Defining Real and Fake DAOs

The term “DAO” is applied to so many different organizations that it has become close to meaningless. Whatever DAOs are, they must fall under 3 clear and distinct concepts: 1) be decentralised, 2) be organisations and 3) be autonomous.

Thus, a misunderstanding of the word “autonomous” within the term “DAO” would interpret “autonomous organization” to mean “an organization that makes use of smart contracts”. This misunderstanding is a massive ‘cheat’ which lets many arrangements that are not “autonomous” in Webster’s sense nevertheless be deemed “DAOs” merely because they involve ... See more

This could occur in many different ways: For example, all organizational decisions could be determined by tokenholder voting, but token ownership and voting turnout could be widely dispersed among many “minnows” (persons each holding a small % of total token supply/total voting power). Alternatively, different types of decisions could be delegated ... See more

A good example of the latter type of decentralization is Bitcoin. Other than the consensus protocol itself, there are no formal governance rules existing among mining nodes, non-mining nodes, users, exchanges and core developers, but these groups all have different kinds of influence over Bitcoin and essentially govern Bitcoin on an emergent basis ... See more

“DAO” in its purest form refers to an unincorporated association of persons using censorship-resistant technologies to permissionlessly engage in non-hierarchical governance of shared resources and goals. Organizations that do not meet this definition must not be deemed DAOs.

The Problem: “DAO” Has Lost all Clear Meaning

Using blockchain or smart contracts in some superficial way is not enough for an organization to be considered a DAO. For organizations that use smart contracts but aren’t DAOs, Gabriel prefers the term Cybernetically enhanced organizations.

Webster defines “decentralization” in relevant part as follows: "the delegation of power from a central authority to regional and local authorities". This means that decentralization occurs when power is widely dispersed or distributed.

An organization is some sort of association of individuals for common ends or who interact with one another in a patterned way.  For those who have studied corporate law, we know associations are of two main types: unincorporated and incorporated.