Zero Dollar DAOs
The DAO has given the world a glimpse into the promise of general purpose blockchains. A headless investment fund worth hundreds of millions of dollars sounds crazy to most people and wasn’t even possible a year ago. Despite the catastrophic flaw in The DAO, which eventually led to a hard fork, it was still an impressive achievement. Not the millions of dollars raised, but the organization itself: a few thousand database entries gave scattered strangers a shared purpose.
There are so many aspects of our economy and society that are bizarre when you break them down, and this is one of them. Our society operates on useful shared delusions that work as long as other people believe in them. The ether locked up in The DAO was worth hundreds of millions of dollars because lots of people believed it was worth hundreds of millions of dollars. When The DAO approved a proposal, the contractor and DAO token holders would have perceived a transfer of value, but there’s not a single person who is required to acknowledge that Ethereum transaction. There are just enough people who share the idea that Ethereum transactions are meaningful.
The DAO has proven that Ethereum gives us the toolkit to create brand new, useful shared ideas that can help us accomplish goals together. This ability has been diminished by the huge barriers that The DAO had to overcome, which few can probably repeat: well-respected members of a wealthy community promoted an investment opportunity where the deposit could easily be withdrawn (in theory). Any new attempt to create a DAO will face incredible scrutiny before anyone will be willing to put their money in a complex contract. Those of us who are unlikely to be able to grow another large DAO might understandably not notice the opportunities that have been opened.
How can we build useful shared ideas that unite people in purpose without the ability to convince thousands of people to part with their hard-earned ether? The DAO’s unity came from the well defined process for its token holders to make decisions together: one token, one vote. Its unity was enough to compel its members to build tools and organize the community without compensation: they just wanted to make it easier to make progress together. The barrier to entry for replicating this effect comes from the need to assign voting rights up front to people who deposit funds. We can remove that barrier by assigning those rights later instead.
Commonwealths, or Zero Dollar DAOs
A commonwealth is a zero dollar DAO where grants are crowdfunded by the public. Communities can discuss proposals and pledge to fund them on the blockchain. Contributors fund the grant recipient directly through a contract that records how much each person has contributed. Commonwealths never hold funds.
Anyone can define a mission for their commonwealth to tie grants together and serve as the clerk for their commonwealth. A clerk records grants that contribute to the mission on the blockchain, but they have no real power: if the community disagrees with their decisions, they can fork the commonwealth’s grant history. When there are enough contributors to the commonwealth, they can use the records for each dollar they’ve contributed as votes to elect a clerk and reduce the need for forks. Existing contributors decide what counts as a new contribution and, if they do a good job at pursuing their mission, they’ll attract even more contributions.
Commonwealths allow any community to build unity of purpose gradually, so you don’t have to be “Ethereum famous” to start one. Commonwealths don’t hold shared funds, so their contracts are easier to secure. While commonwealths can be used as for-profit entities, they’re best suited for non-profit efforts, where the transparency required for proposal-driven progress won’t be a competitive disadvantage.
Benefactory is an experimental platform to help nonprofit commonwealths fund progress for all people. Our first commonwealth, Common Press, will launch later this month. If these contribution records on the world computer can create an idea people are willing to believe in, it’s about to get much easier to do good.