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The DAO


rkbabang
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Anyone here heard of a DAO?  It stands for Decentralized Autonomous Organization.  The ownership model is basically that tokens are sold to seed the DAO with money, then the token holders own equity in the organization in proportion to the number of tokens they own.  The tokens themselves can be traded.  This is all done with smart contracts on the Ethereum blockchain, so tokens can be traded as easily as Ether or Bitcoin.  One of these DAO organizations calling itself "The DAO" (https://daohub.org/index.html) has already raised over $35M and the initial offering isn't over yet.  I spent 10 Ether (<$100) to buy 1000 tokens just to participate and see how this all is going to work.

 

Arcade City is also planning on setting up a DOA with a token sale in the 4Q 2016.  Arcade City is planning to be an Uber killer by using a completely decentralized model and has already received $2M in traditional venture funding. Since the drivers are acting on their own there will be no central company for cities to go after to shut them out as the cities try to protect their taxi cab cartels.

 

Anyway I read through the whitepaper here, it is an interesting concept with a different ownership model than we are used to: https://download.slock.it/public/DAO/WhitePaper.pdf

 

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I heard about Arcade City but it seems it's probably a fraud because it's founder is allegedly a con man who has a very shady past:

 

http://www.ripoffreport.com/r/christopher-david-for-congress-2012/los-angeles-california-90048/christopher-david-for-congress-2012-christopher-david-christopher-pille-christopher-raf-1111779

 

Thanks for the info. I don't know anything about him, other than what I've come across researching the DAO concept and Arcade City.  Also that post on that website isn't exactly hard evidence against him either, but troubling if it is true.  I wonder if the guy ever sued him.  Also, I wonder who gave Arcade City $2M.

 

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Anyone here heard of a DAO?  It stands for Decentralized Autonomous Organization.  The ownership model is basically that tokens are sold to seed the DAO with money, then the token holders own equity in the organization in proportion to the number of tokens they own.  The tokens themselves can be traded.  This is all done with smart contracts on the Ethereum blockchain, so tokens can be traded as easily as Ether or Bitcoin.  One of these DAO organizations calling itself "The DAO" (https://daohub.org/index.html) has already raised over $35M and the initial offering isn't over yet.  I spent 10 Ether (<$100) to buy 1000 tokens just to participate and see how this all is going to work.

 

Arcade City is also planning on setting up a DOA with a token sale in the 4Q 2016.  Arcade City is planning to be an Uber killer by using a completely decentralized model and has already received $2M in traditional venture funding. Since the drivers are acting on their own there will be no central company for cities to go after to shut them out as the cities try to protect their taxi cab cartels.

 

Anyway I read through the whitepaper here, it is an interesting concept with a different ownership model than we are used to: https://download.slock.it/public/DAO/WhitePaper.pdf

 

Last time I used tokens was in 1994 in a arcade.  I exchanged cash for there arcade tokens. I was 11 years old and I kept using cash to exchange for tokens. I kept playing until I got  hungry so I went down to a place were they sold wing dings ( mini chicken wings).  I had no cash left. Only tokens.  I tried to pay in tokens I got denied. I realized then tokens only had value in the arcade ecosystem. I was sad I couldn't buy wings with tokens.

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Anyone here heard of a DAO?  It stands for Decentralized Autonomous Organization.  The ownership model is basically that tokens are sold to seed the DAO with money, then the token holders own equity in the organization in proportion to the number of tokens they own.  The tokens themselves can be traded.  This is all done with smart contracts on the Ethereum blockchain, so tokens can be traded as easily as Ether or Bitcoin.  One of these DAO organizations calling itself "The DAO" (https://daohub.org/index.html) has already raised over $35M and the initial offering isn't over yet.  I spent 10 Ether (<$100) to buy 1000 tokens just to participate and see how this all is going to work.

