DAO application exploration: Why is cryptocurrency mining suitable for DAO governance? (www.blockcast.cc)

DAO can play an important role in the field of information asymmetry. Cryptocurrency mining can put production data such as mining machines, mines, and mining pools on the chain to provide reliable data for DAO governance.

Original title: “Mining Ecological Aggregator-The Best Form of the Next Asset Chain DAO”

Written by: DADA

Today’s business society model began to take shape gradually in Europe in the 17th century. Compared with the traditional feudal society, there are many improvements in the financial system and laws and regulations. But 300 years later, after the rapid advancement of technology and the upheaval of society, the business model has not changed much. Large companies are monopolized, but they are often criticized for lack of creativity and vitality; startups are light and fast and lack good organizational incentives. Improving productivity is one of the research directions of modern economics. Can the model created 300 years ago give us a strong support to continuously improve production efficiency?

When the three cornerstones of the traditional business society, the double-entry accounting law, the company system, and the law to protect private property, become distributed ledger technology, distributed autonomous organizations, and smart contracts, this will completely change the structure and operation of the existing business society ; If we turn our attention to a more far-reaching social foundation, perhaps the biggest change in human business society in history is starting. Ethereum founder Vitalik Buterin once said: “Bitcoin and Ethereum are facing a real management crisis. He believes that the DAO (Distributed Autonomous Organization) is now in the process of democratization in the United States in 1795. This is not North and South. War, but independence war.”

Li Lin, the founder and CEO of Huobi Group, proposed at a recent meeting that more and more DAOs will appear in the future, and blockchain will provide on-chain elements. The development of blockchain decentralization technology has provided soil for the emergence of decentralized DAO organizations. With the emergence of Ethereum smart contracts, the first real DAO project was born, which is what we often talk about as The DAO.

The DAO was once the most exciting project in the blockchain field. It can actually be understood as a venture capital fund. It uses Ethereum crowdfunding. The funds raised are locked in a smart contract. Everyone participating in the crowdfunding People obtain the corresponding DAO tokens according to their investment shares, and the token holders vote for decision-making, and provide financial support for proposals that may bring back to The DAO. It is a pity that this project did not go forward, but it has inspired us with a new type of collaboration model.

In the past few months, the development of DeFi is in full swing, and DAO, which is closely connected with DeFi, has attracted much attention. Next, let’s take a look at the origin and future applications of DAO.

What is DAO

DAO (Decentralized Autonomous Organization) is a decentralized autonomous organization, also known as a distributed autonomous organization. It is an organization represented by contracts/codes as computer program rules. The participation process of participants is transparent and delegated. Currency/token holders control and are not affected by centralized institutions.

The meaning of DAO

Early Internet investor Mr. Guan Xin (Michael Kuan) mentioned at the recent Web3 conference, “What is decentralization? We are not decentralization for decentralization, we are to protect and encourage diversity.”

We believe:

• DAO can make full use of crowd intelligence in some areas, so as to prevent individuals from entering a misunderstanding collectively due to cognitive defects.
• DAO can display the final result in a trustless manner. The result does not exist in the high-level black box. It is an open, transparent and non-tamperable presentation.
• DAO can also make the process transparent. For some areas, such as asset management, the transparency of capital reversal directly determines the credibility of the fund.

What is to judge whether an industry, an organization or a project is suitable for DAO, generally there are several factors:

• The nature of the decision or vote
• Is group participation meaningful to the results/ Is there an incentive system to encourage participation
• Degree of decentralization

And whether decentralization can bring development to this industry, whether mass participation can affect the final result, and whether the credibility of this result is important. Based on the above factors, not every industry, project, and company is suitable for DAO.

The DAO’s transaction records and planning rules are kept on the blockchain. The entire process is automated, automatically executed and immutable. It is through a series of open and fair rules that can autonomously operate decentralized autonomous organizations. The new organizational form may also be the highest form of the development of the blockchain industry.

