DAO vision and design

We are building a digital economy. It will be bigger than the industrial and agricultural economies of today. This new digital economy is based on data.?The key point is - "who owns what data?" That is the digital freedom - do you own data - or not? Are you monetised (digital serf) or are you an economic player?

So what is the DNA, or vision, and the design principles for DAO's for the incumbent enterprises? How do we design the community governance, including its currency for exchange, money to store wealth created by innovation, compliance and democracy, all to build out this new digital economy? Here we set out to solve problems that can only be solved by bringing data together from various players across both your industry and adjacent industries.

DAO vision

The DNA of our DAO is based around this user control of their data. Ownership of the DAO is shared between developers who are the key innovators as well as the creators and owners of content. Ownership is reflected in holdings of the DAO's native token. The DAO treasury is essentially a bank and its token is backed by wholesale CBDC. This is how private money works as opposed to central bank money.

Our DAO is a collaboration of shared interests to fund and deliver value to users. Companies now go to market as a network and competition is now network vs. network, where companies in the post consortia era can compose network businesses very rapidly and then switch roles, in and out, as to who does what.

DAO Design Principles

1. The currency of the DAO?

The currency of the DAO? is the DAO’s token which raises capital from fiat and is designed to stop leakage back out to fiat by keeping the token in a circular economy inside the DAO to grow and store wealth. Capital is released via voting to fund projects on the DAO.

There is an internal market to buy/sell the DAO token as it is the billing currency for access to data and all services/apps. on the DAO. Innovators are required to stake DAO token in order to earn rights to provide services to DAO members. Wholesale CBDC may form some or all of the reserve fund to control volatility.

Returns from holding the DAO Token come via staking in DeFi to get interest or increase in the exchange rate to fiat. Perhaps the exchange rate to fiat can float so the DAO token takes on equity-like properties. Or maybe it stays pegged but you get higher interest. This is just like a bank offering higher interest rates than on gilts. The DAO treasury is essentially a bank. This is how private money works as opposed to central bank money. Let the market make capital allocation decisions not the Government or Central Bank - who always are so bad at that.

2. Ownership?& Governance of the DAO

Ownership,?in responsibility and reward, of the DAO?is governed by holders of the DAO voting tokens which is linked to the DAO’s currency token. Ownership is split across, and perhaps limited to data owners/creators and app developers.

The level of openness and the level of decentralisation is a design decision. We should think of this new internet as a "collaborative internet" rather than call it a "decentralised internet" as the level of decentralisation across DAO's will vary.

Folks need to step up and represent the community of DAO token holders' views in a delegated voting arrangement. Without folks taking on this duty then the DAO's democracy cannot work fairly. Delegated voting roles should be aligned to skills and interest and is a bit like being elected as a Member of Parliament but for a skill or interest not a physical region.

CEO's will be measured not only on share price performance but critically on the contribution to earnings from holdings in the industry DAO token. As a share holder approaching retirement, I am very interested in CEO's who will give me exposure to this new digital economy. Volatility to fiat will be controlled by that CBDC backed reserve fund so there is no excuse, Mr or Mrs CEO, from not holding this token on the balance sheet and playing your role in shaping the new digital economy!

3. Data owners maintain control

Data owners maintain control?of their data via NFT’s and autonomous digital assistants to grant access to their data e.g., to these ML bots. The most sensitive and valuable data never moves, and no human ever sees it - only ML sees it and only decisions or analytics data moves.?As the data owner is in charge this removes much of the GDPR concerns.

4. Incentive design

Incentive design?promotes helpful behaviours rewarded in DAO token. Rules are voted for by token (data) holders using say quadratic rules to prevent whales. These rules are automated into smart contracts.?

5. Financial compliance & reporting

For compliance,?all transactions can carry pseudo anonymous identity - e.g., this is an adult UK tax-payer. Patterns are analysed and only suspicious patterns require full KYC/AML reporting. This reporting can be automated in smart contracts.?The "issue - hold - verify" cycle remains. The credential (DiD) issuer is the authority such as the passport office or driving license body - both government. In self owned or self managed identity (a better name for self sovereign identity as you can't unilaterally declare yourself a citizen of any country) the credential holder decides what data to share using say ZKP. Suspicious pattern dectection may determine that full KYC is needed.

The books of the DAO are reflected in 6 key areas of on-chain entries which can be reported as the DAO financial-statements.

These bookkeeping entries for the DAO cover: treasury, incentives, commercial fees, app activity and the data monetisation itself. The balance sheet represents the assets governed for the benefit of the holders of the DAO's Token who are the members of the community. Legal entity versions of DAO's known as DACs (decentralized autonomous corporation) or LAOs (Legal autonomous organisation) are emerging.

References

You can read more about these ideas in The Token Economy Primer, other editions of this Token Economy newsletter and my two Tokenomics white papers all of which are linked in the featured section on my profile.

DAOs are discussed here in the recent EY summit day 1 (at about 2hrs 13 mins.) and in the Stanford video series