What is a DAO?

A DAO is a “Decentralized Autonomous Organization” or at least that is what it stands for. However, almost no “DAOs” are decentralized and autonomous, and if you visit the Discords you would be hard pressed to even find any organization.

This is of course not to say that the idea of a DAO is without value. If you intend to govern a protocol that intends to change, and you want to also claim that protocol is decentralized, then you need some credibly decentralized way to organize the efforts around those changes.

However, most of these are not that. Consider for example the notorious ConstitutionDAO (which I discussed on Crypto Critics’ Corner) was in no meaningful way decentralized. There was a Delaware corporation and a few people on a multi-signature wallet. It was in no meaningful way autonomous, with a group of individuals controlling a single wallet, going to bid, and then hopefully getting the Constitution (important note donors [yes they were donations] in no way shape or form owned or controlled the purchased Constitution), and returning the Constitution to the corporation. They raised tens of millions of dollars, despite marketing themselves with what is fundamentally a lie.

There are numerous DAOs just like this! Glorified crowdfunding that in no way can be described as decentralized or autonomous, and yet they continue to proliferate. There’s ones to buy an island, a golf club, and even a copy of the Dune Bible. That last one thought buying the book gave them the rights to make a TV show, which obviously it does not.

Even the ones that are meant to govern supposedly ‘decentralized’ finance protocols, will often amount to voting and a multi-sig of key team members who you hope will follow the votes of the community.

So while a DAO should be a “Decentralized Autonomous Organization” more often that not it’s a Discord server and a multi-sig. If you’re lucky then there’s no scammers on the multi-sig, but counting on that would be imprudent.

Every time you call something that’s not decentralized and autonomous a DAO you are lying.

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