The future of companies onchain — DAO3 will exponentially accelerate the creative process
There’s tremendous potential in the ICO model, despite the disillusionment today from it’s rocky wild-west beginnings. ICOs enable software crowd-funding in potentially transparent and borderless ways that can fuel an explosive new industrial revolution by micro-funding very early projects anywhere in the world, from anyone in the world. As we’re near a local crypto bottom today, many will be skeptical of this sentiment, especially given the fraud and early failures of so many ICOs. The crypto community has a short term memory, where in 6 months it can go from elation to despair, as per the Gartner Hype Cycle.
This article explains how the ICO process will be dramatically improved through culture, frameworks and code generation platforms. We can engineer an on-chain process that will do exactly what we want: fund projects in a sensible manner to develop and progress at a pace and scale never before seen in humanity. Imagine a talented team with a great idea and track record, but in a poor country with a different perspective and needs, such as the Philippines, receiving a modest $20k/month (instead of $100M upfront as in the typical Envion debacle), for novel projects, where their monthly funding would increase if they impress their funders. Such teams might have a great advantage to develop at low cost, and in ways that expensive teams in the West might do only if they manage to obtain large funding under a more centralized VC model. These teams could sprout everywhere, like grass, and be funded by committees without borders, according to their success. Note that this is not decision-making-by-committee (that’s ineffectual) but rather only funding by committee. Such a process puts the money where the merit is — where the creative potential is, in structured and highly effective borderless way.
A quick recap: Vitalik Buterin is the genius that created Ethereum and proposed the DAICO — an ICO whose funds are released on a schedule that can be sped up by vote, or recalled by vote.
Surprisingly, there is a glaring flaw in Vitalik’s first DAICO model; It’s unnecessary, problematic, and ethically sub optimal to
- Require a global vote to for individuals to get a refund
- Allow a global vote to force all individuals into a refund
The DAICO3 model fixes this. In DAICO3, unsold tokens are frozen in a DAO (decentralized autonomous organization), where they can be voted for burning, or sold for e.g. 10 years to finance and progress the DAO’s purposes.
Th DAO is not to be confused with “The DAO”, which was an early and specific investment funds DAO that infamously got hacked. Rather, this new DAO that we call DAO3 when it involves a DAICO3 and other features.
Much like in the offchain world, the DAO3 optimizes management in that the best managers to “bubble up”. A 51% vote can reassign a new manager that’s entitled to collect, over time, the frozen tokens left in the DAO3, and control future upgrades of the DAO3 products. Bad project managers tend to cause token prices to fall. Low token prices that attract better managers to garner a 51% vote to take over. This causes the best managers to bubble up. If anyone is unhappy with the new management, they can fork the project.
The DAO3 can create projects that live forever, long after it’s founders are gone, like how companies in the old paper world have lived beyond their founders. The benefits with DAO on-chain is that they transcend governments, bureaucratic red-tape, and do not require political stability for their longevity. This future of companies will not be centralized.
DAICO3 implements a smart contract sale and has 3 parts to it’s specification:
DAICO3 base options (not all mandatory):
- +FTD: (“Freeze tokens in DAO3”): Unsold tokens are locked in a DAO3, and later burned or sold, by vote.
- +IR: (“Individual Refunds”) instead of RBV (“Refund-By-Vote”) as in the original DAICO. 100% refund minus the % already released to the team as per item 3 below.
- +MRF (“Monthly Release of Funds”) e.g. 5% released to team per month, and can be increased by vote.
- +SoV: “Store-of-Value” : to protect ICO funds, default 0–100% of ETH is auto-converted to DAI
DAICO3A contains all base options, and is recommended.
DAICO3 by default has only the FTD option (“Freeze tokens in DAO3”). -FTD removes this option. +IR or +MRF would add those options.
Some might point out that refunds at a particular rate can create arbitrage opportunities should the project tokens’ value fall below their ICO price. That’s true, and that’s a good thing. It provides additional safety for investors, and incentivized projects to not overprice their ICO tokens.
To read more about DAICO3 options, check the full specification proposal here:
DAO3 has 3 parts to it as well:
DAO3s base options (not all mandatory)
- FBD: “Funded by DAICO3”
- VT: ”Vested Tokens” 51% can reassign owner of vested tokens
- PU: “Platform Updates” 51% can reassign owner of platform updates
DAO3A contains all options, and is recommended.
DAO3 or DAO3L is a light version that, by default, has just the Vested Tokens by vote option. -VT removes this option. +PU or +FBD adds those options.
The idea isn’t just to create 1 DAO3 project, and with a single configuration, but rather to create a code generation platform, or DAO3F — DAO3 Framework — that will empower projects to not only know the roadmaps, but have the vehicles as well.
DAO3F is a framework to generate code for DAO3s
The CoTrader project is particularly interested in establishing the DAO3F, because, as an investment funds platform on-chain, live on the Ethereum mainnet, at https://mainnet.cotrader.com:
CoTrader created smart funds where fund managers, or traders, could take their fund pool into ICOs governed by DAICO3, and, better yet, by DAO3 projects.
This is much safer for investors. CoTrader is looking to work with the Ethereum Foundation on the DAO3F initiative.
To learn more about CoTrader, check https://CoTrader.com
