SCRF Interviews | DAO Standards - DAOStar One (Ep.10)

Overview

The first of two episodes dedicated to DAOStar One, an attempt to define a common technical standard for DAOs. Featuring a discussion between Metagov Executive Director Joshua Tan and Isaac Patka, Co-creator of Logos DAO and contributor to Moloch Mystics. This conversation was moderated by SCRF’s Head of Operations, Eugene Leventhal.

Links:

Video

Audio (Apple, Spreaker)

Transcript

At issue:

  • Decentralized Autonomous Organizations (DAOs) lack a common technical standard which would make it easier for developers to create tooling for DAOs, and give DAOs the same level of legibility and interoperability that other web3 entities like NFTs currently enjoy.

Takeaways from the discussion:

  • DAOStar One is a roundtable of key organizations in the DAO ecosystem. They created the ERC-4824 standard which offers a common technical standard for DAOs, similar to ERC-721 for NFTs.
  • DAOs can be defined with two primitives: there’s a smart contract, which has behavior, and there are members. Members can meaningfully affect the behavior of the smart contract with proposals.
  • The benefits of having a shared technical standard for DAOs include interoperability between DAOs, legibility, i.e. being able to quickly understand what a DAO is about, and being able to better develop tooling

The story begins at MetaCartel | MCON 2021 at a picnic table over some post-conference beers. Joshua Tan, executive director at MetaGov, was complaining about the lack of standards for building and measuring DAOs with a group of fellow governance experts.

“Right now it’s impossible to quickly peer into a DAO and get a sense of what’s going on,” says Isaac Patka, co-creator of Logos DAO and contributor to Moloch Mystics. “It’s almost like doing forensic analysis, you might start on Twitter, look for a website… the whole concept of a DAO, what that DAO manages, and what it’s doing is spread across several platforms.”

Suddenly it struck them. Why not begin building a common standard? NFTs have a common standard, defined by ERC-721, which includes TokenURI, a unique identifier, which typically contains information like a link to an image file.

“If you go to EtherScan and click on an NFT contract,” Patka says, “EtherScan knows it’s an NFT contract, there’s rich information available, you can follow token trails, and all of that is because we’ve agreed on a way to describe an NFT and the ownership of an NFT.”

They agreed to put together an Ethereum Improvement Proposal (EIP) defining a common standard for a DAO and to have it ready by ETHDenver in only four months. DAOStar One is the organization they used to coordinate the project, and future iterations.

“The schema we came up with is extremely basic,” says Tan. They wanted to avoid overly defining it and keeping it extensible. “The standard imagines DAOs being defined by two basic things, behavior, in that there is a smart contract that has behavior; and a DAO has members.”

Members meaningfully affect the behavior of the DAO contract in the form of proposals. So the EIP defined a set of members, proposals and an activity log that defines relationships between members and a proposal.

If broadly accepted by the DAO ecosystem, the information will improve legibility, which is the ability to understand what a DAO is doing and who is involved with it, and interoperability, the ability for DAOs to play nice with one another.

One of the first benefits will be cutting down on redundancy and unnecessary work like aggregating data. “Eventually, these common data schemas will allow people to do things we can’t anticipate yet,” Patka says. “There’s a vision of a multiDAO future where DAOs are members of other DAOs and proposals are seamlessly passed from one to another, which would be a nightmare, unless we can manage the data.”

The EIP was submitted during the ETH Denver conference, and accepted as an Ethereum Request for Changes (ERC), in other words, becoming fully integrated into the Ethereum ecosystem.

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Are there any challenges to creating a standard that are unique to DAOs, compared to something like NFTs? It seems like there’s already a large ecosystem of DAOs and many of them might not want the scrutiny of an Ethscan-like interface. Would you be able to apply the standard to DAOs without their consent? Or would this be built into the smart contracts.

Introduction

The term DAO stands for Decentralized Autonomous Organization and refers to organizations that are run by rules encoded in software. As a result, they can be more efficient and resilient than their conventional counterparts. The idea of DAOs is not new; there have been examples of successful collective governance models throughout history. However, advances in blockchain technology have enabled us to implement these models at scale and with greater flexibility than ever before.