The best application form of DAO

Everyone in the DAO can vote to make decisions, thus ensuring that stakeholders in the organization, that is, token holders, have the opportunity to express their opinions. Therefore, in some areas where information is asymmetry and opaque, DAO will play a vital role.

We believe that digital asset mining is the best application scenario for DAO in traditional assets.

First of all, although encrypted digital currency mining is currently the support of the bottom of the entire industry, it is a fairly traditional industry, with great opacity, and thus a very high cost of trust. Encrypted digital currency mining itself is a tens of billions of industry, but it lacks a credible intermediary organization, which also increases the threshold for many external investors to participate. Even as an institutional investor, who has more resources than ordinary investors to back-adjust projects, they often “step on thunder.” The traditional nature, strong trust and high competitiveness of this industry have also led to the birth of no centralized media with high participation, strong credibility and fairness so far. This has brought various concerns for ordinary investors to safely participate in this industry with a short capital return cycle and strong capital liquidity.

Secondly, encrypted digital currency mining as a scarce industry and encrypted digital assets as a profit industry is a natural industry suitable for DAO for asset management. In the encrypted digital currency mining industry, all output returns are produced in the form of digital encrypted currency, which has natural on-chain attributes, and the entire process of digital encrypted currency circulation can be traced. DAO will become the perfect form of circulation.

Furthermore, the necessary production conditions such as mining machines, mining farms, operation and maintenance, and mining pools during the full circulation of encrypted digital currency mining can be converted into data and stored on the blockchain, including the real-time status of the mining machine, Information such as live photos or video monitoring of real-time operation and maintenance of the mining farm, and the real-time output of the digital currency status of the mining pool can be chained throughout, providing real and reliable governance reference data for the DAO. At the same time, a DAO that aggregates the entire ecology of the mining industry provides The perfect landing possibility of blockchain governance.

The mining ecological aggregator is not only used by a single link such as mines, mining pools, mining machines, and mining practitioners, but also allows practitioners who want to become mining fund managers to complete the mining ecological integration through the mining ecological aggregator The realization of a complete project such as project initiation, financing and settlement. Fund-raising projects governed by DAO have open data, transparent processes, and full control. Ordinary investors can participate in projects more conveniently and with lower risks through the mining ecological aggregator.

There has always been an insurmountable barrier between the blockchain investment circle and the traditional investment circle. The traditional investment circle pays more attention to asset security, while the chain investment pays more attention to higher returns. Therefore, DAO based on blockchain technology, an autonomous organization completely controlled by code, has two notable features, namely “decentralization” and “autonomy”, which will be a better option for investors The solution involves all the funds being handed over to the chain contract as the asset custodian, and the community jointly decides the investment direction and progress. The investment process and assets are completely open, transparent, safe and reliable, which reduces the lack of personal knowledge and information asymmetry. loss.

As the cornerstone of the blockchain industry, digital currency mining has a development process that is quite different from the development of the blockchain. Assets are not transparent, and returns are not transparent. Early investors have a lot of head resources, and industry monopoly has discouraged later investors. In order to improve this situation and lower the barriers to entry, the mining industry will serve as a pilot industry for our assets on the chain, open investment and income transparency, open up new nodes for the two sectors, build a mining ecological aggregator, and expand the new chain of asset investment. direction.

summary

With the emergence of DAO projects, a new model of blockchain investment will be born. Through the form of DAO, investors holding tokens/tokens will carry out community autonomy, open voting to select investment opportunities, and then pass phases and batches Invest funds according to the progress of the project. This method will better protect the interests of investors and effectively avoid the unhealthy dependence and risks caused by centralization. The mining ecological aggregator of DAO will open new mining investment. Vision, to create a closed loop of investment ecology of decentralized community autonomy. Will bringing traditional markets into the blockchain through DAOs be a weapon to empower DeFi?

In the next issue, we will specifically introduce how to aggregate the mining ecology and form the next DAO.