier, the first was a way to resolve a subjective breach in contract. Humans are fallible and so to is their ability to get along all the time. Some form of accountability must be set in place in order to resolve disagreements over a particular smart contract. In other words, members of a DAO need another way to make amends aside from simply “forking” their code in to another DAO, which can be destructive for both sides.
The other obstacle he identified was the need for a way to upgrade smart contracts without necessarily understanding code – the necessity of which is obvious. This is of course what sets Aragon apart from Etherium. Where Etherium laid the ground work for Decentralized Autonomous Organizations using interlocking coded smart contracts Aragon is “humanizing” the system by providing a decentralized court and coherent user interface to allow for the easy allocation of shares and payment. The following graphic is a good example of exactly how Aragon works.
Finally, it is important to note that DAOs are not entirely “de-centralized”, just more so than their beurocratic peers. Indeed, founders still hold most of the power as they can ascribe shares and decide just how democratic an organisation is. However, ownership is transferable and if a founder wants to raise funds for the organisation they will need to sacrifice some ownership. Furthermore, since democratic proposals still operate through an internal token economy it means that some people hold more may sway than others. In a sense Aragon is simply a more efficient and direct, less wasteful version of the economy with more potential for democracy if so desired.