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DAO: Why the Purest Forms of Democracy May Now Be Possible

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Democracy has a definition that is difficult to pin down not least because it represents a spectrum of ideas as opposed to a singular concept. However, to facilitate the discussion which follows, we will offer up our own:

Democracy: Any system of government where each decision has an outcome which aligns with the wishes of the majority. 

We will leave aside for the moment the fact that this definition will have some weaknesses. Instead, we will work from the assumption that it is complete. From this vantage point, it is clear that none of us live under a system of government which approaches anything even remotely resembling a democracy.

Liberal democracies – for some the most advanced form of the democratic concept being practised today – essentially amount to closed parliaments where the wider population has little to no involvement in the myriad of decisions that are made on their behalf on a daily basis.

Of course, we could argue that citizens choose their representatives to act on their behalf in the first place. But we also know how inefficient this is in practice. Elected representatives all too often do not respect their campaign promises.

Democracy Cartoon

And even in those rare cases where they do, from the perspective of any single elector the likelihood of a representative exercising choices over the course of their mandate in a manner that aligns perfectly with the interests of that same elector is practically zero.

Leaving aside how things currently proceed in practice, is it even possible – even at a simply theoretical level – to conceive of a system in which all decisions are rendered in a democratic fashion as per our earlier definition? We will call this the Pure Democracy Problem (PDP) – which, as it happens, appears to overlap with the question of whether Anarchism is an achievable state of affairs.

The question of PDP is not necessarily one that limits itself to how we organise our systems of national government. It applies equally to any context in which we have a community – large or small – of collaborators who interact on any given subject.

You may have a local church group, for instance, that is looking for the most reliable method to manage the congregation’s funds in accordance with the wishes of its parishioners. Or you may have a decentralised Wikipedia-type platform where a new editorial policy is introduced in accordance with the preferences of the majority of its readership which may number in the billions.

Achieving Pure Autonomy

For pretty much all of human history, there was one simple answer to the PDP conundrum we have just posed: no mathematically rigorous solution exists.

That was, however, until the arrival of – you’ve guessed it – blockchain technology. As a result, we have been witnessing the emergence of a broad range of blockchain-based propositions coming under the umbrella name of Decentralised Autonomous Organsiations (DAOs).

In essence, these DAOs believe they have solved PDP – at least according to their own interpretation of the problem. They exploit the blockchain’s inherent qualities of security (voting can no longer be rigged) and transparency (everyone knows what they are voting for and whether or not those decisions are subsequently actioned).

However, it should be noted that what the blockchain does not offer is governance: it cannot incite individuals to vote in the first place, for instance, nor can it determine if voters are immune from pernicious influences.

Added to this, there is the issue of scalability – there is currently no blockchain in existence with the technical capacity to manage a community of tens of millions of participants who may need to collaborate and action thousands of decisions in real-time . Therein lies the real challenge for any platform that wants to solve PDP at a global level. And as soon as someone does achieve that particular feat, then arguably the seeds of Anarchism itself will have been sowed.

One such DAO project, however – known as DAOstack – believes that it has found such a solution – implemented in code through a set of Javascript libraries that liaise with the Ethereum public blockchain.

Holographic Consensus

DAOstack refer to their solution as Holographic Consensus, and to understand it one needs to take note of an important subtlety in the PDP problem: a pure democracy does not necessarily imply that everyone sitting inside a matrix needs to participate in every single vote that needs to be actioned inside that matrix.

Any effective, large-scale governance needs to have certain mechanisms to allow for small-group decisions on behalf of the greater majority that are guaranteed to be in good correlation with it.

Remember, PDP is about finding a mechanism which ensures that all decisions align with the wishes of the majority – but there is no law which states that the majority of voters themselves need to have participated directly in the vote.

“Any effective, large-scale governance needs to have certain mechanisms to allow for small-group decisions on behalf of the greater majority that are guaranteed to be in good correlation with it,” states Matan Field, a Physics PhD, a vigorous advocate for the DAO model and  leading figure within the DAOstack movement.

DAOstack itself is conceived as a white-label platform in which any DAO-structured community can assemble its own sets of rules, procedures and policies to determine how it will be governed. As such, it is best to see Holographic Consensus as a set of propositions as opposed to one specific solution.  “The holographic consensus is not a single protocol …  it’s a concept [drawn from] a wide family of protocols,” one user explains on the DAOstack’s native discussion platform.

And one such implementation of Holographic Consensus draws upon the fields of probability theory and statistical inference in order to determine the required sample size of voters needed to render a decision in a manner that is statistically highly likely to align with the wishes of the majority.

But, of course, in this scenario the door is still left open to the occasional mistake – which is the reason for which some believe that the proposition needs to be backed up with a vote recall mechanism that gets actioned when a pre-determined number or proportion of network participants deem it necessary to do so.

Other approaches involve smaller sample sizes of voters but which require unanimity which, if not achieved, result in a second vote with a larger proportion of voters for which a pre-determined level of near-unanimity is then required.

The real point of note in the DAO approach is that it does not conceive of a one-size-fits-all democratic model. Any model is itself subject to modification as per the changes in outlook and/or preferences over time of participants in the network.

Adoption and Disruption

As with most blockchain experiments currently, the DAOstack project is still in its very early stages. The first project to run on the so-called stack will be the Genesis DAO. This will involve the eventual transfer of a percentage of the funds raised via the project’s previous ICO to a crowd management model based on a holographic consensual approach to ensure that the movement’s finances are democratically managed at all times in line with its own philosophy.

It is an intriguing experiment. DAOstack sits amongst one of the most high-profile projects in the DAO space, thus making the Genesis DAO serve as a proof-of-concept for what could yet become one of the most disruptive experiments of the blockchain era.

“Imagine thousands of people working together to solve major world problems, with rewards distributed according to value contributed, and decisions being made through the wisdom of the crowds,” states Josh Zemel, communications manager at DAOstack, in his own blog on the prospects for future adoption.

Zemel envisages a future in which we still have the likes of “Facebook or Amazon but owned by the users; a hedge fund with no one skimming off the top; or even equivalents of BP or ExxonMobil, driven by the people and for the people (and the planet).”

If the DAO concept does achieve scalability, then the wider implications for human social organisation could be immense as we begin to implement what will essentially be constitutions enacted through code. Those interested in learning more about the DAOstack experiment can do so here.