The DAO Mathematics: 1+1 is Actually More Than 2

Backfeed, an open-source startup that develops a social operating system for decentralized organizations, suggests possible solutions for DAO problems.

Julian Feder of Backfeed writes:

“We felt about DAO’s the same way normal people feel about unicorns and UFO’s, and at last, contact is established, disclosure may begin.”

DAO’s potential failures

Backfeed is a young organization that has been working resiliently on developing effective models of conducting the Distributed Autonomous Organization.

They have put a lot of work into proving to the whole world that a decentralized organization can be just as agile, just as efficient and profitable as the traditional ones with one central point of control, or even more than them. Has Backfeed succeeded?

According to Backfeed, soon it’ll be submitting a proposal with solutions to the DAO’s potential failures brought up by concerned individuals.

Solving the problems

The event will take place at the DAO’s token holders’ audition and there will also be a press-release about it. To give you a quick taste of what is happening next week, take a look at the equations below and find out why ‘The DAO ≥ Traditional Organization’ is possible.

Problem 1. The DAO ≠ solving of complex problems

The DAO relays on shareholder democracy which can cause not-so-good results and double-dealing attempts.

Solution: supportive, rewarding governance scheme + reinforce of the influence = amazing results.

Problem 2. Money = influence

Invested capital represents the amount of risk one is taking. The bigger investment, the more power.

Solution: public reputation system = reinforcing positive influence + preventing leakage of funds, money dictatorship and discouragement.

Problem 3. No encouragement → no participation

If the system does not incentive shareholders to participate in decision making processes, any resolution will be rarely achieved.

Solution: public reputation system + incentive mechanisms (see Backfeed protocol).

Problem 4. Curator board = centralized control?

Right now, there is a board of highly trusted members of the Ethereum community performing curating tasks in the DAO. Will the curator board preserve the nature of The DAO in the way it was meant to be?

Solution: Curator board < algorithmical and decentralized human web of trust.

Is crowd wisdom our future?

Alex North concludes in his article “The DAO: are we taking “The Wisdom of the Crowd” too far?”:

“The wisdom of the crowd won’t reach any optimal investment decision unless the crowd has investment wisdom. Needless to say, after coming to terms with the need for proper advice, theDAO will immediately face another big question: how do you choose the experts? In my opinion, some degree of trust and centralization is the only answer.”

Looking at the wider picture, Backfeed is striving to find a general prototype for the decentralized cooperation. Is crowd wisdom really our future?