[HN Gopher] In quieter corners DAOs are forging a new ecosystem ...
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In quieter corners DAOs are forging a new ecosystem for digital
startups
Author : pseudolus
Score : 53 points
Date : 2022-01-29 20:18 UTC (2 hours ago)
(HTM) web link (www.newyorker.com)
(TXT) w3m dump (www.newyorker.com)
| mupuff1234 wrote:
| Sounds like the main thing they're selling is exclusivity.
| dang wrote:
| All: if commenting here, please respond to specific information
| in the article and avoid the generic yay and boo comments that
| have appeared here countless times already. They are boring.
|
| Curiosity withers under repetition.
| https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
|
| Diffs are what's interesting.
| https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
|
| https://news.ycombinator.com/newsguidelines.html
| qeternity wrote:
| > A dao, by definition, is simply a business structure, akin to
| an L.L.C. or a C-corp.
|
| ...
|
| > The more funding you put in, the more slips of paper you get.
|
| Shares. These are called shares. And aside from regulatory
| arbitrage, there is nothing novel about DAOs.
|
| How tf does this make it into the New Yorker? Who is this article
| written for?
| tedunangst wrote:
| Uh, well, the ... that you elided provides the context for the
| slips of paper analogy. The article is not literally calling
| them slips of paper.
|
| > The community holds internal discussions and then votes on
| decisions using the token, on apps such as Snapshot, the way
| one might slip a piece of paper into a cardboard box to elect a
| class president.
| qeternity wrote:
| This is literally what shareholders do. It doesn't make the
| analogy any less stupid. I don't care what they call them.
| That's not my issue. My issue is pretending like this
| mechanism is new and hasn't existed for centuries.
| Animats wrote:
| tough wrote:
| I do believe DAO's are one of the best parts of crypto so far...
| arcticbull wrote:
| 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.
| berberous wrote:
| 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-a...
| arcticbull wrote:
| 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 wrote:
| 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/0516999b88534575bf759323f5e
| 9fe...
|
| 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.
| arcticbull wrote:
| > I don't see this conversation going anywhere
| productive, but do you not think anything has changed
| since the Great Depression?
|
| In the sale of blue-sky securities? Not a darn thing.
|
| > 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.
|
| Sounds like a VC fund. Just wait until you see the list
| of those projects!
|
| > 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.
|
| So like, Zoom and GSuite? I'm not sure how "Waze for
| moving crypto assets" fulfills that goal.
| ShamelessC wrote:
| Those comments are both shallow dismissals so I would wager
| that it is _your_ comment which is no different. You have
| offered zero evidence of a successful DAO, merely defined
| what a DAO is, and appealed to the authority of a bunch of
| people who are likely to profit directly from the
| cryptocurrency bubble.
|
| On the other hand, ConstitutionDAO - the most noteworthy
| example to date, was a complete failure and hasn't even
| been able to handle refunds.
|
| > that is something that will change.
|
| "Talk is cheap. Show me the code."
| SubiculumCode wrote:
| Constitution Dao is not the most notable at all, just one
| that caught the dumb dumb news cycle.
| ShamelessC wrote:
| Sorry but that is what I meant. Was that not obvious?
| dmitriid wrote:
| Don't forget, there's also SpiceDAO which bought a Dune
| sketchbook and learned that it doesn't give them any
| rights to produce derivative works.
| leppr wrote:
| That is a fake narrative spun from a screenshot of a
| tweet[1] taken out of context by people unfamiliar with
| IP laws.
|
| I'm familiar with this DAO, they have been advised by a
| competent IP lawyer before even bidding on the book.
| There is a crucial legal difference between derivative
| work, and work "inspired by" another.
|
| [1]: https://twitter.com/TheSpiceDAO/status/1482404318347
| 153413
| ShamelessC wrote:
| Just provide a source - no one knows you so your
| familiarity with the DAO is useless.
|
| edit: Thanks - that tweet doesn't inspire confidence. Why
| would you need to overbid on a sketchbook in order to
| make a show which is inspired by it? Why not just, you
| know, make the show...
| dmitriid wrote:
| > That is a fake narrative spun from a screenshot of a
| tweet
|
| Not by a screenshot of the tweet, but by the tweet
| itself. And it was rightfully ridiculed for it.
|
| And now they are "producing an original series" and don't
| have the money for a writer's room?
| https://news.ycombinator.com/item?id=30046358
|
| For three million dollars they could've created not just
| "a package with a powerpoint", but half of an animated
| series, probably.