Shared standards are a sign of market maturity. As an industry, we’re still learning how to work together. Standards are a sign of maturity - they create a level playing field so that people can rely on each other and create economies of scale that enable startups and established companies alike to grow. Standards help ensure security, liability and compliance across the industry. They also make it easier for new entrants without extensive experience in the arena to get started quickly by following best practices.

When everyone is playing by the same rules, it’s easier for new players to enter an industry.

This is particularly important for open source projects where code contributors need not be part of a single company or organization. Standards also increase competition, which drives innovation and lowers costs over time. In addition to reducing barriers to entry for new players, standards help drive down costs related to learning how to use products and services correctly—and they make communication easier among developers working on similar problems across multiple organizations or companies.

We’ve all heard about the It matters because it allows us to develop on top of each other’s work and share our experiences in ways that benefit everyone. Rather than reinventing the wheel, we can focus our efforts on solving new problems and finding innovative solutions.

There has been a lot of activity in recent times over the issue of codifying standards. Many people in the network community (in fact, most) agree that shared technical standards are a good thing, but it’s hard to get concrete details on the subject.

In an effort to lay out the benefits and reasoning for why DAOs should adopt some sort of technical standards for their implementations, standards can help ensure security, liability and compliance to drive innovation, creating a level playing field, attract new entrants and expand the market to create economies of scale for both producers and consumers.

The ability to produce products at lower costs means that companies can offer their goods at more competitive prices, making it easier for customers to purchase them in larger quantities, which reduces costs for everyone involved and creates more jobs across all levels of the supply chain

I’d like to highlight why companies should look to establish shared technical standards in their organization and why we need a standard bearer?

Developing products to the same standard makes it easier to manufacture parts in bulk, which lowers production costs. In turn, using these standard parts means that consumers have access to more affordable goods. Every company wants to be a standard bearer and set the bar for their industry, but few organizations have the audacity to actually make that their goal.

DAO standards help us define technical standards, protocols and applications that benefit from shared governance models, there are also used for decentralized applications (dApps) that run on top of any blockchain, even private blockchains or public networks like Ethereum.

These standards provide a set of tools and patterns which can be used to build new protocols with better security guarantees, or even entirely new DAOs. They have the potential to revolutionize many industries, but only if they can be standardized. There are many advantages to having clear standards for DAOs and their associated applications, including increased interoperability between platforms and applications built on top of them (e.g., wallets, exchanges).

As the market matures we expect that more organizations will recognize the value in sharing these common standards with other companies who wish to build upon them. Now that we know the benefits of having a shared technical technical standard, let’s talk about where we’re at on that journey as this shared technical standard is in its infancy.

It exists It only exists in the form of an ERC-4824 token standard. However, as we’re seeing more and more companies contributing to this effort, it’s important to take a step back and look at how much progress has been made so far.

  • What is the current status of the ERC-4824 standard? The ERC-4824 standard is currently in its infancy. The first version of the standard was released on March 25, 2018 and was largely focused around token functionality and not so much on governance. This was followed by a second revision on April 4, 2018 that added some additional functionality to the standard.
  • Who are some of the companies that have contributed to this shared technical standard? The ERC-4824 standard is a community effort and as a result there are many different companies contributing to it.
  • Some of the more notable contributors include: BlockApps, ConsenSys Diligence and MyCrypto. What’s next? The ERC-4824 standard is still in its infancy, can we expect to see additional iterations of this standard over time as it continues to mature?

My conclusion, we’re just at the beginning of a new era of digital transformation

We want to make sure that everyone can participate in this journey, regardless of who they are or where they live. That’s why working on open-source standards like ERC-4824 DAO and Web3.0/ERC-721 which any person or organization can use without needing permission from anyone else.

We do this because we believe that the future of digital services will be built on open standards, not proprietary technologies. If we get it right, then in a few short years we’ll be able to look back on this time as an inflection point for humanity.

This is just the beginning of a new era of digital transformation and new ways of creating value for people, because trust & reliance on centralized systems are eroded by value proposition of the most populous movement, our Web3 Self-Sovereign CULTURE DECENTRALIZATION LIBERATION & FREEDOM.