If you want to start coding with Ethereum, we have documentation, tutorials, and more in our developer portal. What is Ethereum? Ethereum is a technology that's home to digital money, global payments, and applications. The community has built a booming digital economy, bold new ways for creators to earn online, and so much more. It's open to everyone, wherever you are in the world — all you need is the internet. Ethereum's decentralized finance DeFi system never sleeps or discriminates.
With just an internet connection, you can send, receive, borrow, earn interest, and even stream funds anywhere in the world. A specially interesting application is the emergence of new forms of decentralized governance which are mediated by a blockchain. These blockchain-enabled organizations are known as Decentralized Autonomous Organizations DAOs , and take benefit of the affordances of blockchain infrastructure to enable e. The blockchain field has attracted a broad range of experts and enthusiasts [ 5 ], currently with a majority belonging to the fields of Computing and Finance, and focused on new financial applications, e.
Some of these projects chose to rely on DAOs for their governance. In order to meet this demand, several platforms have recently appeared to provide DAOs as-a-service, that is, deploying DAOs in a public blockchain and facilitating community interactions through them.
These platforms have reduced the technical knowledge required to operate through a DAO, and thus thousands of people are now interacting within hundreds of DAO communities. Research literature has covered it mostly with theoretical works [ 4 , 6 , 7 ], although some empirical works have been slowly emerging. We can highlight qualitative research such as an ethnographic account of the first popular DAO [ 8 ], a comprehensive study understanding the imaginaries behind DAOs [ 9 ], or a content analysis of grey literature on three popular DAOs to understand how are they governed [ 10 ].
Recently, a study analyzed how affected on DAO activities the increases in the costs of using the Ethereum blockhain that took place in the second half of [ 12 ]. In this paper, we will contribute to the growing stream on literature on the topic by providing a statistical analysis of three of the main DAO platforms Aragon, DAOstack and DAOhaus in terms of growth, activity, voting system and funds.
The article proceeds as follows: Section 2 introduces the main concepts related to blockchain, Ethereum and DAOs. In Section 3 , we review the three DAO platforms that we are going to analyze in this work. Section 4 compares the three main DAO platforms in terms of growth, activity, voting system and funds. Section 5 proceeds to discuss the main findings, while Section 6 finishes with some concluding remarks, including the limitations of our work. Blockchain and DAOs: the field in a nutshell Blockchain Blockchain is a distributed ledger, which can be understood as a distributed append-only database with a synchronization mechanism.
Like the Internet, a public blockchain is an open infrastructure, not owned or controlled by one central authority. Generally, the ledger database is replicated in each of the network nodes, and thus can be viewed by all its users [ 2 , 13 ].
Thus, we consider transactions and operations in public blockchains to be transparent, since they can be tracked and seen by any participant in the network. The ledger is a sequence of blocks hence block-chain that contains a set of transactions already performed Footnote 3. Each block points to the previous block in the ledger, forming a chain. When a user wants to add a new transaction to the ledger, the transaction data is verified by the so-called miners.
If there is consensus on the new block validity, it is added to the chain in a decentralized process [ 1 , 2 ]. Furthermore, the blockchain grants immutability of its past records: nobody can delete and alter the data of the block placed within the validated chain [ 14 ].
After that, thousands of new cryptocurrencies have emerged with their own features [ 16 ]. The second wave of blockchain was prompted by the advent of Ethereum in [ 17 ]. Ethereum provides a distributed computing platform and a programming language, Solidity [ 18 ].
Dapps have been applied in many fields [ 20 , 21 ], specially on Finance. Thus, we may highlight examples such as banking services [ 22 ] or cryptocurrency payments [ 23 ], leading to the surge of Decentralized Finance DeFi , a form of finance that does not rely on central financial intermediaries used to get crypto-savings, crypto-loans, or trade with them [ 24 ]. Beyond Finance, we may mention IoT, using blockchain as a common communication layer [ 25 ], or supply chains, facilitating traceability and desintermediation [ 26 ].
In the context of this article, the most relevant field where blockchain and smart contracts have had an impact is in enabling new forms of decentralized governance, such as Decentralized Autonomous Organizations DAOs , where decision-making is distributed or delegated away from a central authority. Decentralized autonomous organizations A DAO is a blockchain-based system that enables people to coordinate and self-govern themselves mediated by a set of self-executing rules deployed on a public blockchain, and whose governance is decentralized, that is, independent from central control [ 27 ].
DAOs are organizations in the sense that they mediate the interactions of a group of people, typically an open community that joins as members. In some DAOs, members are token holders of a certain token that enables DAO participation, similar to corporation shares. DAOs are considered autonomous because, unless its code explicitly says so, they are independent from their creators. Their operations follow the rules embedded in its code, together with the human governance of its members.
