DAOs: artificial intelligence and virtual states, or new forms of organizations (part 1)

DAOs: artificial intelligence and virtual states, or new forms of organizations (part 1)

The best sci-fi I’ve ever read was Accelerando from Charles Stross. The story perfectly fits the progression curve, which was predicted by Ray Kurzweil, the futurist. The book reveals a relatively realistic vision, which surpasses all our imaginations. It’s about uploading human consciousness, artificial intelligence that goes far beyond humanity, nanorobots transforming solar systems into huge computers, but the most extreme thought in the book was the intelligent and autonomous companies. Then I met Ethereum and DAO…

What is DAO?

DAO stands for “decentralized autonomous organization”. If I want to describe the meaning of these words, I would say they are the intelligent and autonomous companies which have been written by Charles Stross, but in reality, the picture is far more subtle. In the Ethereum network, DAO is a smart contract that implements the operation of an organization. As it has already been said, a smart contract is a program which “embeds” itself into a blockchain right after that it has been created and runs independently without any external supervision. Like the Ethereum network is not owned by anyone, so the smart contract will have an owner only in that case if it’s hardcoded. If the owner decides to “liberate” the smart contract, it will have an individual and independent life from there. This is why this technology is a good way to create DAOs. I know this is still a bit misty, so let’s take some real-life examples of how a DAO works and why we can think that they are intelligent.

The DAO

The most well-known DAO has a very imaginative name: The DAO. This DAO was a kind of project incubator. Anyone could send money to The DAO (Ethereum smart contracts have their own “bank account”), and DAO tokens have been given to investors in return. DAO tokens granted a right to vote, and the members voted for a project which was supported by The DAO later. The profit generated by the companies was also distributed in proportion by The DAO based on the number of the tokens. The system was therefore fully democratic. Moreover, The DAO went further, as opposed to democratic systems, there was no really minority here. If some of the members did not agree with the decisions, they would have left the DAO, and they can just jump into a new DAO.

It does not seem so mysterious at first sight as I wrote above, but let’s think about it. The simplest interpretation is that The DAO is a joint stock company that distributes profit to its shareholders.

However, there is, another kind of interpretation: The DAO is a collective super-intelligence that produces companies and, by the way, can even reproduce itself. It may seem a bit too extreme to treat something as an individual entity, which depends on people decisions, but it’s not. It happened earlier: the DAO had a tiny programming error, which made someone able to suck out a huge amount of money from it. Investors, of course, went indignantly to the The DAO’s “creators” to do something, but they spread their hands: since The DAO existed as an individual entity on the Ethereum network, they could not do anything.

Ethereum Classic

Finally, the solution was made by a hacker team named Robin Hood, they did the same thing with the same technique: they threw the remaining money out of the thief’s way and they give it back to the owners. The DAO has reached a very sad end, but the story is not over yet. Because The DAO gathered a huge amount of Ether, this attack had shaken the entire Ethereum network. Ethereum itself has been compromised. So most of the developers decided to simply “roll back” the wheel of time to not have the robbery event. This, however, is impossible on a blockchain system. The only solution was to create a new Ethereum network based on the old blockchain. Most of them were joined the new network, so this it what we call it Ethereum today. However, some of them did not agree with the decision, because this is completely opposed to the principles of the block chain, so they continued to operate the old network. This is Ethereum Classic today. Virtually two parallel Ethereum universes were created. One of them has the attack on The DAO and the other has not. A superintelligence, time travel, parallel universes. It’s like some sci-fi. Welcome to the blockchain’s world…

Angur and NumerAI

I would like to introduce two other collective superintelligence. Both are designed in some form to predict the future. Angur is a system that someone can ask for odds to predict a future event. You bet some money, and the system gives you some prophecy after a while. In the background, tips are given by people. The system distributes the amount of money which was offered for the prediction between the members who gave successful tips and their reputation also increases. When creating the final result, the system adds weight to member tips based on their reputation. NumerAI is a similar system, but instead of people, machine-learning systems compete with each other which are created by experts. NumerAI is a superintelligence entity which is made out of machine intelligence. None of the projects are typical DAO, but I thought that it is important to mention them because they are already outlining the way that the autonomous intelligent companies that today’s DAOs are will be in the future.

So we could see how Smart Contracts on the Ethereum Network make it possible to create self-organizing, autonomous organizations. We can also see that these organizations can be considered as a kind of collective superintelligence that today is mostly made by humans, but in the future, more and more programmatic or machine-based components will appear. In the second part of the article, we will return to the organizational model a bit. We will show how a DAO can develop and grow just by grouping people, and why do we think that these type of organizations are the future. We will also say something about the concept of virtual states, and of course, how is related to ENVIENTA. Stay with us …