 

Arcade City is also planning on setting up a DOA with a token sale in the 4Q 2016.  Arcade City is planning to be an Uber killer by using a completely decentralized model and has already received $2M in traditional venture funding. Since the drivers are acting on their own there will be no central company for cities to go after to shut them out as the cities try to protect their taxi cab cartels.

 

Anyway I read through the whitepaper here, it is an interesting concept with a different ownership model than we are used to: https://download.slock.it/public/DAO/WhitePaper.pdf

 

Last time I used tokens was in 1994 in a arcade.  I exchanged cash for there arcade tokens. I was 11 years old and I kept using cash to exchange for tokens. I kept playing until I got  hungry so I went down to a place were they sold wing dings ( mini chicken wings).  I had no cash left. Only tokens.  I tried to pay in tokens I got denied. I realized then tokens only had value in the arcade ecosystem. I was sad I couldn't buy wings with tokens.

 

Should they have called it "shares" rather than "tokens"?  I still use tokens all the time when programming.  Yes that is a different type of token, but so is your example.

 

EDIT:  Come to think of it, "token" from a programming perspective is exactly what the DAO tokens are.

 

 

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http://www.bloomberg.com/view/articles/2016-05-17/blockchain-company-wants-to-reinvent-companies

 

Levine makes a good point. This is, essentially, a general partnership.

 

There's generally a reason that capital allocation decisions are made by a select group of people - generally the experts in their field. Crowdsourcing allocation decisions seems...suboptimal.

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http://www.bloomberg.com/view/articles/2016-05-17/blockchain-company-wants-to-reinvent-companies

 

Levine makes a good point. This is, essentially, a general partnership.

 

There's generally a reason that capital allocation decisions are made by a select group of people - generally the experts in their field. Crowdsourcing allocation decisions seems...suboptimal.

 

That is the largest danger for sure.  The things that make it interesting is that it isn't a democracy.  Your vote is weighted by your shares, so those with the most to lose(or gain) have the most say.  Also, as the article you posted points out, the contracts are written not in English, but in computer code (Solidity) and executed on the Ethereum blockchain. This will hopefully weed out unintelligent people from investing heavily and having a heavily weighted vote.  Having a  large amount of coders holding tokens, The DAO will be in a good position to invest in code heavy projects/companies.  The danger is that it veers off of its circle of competence and invests in different types of companies as well.  This is either going to work fabulously or crash and burn fairly quickly.

 

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That is the largest danger for sure.  The things that make it interesting is that it isn't a democracy.  Your vote is weighted by your shares, so those with the most to lose(or gain) have the most say.  Also, as the article you posted points out, the contracts are written not in English, but in computer code (Solidity) and executed on the Ethereum blockchain. This will hopefully weed out unintelligent people from investing heavily and having a heavily weighted vote.  Having a  large amount of coders holding tokens, The DAO will be in a good position to invest in code heavy projects/companies.  The danger is that it veers off of its circle of competence and invests in different types of companies as well.  This is either going to work fabulously or crash and burn fairly quickly.

 

I think there are a lot of fallacies in these assumptions.  Just because someone is able to read the code doesn't necessarily mean that they're intelligent. And even if they are able to read the code AND they are intelligent, it doesn't necessarily mean that they're able to make optimal capital allocation decisions.

 

Similarly, if someone has a very high % ownership it means they exert undue influence over the decisionmaking process - but just because they have a high % of ownership doesn't necessarily mean that they're able to make the right decisions.

 

Eh. I mean the concept is interesting. But (IMO), I'd consider it burned money to "invest" in one of these. Way too many unknowns.

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+1 on what glorysk87 said.

 

I know too many programmers who are intelligent and can read code, but can't make good investment decisions for the life of them.

 

And that's also assuming that you don't get majority that votes to funnel money into related party corps - which is very likely.

