Hi, Ben Weiss here! I’m filling in for Jeff for the next three weeks while he’s on vacation.
Most DAOs are akin to public companies. Like shareholders, members can vote on proposals, and their sway is determined by the proportion of cryptocurrency they own. But instead of one party counting each participant’s vote, DAOs use blockchains to coordinate.
In theory, stripped of the humans underlying the decision-making, the idea works like an algorithm: log votes onto a blockchain, calculate a winning proposal, and execute the proposal with code. But, in practice, DAOs, like any human organization, become messy. If someone owns the majority of tokens, is there actually real democracy, or is it just theater? That criticism, which has since been called “decentralization theater,” is a repeat accusation in crypto.
Add in how messy DAOs can get (try wrangling a bunch of pseudonymous degens across the internet) and it’s no wonder that investors as well as founders have soured on the concept. “From half a decade of experiments, governance proved to be almost everywhere else but the [block]chain,” wrote Jake Brukhman, founder and CEO of the crypto VC CoinFund, in a reply to Yahya, the investor at Andreessen Horowitz.
I remain skeptical. Humans are messy, and no amount of tech can fix that—but maybe the next iteration of DAOs can do better.