Moreover, being deployed on a public blockchain, they are censorship-resistant, since there is no central controller that may turn off the DAO and its provided service. Thus, as long as there are members willing to execute their code, DAOs will continue operating, e.
DAOs are considered decentralized first because of relying on a server-less decentralized infrastructure a public blockchain. Second, because they rely on certain decentralized governance mechanisms, so the decision-making process relies on the collective agreement of its members. This process typically relies on some form of voting, in which the DAO members can participate. Note that such decisions may refer to e.
That is, upon the agreement of its members, a DAO may be updated to operate differently, with a new set of encoded rules. This may be critical to fix a bug in the code, but also enables it to adapt to community needs and demands [ 28 ]. DAOs are deeply related with Ethereum, the most important general-purpose public blockchain [ 29 , 30 ].
In Ethereum, every operation performed implies a cost, i. In practice, validating and performing those operations require a certain amount of computational work performed by miners. The amount of computation required by an operation is named gas, and it is paid in cryptocurrency; in Ethereum, with its token Ether. For the user approach, gas ultimately translates into money and the amount of gas depends on the size and type of each operation.
Hence, the Ethereum blockchain can be seen as a costly and secure distributed database system. DAO activity is typically recorded into the blockchain Footnote 4. This fact conditions the type of data that a DAO stores in the blockchain, since blockchains are not designed for massive storage.
For example, DAO members typically use other complementary off-chain tools for their communication, such as forums like DAOtalk Footnote 5 , since DAO software does not usually offers interactive communication tools. Consequently, this technological aspect surely affects the behavior of DAO communities and could make it substantially different from other online communities. See for example how the increases in the Ethereum cost affected the DAO activity in [ 12 ]. TheDAO was a sort of hedge fund, in which contributors could directly vote proposed projects.
However, the concept of immutability of the ledger past records was damaged due to this event, and part of the community continued operating under the old rules, in a blockchain named Ethereum Classic in which the funds were stolen and not reverted [ 32 ]. This event was somehow traumatic for the blockchain community, and had multiple implications. Still, the endeavor of creating decentralized organizations to operate in the blockchain persisted.
However, it was widely recognized that the complexities of blockchain programming make the task of creating a DAO from scratch a highly risky project, even for specialists [ 8 ]. As a result, new solutions emerged to facilitate templates and tools to dramatically reduce both the risks and the technical knowledge required to deploy DAOs. DAOs enabled by a platform The platforms that provide DAO deployment as-a-service enable users to create their own DAO using a template that typically can be customized.
Colony will not be covered in this article due to its early development stage, with, to the best of our knowledge, just two DAOs deployed in the platform so far, and no APIs to retrieve the data. It is worth mentioning that Colony DAOs break with the typical proposal-driven schema of functioning, where each action of the DAO must be voted. In Colony, DAOs are task-driven, which means tasks are published, and members accept them for a payout [ 33 ].
Thus, the mechanics of task-driven vs proposal-driven DAOs may add complexities when pursuing comparisons in the future. Aragon aims to extend the use of DAOs as a free and open-source technology to allow the creation and management of decentralized organizations [ 34 ] under different forms including companies, cooperatives, nonprofits, or open-source projects.
Footnote 8 Aragon provides a static template to make your own DAO, but it also allows you to create a customized one. In addition, Aragon provides a SDK Footnote 9 to create and deploy smart contracts, apps, and organization templates i.
In this article, we will focus on the Vote app, since voting is the main action in most DAOs. Its decision-making system works as follows. The app defines two conditions that any voting must fulfill to be approved: 1 The majority required: From all cast votes, the percentage of positive cast votes must be greater than or equals to the required percentage of support.
Note both parameters may be changed via voting. However, voting in Aragon goes beyond the Voting app, since there are other apps for voting and decision-making. For instance, there is an app, currently in development, which implements the decision-making system of the DAOstack platform, Holographic Consensus [ 37 ] explained below. Another notable example is the Dandelion voting app which implements the decision-making system of Moloch implemented in the DAOhaus platform explained below.
Another ambitious decision-making system implemented as an Aragon app is Conviction Voting CV [ 38 ], which derives from the work on Social Sensor Fusion [ 39 ]. Individuals may change their preference vote at any given time. In DAOs, members represent their preference allocating their limited tokens to one or more proposals. The longer they keep them there, the more conviction the proposal will accumulate and the higher the chances it will reach the threshold to pass.
Note such threshold is dynamic, and dependent on the DAO treasury funds [ 38 , 40 ]. CV was tested through simulations Footnote 11 , and Aragon makes it possible to deploy it in a real environment [ 41 ]. There are other ways to change the decision-making processes in Aragon, changing not just the voting app, but how the organization works.
