Institutions, organizations, rules, and calculation rules provide a comprehensive way to talk about DAO design.
Title of the original text: “Hot Spot丨Understanding Decentralized Autonomous Organization-DAO”
Written by: Joshua Tan
Translation: Li Hanbo
DAO, the decentralized autonomous organization, is a technical tool written in code and running on the blockchain. It is also a new type of governance institution. Early exploration of DAO paid more attention to its technological development, and less attention to its social impact, which led to a series of failures, and also exposed the limitations of the rigid, “code is law” DAO design method . In this article, we explored a more comprehensive DAO method, a method that combines technical engineering with social design. We call this method the system view.
Definition of terms
We have the language of cryptoeconomics to talk about the technical aspects of DAO, but so far, we have not found the right vocabulary to talk about its social aspects. In this article, we want to introduce four such words: institution, organization, rule, and calculation rule. (Well, technically speaking, these are five words, but the “rules” are repeated!) In doing so, we will try to integrate the cryptoeconomics you know and love into the larger institutional economics And show you why not only technical elements such as tokens or codes, but also social elements such as rules and social agreements should be considered. Through the overall engineering of DAO, we can avoid the trap of reductionism and open these new tools to the future application world.
Institutions are defined as stable models that regulate human behavior. Many things are systems, including many things that people don’t usually think of as systems . Courts, markets, and contracts are all systems, but the aisle design of your local supermarket, and even the reflection of babies’ crying are also systems. DAOs build systems based on calculations-they promote governance through a series of smart contracts -like any system, their design should take into account the governed. The modern system design method was pioneered by Eleanor Ostrom and others in the context of shared resources, but here we will explicitly focus on the DAO and other computing institutions. In addition, we will distinguish between the types of institutions that follow the institutional model (such as market, law association, DAO) and actual institutional examples (New Jersey Superior Court, reputation function on Reddit). When we talk about DAO institutions in this article, we will study DAO institutions as a kind of “institutional model”, which is a type of institutional design, and its examples can be very different.
From an institutional point of view, DAOs are not just a combination of smart contracts. They are also social organizations. They are entities composed of individuals gathered for a common purpose . This means that the smart contract portfolio that defines a DAO is not the complete DAO. Representative; the same code, used by different groups, may cause huge differences in the organization. The groups participating in the DAO can choose to abide by (or not abide by) the prescribed rules, and they can also collectively decide to change the way the organization behaves by modifying the DAO rules. For example, in MolochDAO, the decision about funding or accepting new members will be carried out and implemented in accordance with predetermined rules, and the decision to change one vote per person to one vote per person is an adjustment to these rules. The constitutional amendment process is one of the most sensitive aspects of an organization’s rules.
These on-chain (and off-chain) rule sets, smart contracts, and social decision-making processes are all described by rules: a system of values and rules that organize the collective decision-making process . The charter can be organized into a centralized document, but in many organizations, it is distributed in multiple documents and instructions, from the formal charter to the code of conduct, to the posts of authoritative members. In an opt-in organization like the DAO, the charter is a contract of participation-through participation, a person implicitly or explicitly agrees to abide by the organization’s charter. By regulating the decision-making of an organization, the charter helps us to formulate principles and rules for how to formulate rules (such as the order rules of the legislature), modify existing systems (such as modifying voting qualifications), and even design new systems (such as establishing an independent supervisory agency). rule. Good rules can help organizations adapt to new environments, new members, and even new codes.
Finally, the computational rule implemented by the rule code refers to the part of the rule composed of software . For example, the way a DAO runs its online voting process (including user authentication, quota, token weight, proposal timing, etc.) is part of its calculation rules. The underlying blockchain of DAO has its own calculation rules, namely its consensus protocol. Calculation rules (for example, smart contracts) automate the management of decision-making procedures; this enforces the process but does not enforce the results. Among other benefits, the digital nature of DAO governance allows us to capture and transform repeatable governance models—rules and more basic rules and proposals—as best practices applied in various situations. It is in the context of these models that we hope to develop an ontology of institutional economics suitable for the DAO ecosystem, as well as a map of how various projects cooperate across these different levels of models.
