The DAO provides de-centralised governance by: - Allowing new digital autonomous organisations to be created using existing legal entities. For example, digital mutual societies or digital joint stock companies. - Provides de-centralised consensus in order to remove the need for a central operator, owner or authority. This allows cordite to be more resilient, cheaper, agile and private than the incumbent financial infrastructure. - Facilitates the funding, building and organising of decentralised applications. - Encapsulates voting, raising issues, marshaling changes to the system and deciphering economic models.

Why are we interested in DAOs?

It is really hard to bring together a group of organisations to fund and build a decentralised application that they would all like to use.

We have repeatedly seen that if you try and build a “blockchain app” and sell it, no one is interested - and you can’t have a blockchain app on your own! However if you talk to other institutions to investigate co-creation, then they are often really interested. However actually getting a disparate group of organisations together to fund the building of a decentralised app is really hard.

  • getting budgeting cycles aligned is hard
  • getting experts together is hard
  • who would actually build the app?
  • who will make changes?
  • who chooses which changes to build next?
  • who will get those changes deployed safely to many institutions’ nodes?

However imagine if we spin up a decentralised autonomous organisation - a DAO. We could create governance, economic and membership models, in code, that make it easier to bring organisations together to:

  • fund the building of a decentralised app
  • propose, and vote for, changes to the app
  • propose, and vote for, changes to the dao itself - e.g. changes to voting or membership rules

Some DAOs may:

  • offer incentives for joining the dao early
  • have rules for distributing proceeds for deploying the system to another geography

A Decentralised Autonomous Orgnisation (DAO) is an organisation that is governed by rules based on computer code or network protocols and its decisions are made through the voting of its members.

We think that DAOs represent a really elegant way to bring organisations together to fund the building, and running, of decentralised applications between institutions much easier, without having to resort to a centralised company sitting in the middle monetising this.

Open source foundations represent existing example that is not that far away from what we are talking about here.

For an example of DAO, see Dash

DAO : Membership

Julian starts a gang with his brother Dick called the Famous Five. Dick proposes their sister Anne joins and Julian accepts. Anne proposes their friend Georgina. Both Dick and Julian accept. Georgina proposes her dog Timmy joins but none of the others accept her proposal. A simple test of the Cordite DAO functionality. Each actor can run a separate Cordite node where Cordite is the collection of nodes.

sequenceDiagram Julian->>FamousFive DAO: createDaoWithName(FamousFive) Julian->>FamousFive DAO: createNewMemberProposal(FamousFive, Dick) Julian->>FamousFive DAO: acceptNewMemberProposal(FamousFive, Dick) Dick->>FamousFive DAO: createNewMemberProposal(FamousFive, Anne) Julian->>FamousFive DAO: voteForNewMemberProposal(FamousFive, Anne) Dick->>FamousFive DAO: acceptForNewMemberProposal(FamousFive, Anne) Anne->>FamousFive DAO: createNewMemberProposal(FamousFive, Georgina) Julian->>FamousFive DAO: voteForNewMemberProposal(FamousFive, Georgina) Dick->>FamousFive DAO: voteForNewMemberProposal(FamousFive, Georgina) Anne->>FamousFive DAO: acceptForNewMemberProposal(FamousFive, Georgina) Georgina->>FamousFive DAO: createNewMemberProposal(FamousFive, Timmy)

DAO: Proposals

Julian proposes to his gang FamousFive that they head to Treasure Island. Anne proposes an alternative to Go Off in a Caravan. Dick and Georgina vote for the Treasure Island proposal. Anne finds her proposal has been rejected, while Julian’s has been accepted. The FamousFive head to Treasure Island. A simple test of the Cordite DAO functionality. Each actor can run a separate Cordite node where FamousFive is a distributed autonomous organisation (DAO) running on Cordite.

sequenceDiagram Julian->>FamousFive DAO: createProposal(Five on a Treasure Island) Anne->>FamousFive DAO: createProposal(Five Go Off in a Caravan) Dick->>FamousFive DAO: normalProposalsFor(FamousFive) Dick->>FamousFive DAO: voteForProposal(Five on a Treasure Island) Georgina->>FamousFive DAO: normalProposalsFor(FamousFive) Georgina->>FamousFive DAO: voteForProposal(Five on a Treasure Island) Anne->>FamousFive DAO: acceptProposal(Five Go Off in a Caravan) = REJECTED Julian->>FamousFive DAO: acceptProposal(Five on a Treasure Island) = ACCEPTED

Apologies to Enid Blyton, the author of The Famous Five Series. The characters and stories are based on this series.