The article argues for revitalizing Decentralized Autonomous Organizations (DAOs) beyond their current form—typically token-holder voting on treasuries, which is inefficient, prone to capture, and fails to address human political flaws—leading to widespread cynicism. However, DAOs are essential for several key functions in the crypto ecosystem:
- Better oracles: Current designs (token-based or human-curated) are flawed—vulnerable to manipulation or lacking decentralization. New social and technical approaches are needed to secure DeFi without high rents.
- Onchain dispute resolution: Critical for advanced contracts like insurance, but highly subjective and challenging.
- Maintaining lists: Such as secure apps, interfaces, or token addresses.
- Quick project bootstrapping: For short-term collaborations without legal overhead.
- Long-term maintenance: To sustain projects if original teams vanish, funding new contributors.
The author uses a “convex vs concave” framework: Concave problems (e.g., averaging inputs for robustness) require median-based systems to counter attacks; convex ones (e.g., decisive actions) benefit from checked leadership.Challenges include privacy (to avoid social gaming) and decision fatigue (leading to declining participation). Solutions leverage modern tech:
- ZK (zero-knowledge proofs), MPC/FHE for privacy.
- AI to reduce fatigue, used thoughtfully to enhance human judgment (e.g., via DAO-level tools like DeepFunding or user-controlled LLMs), not replace it.
- Consensus tools like Polis for better communication.
The “DAO stack” must integrate governance with communication platforms. Projects should prioritize innovative oracle/governance designs (50% effort), incorporating ZK, AI, and communication to extend Ethereum’s decentralization upward.