HomeBlockchainBlockchain dev says DAOs don’t work, elected leaders are the reply

Blockchain dev says DAOs don’t work, elected leaders are the reply

Blockchain developer Martin Krung has proposed changing decentralized autonomous organizations (DAOs) with what he calls a decentralized hierarchical organizations (DHO). Particularly, he proposes elected leaders and hierarchical decision-making as a compromise between pure decentralization or centralization.

Krung acknowledges that DHOs are extra acceptable for normal organizations like hobbyist communities somewhat than monetary functions like decentralized exchanges (DEX). Regulators just like the Monetary Motion Job Drive (FATF) and the Securities and Alternate Fee (SEC) will most probably declare jurisdiction over monetary platforms, forcing them to decide on between complying with rules or turning into totally decentralized.

Krung admitted, “for money protocols, hierarchies are difficult because many can’t be compliant, so total decentralization is the only way.”

Engaged on decentralized hierarchical organizations.

ShapeShift DAO: Would a DHO have been a more sensible choice?

Certainly, many monetary platforms don’t adjust to rules. For instance, one of many oldest crypto exchanges, Erik Voorhees’ ShapeShift, selected to grow to be a DAO through the summer time of 2021 after monetary regulators pressured Voorhees to implement know-your-customer (KYC) and anti-money laundering (AML) checks.

In the end, ShapeShift determined to keep away from many KYC/AML requests below the guise of permitting its FOX governance token holders to decentralize the platform.

Nevertheless, in apply, a dwindling variety of folks care about governing ShapeShift. The FOX token has misplaced 98% of its worth since April 5, 2021.

Voorhees was as soon as a proponent of Bitcoin, calling it the opening transfer towards “an open, immutable financial system” that might be tough for any authorities to manage. These days, he spends most of his time selling a ShapeShift competitor, ThorChain. He just lately recommended an evidence of ThorChain that concluded, “ThorChain loans provide free money. Free Money. F*cking fantastic. Go go ThorChain.”

Maybe a DHO would have been a more sensible choice than a DAO for ShapeShift.

Learn extra: Curve exploit reveals DeFi nonetheless removed from decentralized in 2023

Folks started to recommend varied sorts of decentralized hierarchical methods (DHS). For instance, some called for decentralized autonomous companies that might enable eligible voters to periodically elect senior officers. Every place’s duties and authorities could possibly be coded.

Others, in the meantime, appeared skeptical that any system permitting elected officers may perform effectively. Mirroring their cynicism round real-world “democratic” governments, they doubt the long-term viability of a DHS.

For his half, Krung appeared to assume some points could possibly be solved with checks and balances, like a Kleros-like decentralized arbitration system. Nimble changes to the code may merely kick somebody out of the group. The group may additionally make voting nameless to guard voters in case of a controversial matter.

Others recommended “reputational weighted voting,” during which voters would have extra clout if they’d the next repute rating. It may additionally present a substitute for favoring wealthier voters who can afford extra governance tokens. Delegations have additionally grow to be a difficulty in blockchain governance, whereby token holders persuade neighborhood members to delegate their votes to an ally, which has grow to be a difficulty for UniSwap and plenty of different DAOs.

In abstract, Krung has recommended a brand new sort of blockchain neighborhood that’s neither decentralized nor centralized. His so-called DHOs may remedy among the points with DAOs battling autonomy. Any group wants a method to make choices; typically, these choices should happen rapidly. Naturally, the thought of DHOs was not universally fashionable, with loads of feedback in help and competition.

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Supply: https://protos.com/blockchain-dev-says-daos-dont-work-elected-leaders-are-the-answer/


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