| [deleted]
| camjw wrote:
| They didn't "learn", SpiceDAO was just a straight up
| scam. They raised like $8m dollars, spent $3m on a book,
| (100x expected auction value) and then decided to pay
| themselves $30k a month from the remaining proceeds and
| presumably just collect interest on the rest. It's been
| HUGELY profitable for the people who set it up. Ahem, the
| "core team".
| ShamelessC wrote:
| How could I!? Last I checked they were basically using
| their received funds to create a fucking powerpoint to
| show to streaming providers? A show which obviously can't
| use any of the Dune IP so...why did they buy the
| sketchbook?
|
| The sheer incompetence/negligence/malice would be funny
| if it weren't so sad.
| dmitriid wrote:
| And DAOs are of course the next iPod or Dropbox, and not
| the next Juicero or Enron... why?
| ShamelessC wrote:
| Apparently many ConstitutionDAO participants have been
| screwed because in order to get their money back they've had
| to pay transaction fees which exceed 200$. Quite the racket.
| leppr wrote:
| 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 wrote:
| That doesn't make it any less absurd/off-putting.
| gjs278 wrote:
| [deleted]
| smorgusofborg wrote:
| 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 wrote:
| A racket implies intentional malicious activity, which is
| the accusation I'm clearing up here.
| ShamelessC wrote:
| Ah indeed there's not direct evidence of foul play. Poor
| choice of words on my part.
| halpert wrote:
| > 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?
| garrickvanburen wrote:
| 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.
| arcticbull wrote:
| 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 wrote:
| 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-limi... [1] https://www.flamingodao.xyz/
| arcticbull wrote:
| > 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 wrote:
| 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.
| arcticbull wrote:
| I mean yes, that's fair, I am. Broadly though, it's
| because they seem to be unified behind the idea of
| issuing unregistered securities and selling them to un-
| accredited investors because they don't seem to think the
| registration of securities is valuable.
|
| I disagree, because, the Great Depression.
|
| They're not setting out to solve a limitation around
| business organization. You can do basically anything you
| want out of a Delaware LLC or C-corp except sell the
| shares to an un-accredited investor without registering
| them. There's even a light-weight way to do _that_ with
| Reg CF and Reg A+.
|
| You want public voting? Ok, that doesn't require a
| blockchain and it certainly doesn't require a whole new
| legal framework for organizing a business. Twitter has
| managed to have polls for years.
|
| Most people actually trying to build a business of value
| aren't trying to reimagine the concept of a business.
|
| By all means, go with God, find a better way to organize
| companies. If they land one one, I'll happily use it. But
| so far all I see is grift, crime and frankly, little
| else.
| notch656a wrote:
| Those entities eligible to be accredited investors are
| estimated to control the better side of 3/4 of private
| wealth in US. I don't see how allowing (or DAO/LAO
| somehow illegally bypassing security laws) un-accredited
| investors could possibly be a deciding factor in
| recreating a Great Depression. Most (private) wealth can
| already buy whatever "toxic" stuff they want in your own
| words.
|
| Also, it's possible to sell these investments to non US-
| persons under regulation S without bothering with the
| accredited investors.
|
| >Most people actually trying to build a business of value
| aren't trying to reimagine the concept of a business.
|
| Most people actually trying to build a business fail. It
| would be fallacious for me to imply that means not
| reimagining concept of business means likely failure,
| even though it is technically true.
| a_t48 wrote:
| > 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.
|
| Really curious - is it enough for another party to attest
| that they are accredited? Ie- could I set up a company
| selling verification services, saying "the person with
| this key is accredited, send the feds our way if they
| ask"? (Pure mental exercise, just honestly curious)
| mountainriver wrote:
| 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
| [deleted]
| notpachet wrote:
| For people with skin in the game (read: all of us) -- it pays to
| be students of history. There is a rich tapestry of prior art
| available for us to study that can help us define the appropriate
| relationship between the public, with the government as our
| agent, and aggregations of capital as expressed through crypto.
| In particular I recommend reading about the early federal efforts
| to safeguard the public interest from rampant capitalistic
| excesses in the form of the Interstate Commerce Act of 1887, and
| its immediate fruits (the Sherman Act, etc).
