The privileged don’t need DAOs

As someone who’s spent months thinking about DAOs and governance, I knew there was a problem when I asked myself “Do I, personally, have need for a DAO today?” and answered “No”.

To me, DAOs, or Decentralized Autonomous Organizations, are tools for collaboratively producing work. For instance, a software development startup could set up a DAO to handle its finances and decision making, in place of a corporation or a Limited Liability Company.

For entrepreneurs, the main advantages of setting up a DAO rather than a regular legal entity are as follows:

  • Cheap:

  • DAOs are basically free to create and maintain.

  • Companies usually cost at least thousands of USD to create and thousands more for yearly maintenance fees.

  • Global:

  • Companies and other legal entities are harder to create in countries without a mature financial system (e.g. many places in Africa) and countries with political/economic instability (e.g. Venezuela, Syria). Companies usually have to deal with a lot of red tape in order to transact internationally.

  • DAOs can be created from anywhere in the world, and can transact with anyone in the world. Heck, even if you’re in North Korea if you had access to the Internet you could create a DAO and do business globally.

However, DAOs have one disadvantage that could be fatal: the legal status of DAOs is unclear in most jurisdictions. This means that members are not legally protected, and have to shoulder unlimited liability if anything goes south. (Don’t quote me on this, I’m not a lawyer)

Entrepreneurs are usually privileged: they have financial backing from investors & venture capital, with lawyers at their disposal; this makes the two advantages of DAOs not that compelling. Coupled with the risk of getting arrested, it’s hard to imagine that entrepreneurs would ever favor a DAO over a legal entity.

Many DAO researchers/enthusiasts I know of frame DAOs in entrepreneurial contexts, possibly because they themselves are entrepreneurs/privileged. I have been doing so as well, likely because I also come from a somewhat privileged background. This clearly needs to change.

DAOs are for John Does

The privileged are already being well serviced by the establishment, so they don’t need DAOs. It is the underprivileged who need DAOs, whose lives will be changed by DAOs.

What can a DAO do for John Doe?

Saying “a lot” would be an understatement.

I predict DAOs will connect the world’s economy together in the same way the Internet and the WWW has connected the world’s information.

John Does of the world will be able to:

  • Access the global labor market: work for a DAO and get paid what you deserve, rather than work locally and suffer labor abuse & poor job opportunities with low wages.
  • Access the global consumer market: create a DAO for free, and build & sell products to anyone around the world.
  • Access the global financial system: raise money by selling shares of your DAO to anyone round the world, get decentralized loans, credit, and insurances.

I can’t even begin to imagine the magnitude of the impact this will have. The most insane thing that could happen would probably be complete economic globalization and the breakdown of national barriers.