Post
Topic
Board Altcoin Discussion
Re: The DAO FAIL
by
iamnotback
on 10/06/2016, 11:41:59 UTC
5. Decentralized Autonomous Organizations (DAO). Technically the idea that investors buy a colored coin which enables them to vote on how the funds (denominated in which every token was exchanged for the colored tokens) are spent, and to sell this colored coin at-will on the market. Issues:

  • Game theory appears to be insolubly broken in that "No" votes are more expensive/risky than selling your vestment. There doesn't appear to be any remedy because even holding up funds for a grace period doesn't stop the run on the price after the "Yes" on a stupid proposal. However, I thought of a possible mitigation is to limit the value of proposals that can be voted on simultaneously, so that no bad outcome can't drastically impact the price. But this doesn't mitigate the game theory that there is an incentive for those who want to steal the funds to buy up the colored tokens so they can influence the outcome of the votes and those who see it has been infiltrated have more incentive to just sell than to fight, thus the infiltrators get to buy the tokens at cheaper and cheaper prices and yet the funds they control does not diminish in value. The game theory seems insolubly broken.

    Eric S. Raymond wrote about the Iron Law of Political Economics, and it is always a power vacuum. When pooling funds, the game theory is a mess.
  • Organization is the antithesis of decentralization. Business projects require cohesion and continuity with fluidity of decision making. There is no way to make this into a decentralized structure which doesn't destroy the essence of efficiency of production. Production is highly interactive and collaborative. The time lag in the communication overload of the Mythical Man Month can render a project into gridlock oscillation between competing options. Top-down voting is top-down governance, which is the antithesis of decentralized production. Decentralized version control open source (DVCS) solves this discord to obtain resonance by allowing every participant to have their own perspective on changesets. DAO is entirely wrong model for decentralized production. It fights against everything we learned with decentralized open source development, which is that the individual should be empowered to act independently.
  • Note I could envision tracking investment, decentralizing the trading of the shares (colored tokens), voting on a board, and distribution of dividends. But this voting on each proposal as a flat democracy does not work.


it is hype for scam purpose only

In the case of DAO, Slock.it, and Augur, then that seems to be the case. There is no valid use case which isn't game theory broken for those. Expect The DAO to eventually collapse in a massive clusterfuck of theft and waste with most losing their money. Wise people would get the hell out of The DAO as fast as they can, because the DAO is broken in the sense that you can be jammed from exiting.

Decentralized crowd funding might be viable.


I see the DAO as a game of who can compromise it first and cash out the funds to themselves.

Yup that is what it appears to be. But can you fathom what this is going to do to all the bagholders and to ETH.

I got your point that maybe there is some game theory to how long you stay vested. You like Russian Roulette I guess.

The SEC will be coming... this is the event that will start the SEC's involvement in actively regulating CC. Thanks to Vitalik and Tual.