An overview and explanation of current developments of DAOs on the Ethereum Blockchain. Specific focus on the slock.it DAO use case, governance, entity interactions and a financial categorization.

1. Decentralized Autonomous
Organizations
on
By Paul Kohlhaas
paulkohlhaas@gmail.com

2. “[A DAO] is an entity that lives on the internet and exists
autonomously, but also heavily relies on hiring individuals to
perform certain tasks that the automaton itself cannot do”
V. Buterin (2014)
“It is a new breed of human organization never before
attempted. The DAO is born from immutable, unstoppable, and
irrefutable computer code, operated entirely by its members”
The DAO (2016)
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3. What is a DAO?
• Distributed across the internet without
centralized authority
• Allows human organization and intervention
without third-party trust
• Governance and rules enforced via
incorruptible code and smart contracts
• Risk/reward schemes with programmable
incentives
• No formal legal or physical representation
• Ownership via cryptographic tokens fueled
using Ether
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4. DAO Quadrant
Source: V. Buterin (2014)
https://blog.ethereum.org/2014/05/06/daos-dacs-das-and-more-an-incomplete-terminology-guide/
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5. Digix DAO
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6. The (slock.it) DAO
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7. Use case: Overview
• Building the «Standard DAO Framework»?
• Establishing industry standard, however, many models will emerge
• Organized via slockit.slack.com, reddit and github
• Open source code freely available
Three entities:
1. Token Holders (Investors)
2. Contractors (Service Providers)
3. Curators (Auditors)
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8. 1. Token Holders
• During Creation, anyone can
send ETH toThe DAO and
becomeToken Holder
• Token Holders have the right
to vote on proposals
• They can receive rewards
generated by output of the
Contractors
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9. 2. Contractors
• DAO is essentially software and
cannot produce anything
• Contractors submit proposals for the
deveopment of products or services
• Proposals are in plain English backed
by a smart contract that defines the
exact relationship (deliverables,
responsibilites, parameters)
• Contractor is bound to the immutable
smart contract,Token Holders can
‘pull the plug’ anytime unless
otherwise specified in the contract
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10. 3. Curators
• Solve problem of completely
anonymous transactions within
DAO and 51% attack
• Nominated byToken Holders
• Curate the Contractor address
list
• Confirm that published contract
matches source code of
deployed contract
• Confirm identity of entities
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11. DAO
Token Holders
Normal Economy
Contractor A
*No traditional jurisdiction
*Governance by code
*Transactions in cryptocurrency
*National and international jurisdiction
*Governance bound to laws
*Transactions in fiat currency
1. Proposal
Build X at cost of Y
Contractor B
Contractor C
3. Vote & Accept
DAO accepts parameters of
proposal A
2. Extends Proposal Crypto Economy
Curators
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Curate ETH Address list, check proposals
Users
ETH/$
$/ETH 4. Contract Commencement
5. Product/Service Delivery
ETH/$
$/ETH
Source:Own illustration

12. SplittingThe DAO
The DAO
DAO 1 (55%)
AcceptA
DAO 2 (40%)
RejectA
DAO 3 (5%)
Payout
DAO 1.1
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ProposalA
DAO 1.2 Rewards?
Proposal B

13. DAOs as Decentralized Fund Managers
• DAOs present the emergence of an entire new class of participatory financial
assets
• A venture capital firm is not a venture capital fund.The firm manages the funds
it is entrusted with.
• The DAO in itself is not a fund. It is software that manages the funds it is
entrusted with.
• Instead of the Fund Managers getting significant share of profits, all profits go to theToken
Holders  Distribution of wealth
• The DAO produces and manages unique tokenized assets which represent
investor holdings and their rewards. It allows people to come together, and vote
on how resources will be allocated and benefits gathered.
• Similar to aVC, the DAO continues to exist after the ETH is spent to manage the
assets it now owns
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14. Future of DAOs
• Governance Models
• Governance Interfaces
• Boardroom
• Futarchy
• Legality of a DAO
• DAO Splitting/Sharding
• DAO ICOs andTokenTrading
• DAO, Blockchain and Artificial Intelligence
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15. Q&A
• Resources
• Reddit
• r/ethereum
• r/ethtrader
• r/thedao
• Github
• https://forum.daohub.org/
• Medium
Contact
paulkohlhaas@gmail.com
074 078 6005
Skype: paul.l.kohlhaas
charitychain.org
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