Decentralized Autonomous Organizations (DAOs) could be this bright new future for how people organize each other, or they could be another way for rich people to create consent.
Why it matters: DAOs provide an alternative method for people to coordinate activities toward common goals. It’s a little bit democracy, a little bit oligarchy, and it’s fluid. To decide the above question, it helps to understand how they work.
Driving the news: We’re watching a major DAO decision being made on Uniswap this week. The industry’s leading automated market maker (a robot on the web always ready to make a trade) just had a live proposal that would move it to a non-Ethereum blockchain for the first time.
- The proposal, written by Michigan student group Blockchain, is unlikely to fail at this point.
How it works: There is no way. Some DAOs are more or less formal. Some have greater expectations of members. But how Uniswap works is representative.
- It requires a discussion of a specific proposal in a few different online formats to gauge community support and improve the idea.
- There are two votes, but one is loose, essentially a sound check. The important one requires both a majority for support and a minimum turnout (a quorum).
Here’s where it gets weird: Uniswap is governed by the Uni token. There are 691 million universities in circulation. People vote on their tokens, so some people have more votes. Some voters even delegate their universities to other voters.
- Quorum is 40 million uni. The current vote is 59,555,937 in favor and 1,470 against. So it both passed the quorum and the votes are in favor by a wide margin.
The largest single voter was the wallet of Andreessen Horowitz, the venture capital firm that holds 13.5 million uni. But many people with only one university also voted.
What’s up: Uniswap votes on whether or not to port its app to the Celo blockchain.
- The Celo blockchain is a proof-of-stake blockchain that aims to serve mobile users with the theory that it will make crypto accessible to billions of 100% mobile internet users around the world.
- While some decentralized apps launched on Ethereum have been wasteful when it comes to switching to other chains (Curve and Sushiswap, for example), Uniswap has been very loyal to Ethereum.
- Uniswap has switched to optimism, but it is an Ethereum sidechain seen as expanding Ethereum’s reach. Celo is a competing chain.
So why? The Celo Foundation has pledged $10 million worth of its Celo token to use as an incentive for Uniswap users on the Celo blockchain.
- Incentives usually come in the form of regular issuances to users who provide funds to get a decentralized application up and running.
- These funds are crucial. Such liquidity deposits give the automated market maker (Uniswap) funds to trade. The more money it has, the better trading partner it is.
- Depositors receive these rewards on top of the trading fees they already earn from Uniswap.
Remarkable: The incentives have a particular focus on what the foundation calls “green asset liquidity pools.” These assets represent carbon credits or other tokens associated with real climate action.
Take fast: Experimental democracy is nice, but it only took 8 voting units to get this vote to quorum. Once it has done that: deal closed.
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