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That is the largest danger for sure.  The things that make it interesting is that it isn't a democracy.  Your vote is weighted by your shares, so those with the most to lose(or gain) have the most say.  Also, as the article you posted points out, the contracts are written not in English, but in computer code (Solidity) and executed on the Ethereum blockchain. This will hopefully weed out unintelligent people from investing heavily and having a heavily weighted vote.  Having a  large amount of coders holding tokens, The DAO will be in a good position to invest in code heavy projects/companies.  The danger is that it veers off of its circle of competence and invests in different types of companies as well.  This is either going to work fabulously or crash and burn fairly quickly.

 

I think there are a lot of fallacies in these assumptions.  Just because someone is able to read the code doesn't necessarily mean that they're intelligent. And even if they are able to read the code AND they are intelligent, it doesn't necessarily mean that they're able to make optimal capital allocation decisions.

 

Similarly, if someone has a very high % ownership it means they exert undue influence over the decisionmaking process - but just because they have a high % of ownership doesn't necessarily mean that they're able to make the right decisions.

 

Eh. I mean the concept is interesting. But (IMO), I'd consider it burned money to "invest" in one of these. Way too many unknowns.

 

Couldn't the same  thing be said for publicly traded corporations.  At its base the DAO deosn't seem all that different.  More ownership % = more control just like publicly listed companies.  In both, more ownership % doesn't = intelligence or anything like that. 

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Couldn't the same  thing be said for publicly traded corporations.  At its base the DAO deosn't seem all that different.  More ownership % = more control just like publicly listed companies.  In both, more ownership % doesn't = intelligence or anything like that.

 

I don't think so. In a publicly traded corporation generally you have an ostensibly expert management team making capital allocation decisions. If offered a proposal by shareholders, they can generally choose to reject it if they deem it value destructive or even not an optimal use of capital.

 

Think of it this way.  Do you think Apple would have been successful if instead of Steve Jobs at the helm, there was a democratic process in which anyone could make a proposal and the one with the most votes was executed upon? The company would have burned to the ground.

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Couldn't the same  thing be said for publicly traded corporations.  At its base the DAO deosn't seem all that different.  More ownership % = more control just like publicly listed companies.  In both, more ownership % doesn't = intelligence or anything like that.

 

I don't think so. In a publicly traded corporation generally you have an ostensibly expert management team making capital allocation decisions. If offered a proposal by shareholders, they can generally choose to reject it if they deem it value destructive or even not an optimal use of capital.

 

Think of it this way.  Do you think Apple would have been successful if instead of Steve Jobs at the helm, there was a democratic process in which anyone could make a proposal and the one with the most votes was executed upon? The company would have burned to the ground.

 

 

fair point...doubt the general crowd will be as good as steve jobs.  But can they be slightly better than average CEO? possibly? if the crowd can get anywhere close to the average CEO on execution etc, the market for DAOs in general should increase order of magnitude from here...whether that translates to increased price for the DAO tokens remains to be seen, but seems to be an interesting tech/market none the less

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Couldn't the same  thing be said for publicly traded corporations.  At its base the DAO deosn't seem all that different.  More ownership % = more control just like publicly listed companies.  In both, more ownership % doesn't = intelligence or anything like that.

 

I don't think so. In a publicly traded corporation generally you have an ostensibly expert management team making capital allocation decisions. If offered a proposal by shareholders, they can generally choose to reject it if they deem it value destructive or even not an optimal use of capital.

 

Think of it this way.  Do you think Apple would have been successful if instead of Steve Jobs at the helm, there was a democratic process in which anyone could make a proposal and the one with the most votes was executed upon? The company would have burned to the ground.

 

 

fair point...doubt the general crowd will be as good as steve jobs.  But can they be slightly better than average CEO? possibly? if the crowd can get anywhere close to the average CEO on execution etc, the market for DAOs in general should increase order of magnitude from here...whether that translates to increased price for the DAO tokens remains to be seen, but seems to be an interesting tech/market none the less

 

Also Apple is an operating company making real products.  Most active investment managers earn below market returns.  Is it possible that The DAO could do slightly better?  I don't know.

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Also Apple is an operating company making real products.  Most active investment managers earn below market returns.  Is it possible that The DAO could do slightly better?  I don't know.

