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The Internet is not a stagnant entity. Since its inception, it has transformed and grown — both in functionality as well as in its role within our daily lives. Its evolution can be broken down into three distinct phases. The 90s brought us Web 1.0, which enabled users across the globe to consume static content in the form of text, pictures, and (occasionally) a pixelated video. 1.0 quickly became 2.0, and this era shut the doors on passive consumption and introduced two-way interaction streams led by the onset of social media platforms.
Everyone agrees that the internet is moving into Web 3.0, and that this next phase will create profound changes in how individuals interact not only with online content, but with institutions that communicate or even solely exist online. Web 3.0 will include real-time aggregation of user data to create a personalized web experience for each online citizen. But many internet entrepreneurs and leaders predict that Web 3.0 won’t just be about mega-powerful online institutions such as Facebook exploiting user data to create curated content. It will be about individual users disrupting how power is distributed inside online institutions themselves.
It sounds utopian, but the technological and ideological framework needed to make this more participatory Web 3.0 is already in development. Some of the most promising tools out there for a distributed internet are DAOs, or Decentralized Autonomous Organizations.
The Promise of Decentralized Autonomous Organizations
The internet’s complexity is only growing over time. More and more people are creating content, interacting, and forming online social structures. According to Cisco, global IP traffic will increase nearly three-fold over the next 5 years and reach 3.3 ZB per year by 2021.
This flood of data and participation presents both promise and peril for a decentralized, democratic Web 3.0. On the one hand, more and more people can make their voices heard in the online world and cooperate with initiatives to work towards shared goals. But online organizations struggle from the same problems that institutions have always suffered from, and fighting those inefficiencies in a complex online environment filled with millions of stakeholders can be even more difficult than it is in small organizations.
According to numerous studies, coordinating large groups causes a motivational cost (“social loafing”), relational cost (feeling less connected), and coordination cost of keeping everyone on the team up to speed. Although there have been many great innovations to fix the technical scaling issues of Web 3.0 (cloud computing, internet speed, etc.), the “human power” of interpretation and delegation is falling behind. For a company or group to be highly efficient, the decision-making process must be as fluid as the information evolving around us.
DAOs present a unique solution to the problem of scalable organizations. Since civilization began, organizations have been built on agreements governed by authority figures, relying on hierarchical structures to enforce social contracts (e.g. an employee who isn’t paid according to their contract can appeal to the court system). But authority figures trusted to make governance decisions often make them erroneously, swayed by bias or incomplete information.
DAOs memorialize formal agreements and contracts in blockchain smart contracts. This means governance on DAOs is essentially self-enforcing. Because such a governance system needs no hierarchical authority structure, radically different ways of organizing decision-making power are suddenly available.
Bringing Revolutionary Technology to the Dreamers
DAOs promise much for the internet’s future, but they’re still niche projects rather than a commonly used concept. This needs to change if DAOs are ever going to unlock Web 3.0’s true potential. The need for DAOs is comparable to Microsoft’s ascent in the 90s. While technology inside computers was revolutionary even before Microsoft existed, it was not until Bill Gates built a way for the average person to efficiently communicate that this technology took off and developed into a global mainstay. The internet needed a way to interact and the innovation of the operating system allowed people to build things into this ecosystem at a much faster pace.
DAOstack offers opportunities to build DAOs specific to group values and functions, whether the group’s goal is to manage an investment fund or collaborate on building research tools. A small charity group, for example, could use DAOstack to build effective mechanisms for collective decision making in real-time regarding how funds are spent. This lets a crowd co-own and co-manage assets of a fund without going through the normal time-consuming channels.
DAOs enable a more efficient way to decentralize curation. Currently, website owners, editors, and users must rely on centralized forces to rank very objective quality content: Google tells users which fashion blog is the best through their search engine; Facebook tells users which friends’ post is most important at the top of your newsfeed. DAOstack provides tools for creating DAOs that rank content such as product reviews and hotel ratings in a transparent and democratic manner, putting more weight on collective community governance mechanisms rather than the profit margins of a content-aggregating organization.
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