For instance, the Committee template [ 42 , 43 ], which facilitates creating different committees sub-groups within a DAO. The DAO community may delegate certain decisions or tasks to those sub-groups, which may operate autonomously. The idea is to facilitate scalability in decision-making processes Footnote 12 , reducing the number of people involved. Matan Field, co-founder of DAOstack, states that the bigger a DAO is, the harder it is to manage it [ 44 ], which mimics the classical issues of governance in groups.
Such model is feasible for small DAO communities, where the number of proposals does not escalate further than what the number of members can study and decide on. However, the higher the number of members, and thus the number of proposals, the more proposals need to be reviewed by each member in order to participate. A naive solution to this matter could be to reduce the required quorum i.
For example, an attacker could spam requesting the DAO funds, i. Thus, it may overwhelm the community, making it easier to get the funds using a lower quorum. However, there is an alternative method for passing proposals. If a proposal receives enough stakes, reaching a threshold, it may skip the requirement of absolute majority voting and be passed with a relative majority. Afterwards, stakers may resolve their bets, depending if they guessed correctly earning tokens or not losing tokens.
If HC works correctly, it will act as a filter for the community, which may focus on the proposals that attract attention from stakers. Stakers thus filter out bad proposals, enabling a better scalability for large DAO communities. And the DAO may rely on stakers since they are incentivized to be aligned with the DAO overall opinions, since they need to guess if the voted proposals will eventually pass or be rejected.
Preliminary research shows that HC works as intended [ 47 ]. Moloch DAO was a grassroots response to coordination problems in funding Ethereum 2 and other community grants. DAOhaus DAOs implement a straightforward voting system, which is basically a non-quorum system, where always a relative majority is enough to approve a proposal.
This way to proceed simplifies development and testing processes [ 48 ] of their voting system. This voting system has two main attributes to consider: shares and tributes. And tributes refer to an amount of shares the proposal applicant pays to the DAO. For instance, if a proposal has just a request of shares, it typically belongs to a project proposal performing a certain task for the community in exchange of the shares.
If a proposal has just tributes, it represents a donation to the DAO [ 51 ]. Some changes introduced in Moloch v2, include the ability to expel a DAO member from the community. It also includes some changes like the ability to send proposals by non-DAO members, or some changes related to its voting system, described below [ 49 ]. Moloch v2 introduces the sponsorship, which slightly changes the voting system.
Now, when a proposal is sent, it requires the sponsorship of a DAO member. Such sponsorship is performed when any DAO member makes a deposit confirming that it is trustful. All the proposals need to be sponsored before moving on to the regular queue, where the voting starts [ 49 ].
When the voting ends, independently of the outcome, the sponsor will get a portion of her deposit back. In this way they intend to avoid attackers to spam plenty of proposals to exploit the non-quorum characteristic of the Moloch voting system.
Quantitative comparison of the three main DAO platforms We will compare the three main DAO platforms introduced in the previous section, i. The data used in this comparison covers, from the start of activity of each platform Footnote 18 to November 30, The data collection process is described in the Appendix. The comparison will tackle four dimensions that will help us to better understand the DAO phenomenon: growth, activity, use of the voting system, and the funds owned by DAOs.
Growth statistics will help us to analyze the adoption of DAOs: how many of them are and, how many people is involved. Activity metrics will help us to determine how many DAOs are operative and how many users are involved, because it may happen that DAOs are abandoned, as happens in other online projects, such as wikis [ 52 ], or that some members may abandon the project or barely participate.
Since one of the most prominent features of DAOs are their voting systems, we will also analyze them to see how they are used by means of participation statistics, and percentages of proposals approved and positives votes. Finally, we will have a look at the cryptotokens used by DAOs, particularly, we will analyze their adoption and the funds managed for the richest DAOs.
It is important to remark that in our analysis, we will include both the DAOs deployed in the Ethereum mainnet and the DAOs deployed in the xDai network. In mid, the use of the Ethereum mainnet spiked, increasing dramatically the fees to process any transaction e. As a result, DAO platforms searched for alternatives to avoid such expensive prices.
One of the most successful solutions was the case of the xDai network. It has a bridge with Ethereum mainnet it is a sidechain facilitating the move of tokens from each other. As the table shows, the mainnet is orders of magnitude more expensive and slow than xDai. Note xDai, in turn, is less decentralized than Ethereum and it is dependant on it. Table 1 Comparison of the prices of two DAOhaus operations and the average speed, in both the Ethereum mainnet and xDAI networks in October Full size table Before analyzing the four aforementioned dimensions, we will examine the use of xDai and mainnet.
Table 2 shows the number of DAOs, users, and proposals per platform and by network mainnet and xDai. Aragon is by far the most important platform in terms of DAOs, users and proposals. Aragon started using xDai from July Note there is no available data about the proposals in xDai in Aragon. The adoption of xDai in terms of users and DAOs is significantly higher than in the other two platforms. These figures illustrate the importance of the xDai network in the DAO platforms.
