Recommendations for drawing out the potential of DAO
The World Economic Forum (WEF) released a report on decentralized autonomous organizations (DAOs) on the 17th. It is intended to inform developers, policy makers and other stakeholders to realize the full potential of the new organizational form of the DAO.
The WEF pointed out that it is difficult to make recommendations that apply to all DAOs, as what is required of a DAO depends on its purpose, community, and how it is organized. He then said that various DAOs would like to provide a starting point for formulating effective operational, governance and legal strategies.
What is a decentralized autonomous organization (DAO)?
Refers to a decentralized organization that functions autonomously. Abbreviation for “Decentralized Autonomous Organization”. Unlike general companies, there is no central administrator like a manager. Operation and management is performed by participating members and algorithms.
The WEF explains the background to the issuance of this report as follows.
In 2021 alone, DAO’s asset value will expand 40-fold from about 49 billion yen ($380 million) to about 2 trillion yen ($16 billion), and the number of participants will grow from 13,000 to 1.6 million. It swelled 130 times into a human.
From finance to social networks to philanthropy, the DAO digital organization seeks to reshape how we connect, collaborate and create.
The WEF continued that while DAOs are on the rise, many now face similar operational, technical, governance and legal challenges. The report makes recommendations to address these challenges.
Relation: Digital Agency’s Web3 study group to establish its own DAO
Recommendations on operational, governance and legal aspects
First, regarding the operation of the DAO, he mentioned setting a clear mission and vision before its establishment and building a structure in line with that. Furthermore, if operations are to be gradually decentralized, it will be necessary to legally consider how to transfer control rights.
Furthermore, he pointed out that it would be convenient to have a working group and teaching materials in charge of education when new members join. He also suggested setting a season (period) for activities focused on a specific theme, evaluating activities for each season, and establishing a reward system for contributors.
On governance, he suggested appointing a coordinating manager, including considering the removal of governance proposals deemed inappropriate, such as fraudulent or defamatory.
In addition, by allowing one vote per member, it is possible to prevent situations in which those with large assets have decision-making power. He also mentioned setting a period for participants to scrutinize and comment on governance proposals before they go to the ballot.
Regarding the legal aspect, it is necessary to evaluate what kind of law will be complied with according to the purpose of the DAO, the community, and other factors, and consider possible legal forms.
In addition, regarding the policy provider side, in order to realize the benefits of the new organizational form of the DAO and at the same time reduce its risks, he argued that “it is extremely important to build an appropriate policy and legal framework.” rice field.
For example, there is currently no coordination among regulators and policymakers internationally on how to treat DAOs for tax purposes, and there is uncertainty for both taxpayers and tax authorities. state that
He continued that cooperation beyond the public and private sectors is essential in developing the legal framework for the DAO, and that it would be beneficial for countries and regions to decide what their priorities are first.
He also pointed out that the DAO framework spans multiple regulatory fields, such as securities law, taxation, and employment and labor law, so it is important to develop a strategy that unifies all of these in order to build effective rules. are doing.
After clarifying the goals, various attempts can be made, such as the establishment of a specialized regulatory unit, the DAO’s purpose-specific disclosure requirements, and regulatory sandboxes.
Relation: Solana’s DAO management tool “Matrica”, cooperation with Discord?