 

You just like it because the government can't shut it down. Lol. You should recognize that in areas like this your cognitive bias is huge.

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  • 4 weeks later...

Well that was a short lived experiment that crashed pretty quickly.  Long story short:  The DAO was hacked and funds stolen.  Now they are going to attempt to hard fork the Ethereum blockchain to take the funds back from the thieves and allow everyone who invested in the DAO to get their either back.

 

 

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Just saw this topic. Both ETH and DAO were and are massively overvalued (many orders of magnitude) and only people that are jealous at the investment gains of early Bitcoin investors buy it. Why anyone would buy it over XBT is beyond me. Besides XBT I think XMR is the only crypto currency worth owning.

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Just saw this topic. Both ETH and DAO were and are massively overvalued (many orders of magnitude) and only people that are jealous at the investment gains of early Bitcoin investors buy it. Why anyone would buy it over XBT is beyond me. Besides XBT I think XMR is the only crypto currency worth owning.

 

Ethereum can execute turing complete smart contracts directly with an easy to use programming language, the bitcoin blockchain can not.  I agree with you about XMR I don't like the openness of XBT or ETH.  A ethereum like blockchain without the ability to publically see who owns what or is party to which contracts would be the ultimate, but I don't think it exists yet.

 

 

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Just saw this topic. Both ETH and DAO were and are massively overvalued (many orders of magnitude) and only people that are jealous at the investment gains of early Bitcoin investors buy it. Why anyone would buy it over XBT is beyond me. Besides XBT I think XMR is the only crypto currency worth owning.

 

Ethereum can execute turing complete smart contracts directly with an easy to use programming language, the bitcoin blockchain can not.  I agree with you about XMR I don't like the openness of XBT or ETH.  A ethereum like blockchain without the ability to publically see who owns what or is party to which contracts would be the ultimate, but I don't think it exists yet.

 

Bitcoin is non-Turing complete on purpose because using a Turing complete language here is stupid (this exploit will be followed by many more). Non-Turing complete languages have a rich enough expressiveness.

 

Still cool that it's being tried in practice but the experiment is doomed to fail so the valuation is a joke. Also, a sidechain would make a lot more sense but how will the initial pumpers get rich without effort then? ;)

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I agree fully with this. It's his right to claim and he owns it now. I doubt the court will agree. The court won't even fully comprehend what the case is about.

 

I agree with you to a point. The DAO is code and nothing else. If the code allowed this then he did nothing wrong by doing it.  But there is one level higher to consider. The DAO runs on the Etherium bock chain and the way that works is that if over 50% of the miners agree to a fork it forks. Anyone agreeing to a contract on the Ethereum blockchain needs to understand that as well. So while the attacker was just following the rules, so would the miners if they decide to fork. Bitcoin works the same way, if over 50% of the miners decide to take your bitcoins away from you they can. It is just how it works.

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I should have been clearer on what I agreed with. I agree that the 'attacker' did nothing wrong. I agree with you fully that forking Ethereum is not a crime. I would consider it foolish though as it will create a precedent. If something can happen once it will happen in the future again and it's a slippery slope towards the financial governance and control by the government in the conventional financial world. It's a bad idea for similar reasons as to why Bitcoin should not increase the total inflow of Bitcoin or increase the block size. Both make the system fundamentally less valuable.

 

Meanwhile: ETH and DAO, still massively overvalued :P

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I've seen the theory circulated that the attack on the DAO was accompanied by a large short position on Bitfinex on Ethereum. The hack simply exposed the weakness in the Ethereum chain, the short position on the currency was where the money was made, if they get to keep the money they took too, great but the short position pays off either way.

 

Looking at it from a trading perspective though, it seems odd to initiate a large, noticeable, short position moments before you start the attack. Someone smart enough to carry out the hack would likely also be smart enough to build a short position incrementally through multiple accounts so it wasn't as noticeable or traceable. 

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