Hence, we will include xDAI in the comparisons in the following sections. Growth over time Given DAOs are an early field relying on a novel technology, growth by early adopters is critical for the future mainstream adoption. In fact, observing the growth over time of an online community, we may observe e.
History[ edit ] The open source computer code behind the organization was written principally by Christoph Jentzsch, and released publicly on GitHubwhere other contributors added to and modified the code.
| Gaming international online betting uganda christian | In the case of Aragon, DAOs may have multiple voting systems. For instance, the Committee template [ 4243 ], which facilitates creating different committees sub-groups within a DAO. According to this metric, the impact of xDai has not boosted ethereum organizations activity of DAO users. This may respond to discussions held off-chain, before proposing on-chain. If members transfer cryptocurrency under little regulation, the risk of fraud remains. It has a bridge with Ethereum mainnet it is a sidechain facilitating the move of tokens from each other. |
| Gaa national football league 2022 betting trends | In addition, as we previously explained in Section organizations ethereum. When the voting ends, independently of the outcome, the sponsor will get a portion of her deposit back. To avoid this set-back, Congress must amend the ethereum organizations requirements to provide an exemption for DAOs. Please ethereum organizations our Cryptopedia Site Policy to learn more. Growth over time Given DAOs are an early field relying on a novel technology, growth by early adopters is critical for the future mainstream adoption. This event was somehow traumatic for the blockchain community, and had multiple implications. It leverages reputation-based governance and holographic consensus to coordinate and manage funds, meaning no one can buy their way into influencing its future. |
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| Asian betting companies | Beyond its early applications in Finance, it has also allowed the emergence of novel new ways of governance and coordination. Our ethereum organizations, discussed in Section 5show that there are notable differences across the DAO platforms in terms of growth, activity, and voting results. The first step took place in June when 5, new users joined the project and almost 5, joined to the same DAO [ 47 ]. The opinions and views expressed in any Cryptopedia article are solely those of ethereum organizations author s and do not reflect the ethereum organizations of Gemini or its management. A DAO is intended to improve the traditional management structure of many companies. The main difference that we observe is that in DAOhaus the ratio in xDai almost doubles that in mainnet, which could mean that xDai boosted participation. It is important to remark that in our analysis, we will include both the DAOs deployed in the Ethereum mainnet and the DAOs deployed in the xDai network. |
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| Ethereum organizations | Multisig governance While DAOs may have thousands of voting members, funds can live in a wallet shared by active community members who are trusted and usually doxxed public identities known to the community. Token-based membership Usually fully permissionless, depending on the token used. Even through the use of multi-sig or cold walletsDAOs can be exploited, treasury reserves stolen, and vaults emptied. Preliminary research shows that HC works as intended [ 47 ]. Investors and contractors alike needed to convert ETH into fiat currencies, and this could have impacted the value of ether. Here are some limitations to ethereum organizations DAO structure. It is worth mentioning that Colony DAOs ethereum organizations with the typical proposal-driven schema of functioning, where each action of the DAO must be voted. |
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A 6-STEP IMPACT INVESTING CAREER CHECKLIST INVENTORY
What is Ethereum? Ethereum is a technology built for the public good. It is a worldwide system, an open-source platform 1 to write computer code that stores and automates digital databases using smart contracts, without relying upon a central intermediary 2, solving trust with cryptographic 3 techniques. Ethereum is not owned by anybody, and it is built and maintained by thousands of people, organizations, and users all over the world; it is a commons from which everyone can benefit.
In the code, there are incentives for participants to help secure the system. Access to Ethereum is open to everyone; no permission is required. The network is powered by nodes4 that anyone can run. Token holders delegate votes to users who nominate themselves and commit to stewarding the protocol and staying informed.
Automatic transaction governance In many DAOs, transactions will be automatically executed if a quorum of members votes affirmative. A famous example Nouns — In Nouns DAO, a transaction is automatically executed if a quorum of votes is met and a majority votes affimrative, as long as it is not vetoed by the founders.
Multisig governance While DAOs may have thousands of voting members, funds can live in a wallet shared by active community members who are trusted and usually doxxed public identities known to the community. After a vote, the multisig signers execute the will of the community. Membership can determine how voting works and other key parts of the DAO. Token-based membership Usually fully permissionless, depending on the token used.
Mostly these governance tokens can be traded permissionlessly on a decentralized exchange. Either way, simply holding the token grants access to voting. Share-based membership Share-based DAOs are more permissioned, but still quite open. Any prospective members can submit a proposal to join the DAO, usually offering a tribute of some value in the form of tokens or work.
Shares represent direct voting power and ownership. Members can exit at any time with their proportionate share of the treasury. Typically used for more closer-knit, human-centric organizations like charities, worker collectives, and investment clubs.
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