This table describes various projects and their focus on the patterns described in this article. Many of these projects have complex interrelationships with DAO, as shown in this series of explanations of Aracred as an example of DAO.
Today, many groups are studying the patterns and examples of DAO governance-but they are working in different “governance levels”-across institutions, rules, calculation rules and DAO examples-which is no different from the level of technology . At the level of the rules model, we have groups like the Metagovernance Project, who are building ontology and tools to help people design rules for DAO and online communities far beyond the blockchain. Some of these rule patterns can be automated. This is how groups like Commons Stack are using token engineering to design and test computational rule patterns, such as Conviction Voting. There are some groups that are building replicable DAO models, such as Aragon, DAOStack, and Colony, and they are studying interesting mechanisms such as holographic consensus and dispute resolution courts. We also have some special DAO instances, such as Moloch and Metagame, which themselves have been repeatedly forked to serve the different needs of the community eager to use these new tools.
We hope that this particular clustering of the DAO ecosystem will help clarify the contributions of different organizations-both for the organization itself and for people who have just learned about DAO. We also hope that this clustering can facilitate research in this area, for example by identifying common and overlapping research topics. As the DAO ecosystem matures, each group will benefit from horizontal cooperation within the layers, for example, cooperation between organizations that develop computing rules to develop common technical standards and shared infrastructure. But some of the richest future work–killer applications if you want–will be projects that span these governance layers vertically, that is, projects that build well-governed, rigorously designed, and fully functional DAOs.
Context is the key
Institutions, organizations, rules, and calculation rules provide us with a comprehensive way to talk about DAO design.
Visualizing DAO instances requires a system and rule mode, which can be assisted by a DAO framework (such as Aragon or DAOStack) or a calculation rule mode (such as the Commons Stack toolkit) .
After all, a rule (even a non-calculating rule) is more than a document; it is a description of the values and principles that guide the decision-making process of an organization. It defines roles and related rights, agreements to exercise these rights, and conditions for modifying these rights (such as voting). However, rules also provide a basis for a common identity; it celebrates common values and may provide vision or direction for future decisions under these values, but it does not provide specific details of what decisions may need to be made. In this way, the rules can never be completely reduced to an algorithm .
However, not all rules are equal–obviously, some rules contribute to the prosperity of the community, while others lead to conflict and disintegration. In a group of well-known institutions studied by Ostrom, namely the International Forest Resources and Institutions (IFRI), different roles, rights, rules and arrangements of agreements have led to very different results under different circumstances . There is no single, “best” rule or institution that can work in all forests and all communities. However, certain arrangements are repeated in many examples, such as monitoring systems and community consultations. We call this arrangement a pattern of rules: each pattern refers to a series of related rules applicable to local conditions.
The various components of institutions and rules and their technological enhancements, and the flow of information between them, source: Michael Zargham and Shermin Voshmgir
In this sense, the existing Development Agenda organizations often adopt a relatively small set of rules and models, mainly involving proposing and voting on proposals to guide the expenditure of funds. Raising funds, proposing expenditure proposals for specific tasks, voting on these expenditures and verifying the completion of the work, and handling and resolving disputes are necessary activities of various organizations. The institutions that are the basis of these activities are being implemented by organizations like 1Hive and assembled into reusable models by projects like Commons Stack. So far, these elements of social logic have been the main focus of the development of computational rules, which is not surprising.
Where to go?
These early examples gave people a lot of enthusiasm for the DAO idea, but there is still a lot of exploration to be done to discover feasible institutional patterns (and anti-patterns). It is also important to remember that the calculation rules are not the whole rules, and automation does not magically lead to a healthy system . We believe that adopting an institutionalized approach and adopting some concepts of social science will help us establish and manage a healthy DAO. The institutional approach can also help us organize a series of different projects in the DAO field (see picture above) and identify common research issues.
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