|
| Those efforts were largely focused on antitrust regulation, which
| is a different problem than the sorts of blue-sky securities
| problems that are more common in today's crypto space. But the
| reason I'm recommending reading about the earlier antitrust
| stuff, as opposed to the securities regulations that began to
| emerge a few decades later (which is more superficially topical),
| is that it marked the beginning of a phase transition in how the
| American public viewed the relationship between government and
| business. I think we're in the early part of another such phase
| transition today. Without the antitrust regulations that preceded
| them, subsequent securities regulations would likely have had a
| much steeper hill to climb in the court of public opinion.
|
| Obviously we aren't going to be able to just copy+paste
| yesterday's regulations onto every newly emerging trend. But I
| think we can definitely draw lessons from _how_ earlier types of
| regulations emerged and the ways that the government 's
| relationship with capital interests was adjusted over time.
|
| There were also downsides to the new regulations (like the
| coopting of the definition of "trust" to include unions as a
| means of curtailing the power of labor). Those are valuable
| lessons, too.
|
| I say this as someone who is relatively pessimistic about the
| value that these new crypto constructs are going to be able to
| provide over the long term, but I'd make the same argument to
| crypto optimists, as well.
|
| Apologies to the non-US folks; other countries have their own
| regulatory histories, some of which were well ahead of the times
| compared to America. But I'm less familiar with those.
| toolz wrote:
| These kinds of recommendations and thoughts are extremely
| important moving forward. I do not believe the agency of
| government will be able to keep up with the speed of progress
| and it will become increasingly important for us to take
| lessons learned throughout history and apply them at an
| individual level. I'm very biased towards crypto as I see the
| increasing failures of government action leading to massive
| wealth inequality. If you have any specific resources you'd
| recommend on reading up on the commerce clause I'd be
| interested in reading up on them. My bias is unlikely to reveal
| anything favorable of the for that act, as I'm already quite
| averse to the overreach the government has taken with that
| policy used as its launching point.
| ShamelessC wrote:
| Wealth inequality is traditionally exacerbated by lack of
| government regulation. Further, I don't actually see
| cryptocurrencies actively trying to attack the problem of
| wealth inequality. Rather, they are staunch proponents of
| free markets which, left unchecked, result in massive wealth
| inequality.
|
| Food for thought.
| losteric wrote:
| None of these "cryptocurrencies" address inequality. One
| can draw parallels between generational wealth in our
| present system, and the wealth of early adopters in both
| proof-of-work and proof-of-stake systems. If anything, the
| attraction seems to be gambling on getting in early in
| hopes of profiting from these flaws.
| toolz wrote:
| Most crypto addresses inequality directly by giving
| everyone the same access as anyone else.
|
| No dark pools, no naked shorts, public ledgers are
| commonplace, no brokerage license required to participate
| directly, the list goes on and on.
|
| Equality is not equity, in case there was any confusion
| (maybe there wasn't) but crypto has incredibly strong
| claims to equality in money.
| leppr wrote:
| Current government policies are the biggest causes of
| wealth inequality[1]. On the other hand global trade, which
| is an actual free market, seems to result in less wealth
| inequality over time[2].
|
| As such, I wouldn't be so sure that cryptocurrencies will
| only exacerbate inequality. "Free markets" often required a
| central entity to draft and enforce laws, giving this
| central entity power and incentives to favor certain market
| participants, by selectively applying or changing the
| rules. Cryptocurrencies could bring about actual free
| markets in places where there weren't before, by
| autonomously codifying and enforcing laws.
|
| [1]: https://www.federalreserve.gov/econres/notes/feds-
| notes/weal...
|
| _> Despite the fall in equity markets that drove a sharp
| decline in wealth in 2020q1, equity prices rebounded
| quickly after the Federal Reserve, U.S. Treasury, and
| Congress took steps to stabilize financial markets and the
| economy, and households gained over $18 trillion in wealth
| since the beginning of 2020. This 17% increase over 2019q4
| was driven by asset accumulation much more than by debt
| paydown. Further, asset-price increases were the dominant
| source of wealth accumulation, accounting for nearly 80%._
|
| [2]: https://theconversation.com/global-inequality-may-be-
| falling..., https://www.un.org/en/un75/inequality-bridging-
| divide
| freemint wrote:
| DAOs are unable to perform any interesting calculation due to
| excessive cost of computation. It can't even solve a Linear
| Program to distribute resources effectiently (let alone actual
| scheduling which requires mixed integer problems which often take
| many core hours on actual CPUs). Any function a DAO can perform a
| notary can perform cheaper, including running votes.
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