With the launch of the Gorilla DAO last month, Bitcoin SV now has its first decentralised autonomous organisation. The Gorilla DAO is quickly becoming an unofficial cornerstone of the Bitcoin SV story – the culmination of the lessons learned from its antecedents, the promise offered by new technology and a drive to deliver something of value to the wider community.
Though leaderless by design, the Gorilla DAO does have a face – albeit somewhat accidentally. Patrick Thompson is the founder of the Gorilla DAO, with the concept of a radical, leaderless organisation an idea he found appealing.
‘Something I like, talking to other companies in the Bitcoin space, is that they’re creating tools that are available within, say, big corporations, but not to people in retail markets,’ Thompson explains.
‘A big company like Microsoft can wake up and decide to make a new phone or a new computer, but at the individual level, you don’t have the resources to be able to truly build and put something new and innovative out into the world.’
‘People might have something that they want to accomplish, but they don’t have the know-how to do it. The DAO solves that for them – the resources and tools you need are all in one place, and you can make the choice to get that project going,’ he says.
Considering the status quo, the DAO concept is something of a revolution. But to understand this and what the Gorilla DAO is trying to achieve requires a step back, both figuratively and chronologically.
The ways business activities are organised, though constantly shifting, has largely been governed by the same paradigms through modern history and across geographies. Changes have been incremental (though still highly consequential): business ventures enjoyed special rights in ancient civilizations, and even the structures most common today – partnerships and limited liability companies – can be recognised as far back as hundreds of years ago.
A common feature of these structures is the presence of a representative decision-maker or decision-makers – people to whom high-level control of the organisation is entrusted. A managing partner might oversee the executing decisions made by the other partners in an LLP, or a CEO and board might be elected to act on behalf of shareholders in determining the direction of the business. The corporate hierarchy flows down from there.
Part of this paradigm is born out of necessity. For example, shareholders in a company own a portion of that company and will often have a vote in company matters. However, particularly for large (especially public) organisations, shareholder engagement with the business itself is rare, meaning the company’s senior management are autonomous proxies for the shareholders who are not expected to give effect to shareholder intention, but instead to return value to them.
There are downsides to this structure. Though there are rules governing the conduct of the board (including the CEO), practically speaking, their efficacy is dependent on the desire of the board to enforce them. Likewise, there is an emphasis on hierarchy and power throughout corporations, which can stifle innovation.
Downside notwithstanding, in absence of an alternative, this has been the best model we’ve had – until very recently.
Blockchain/DAO problem solving
The innovation of blockchain is that it allows for systems which have no centralised authority. It is a distributed, secure and immutable database that serves as a verifiable public repository of information – without the need for a ‘middleman’. It has the potential to greatly reduce transaction costs and enable applications such as digital tokens and self-executing contracts, and to the extent that infrastructure is required, these can be decentralised, too.
Thanks to this, a new method of corporate governance is available. Through self-executing contracts, it is possible to build an organisation that administers itself in accordance with pre-defined rules. The rules themselves can be voted on (using the kinds of tokens enabled by the blockchain) and actions taken are recorded directly to the public ledger, allowing for a level of transparency and auditability unprecedented in traditional corporate structures.
The outcome of all this promise is the DAO. Aaron Wright and Primavera De Filippi in Decentralized Blockchain Technology and the Rise of Lex Cryptographia describes the innovation as such:
‘These organisations [DAOs] can re-implement certain aspects of traditional corporate governance using software, enabling parties to obtain the benefits of formal corporate structures, while at the same time maintaining the flexibility and scale of informal online groups.’
‘These organisations can also be operated autonomously, without any human involvement. They can own, exchange or trade resources and interact with other humans or machines…’
This reduces the inefficiencies of proxy management, and the reconcentration of power leaves the organisation less vulnerable to individuals who may not ultimately represent the best interests of the organisation. Those with a stake in the organisation can have a more complete (if not totally complete) view of how it is being administered.
‘To me, it’s a leaderless structure where every member of the DAO is equal,’ Thompson says.
‘Compare that to corporate structures where you have the CEO or chairman at the very top, then you have the CTO, the CFO and so on. There’s a hierarchy that exists in a corporate structure where there are different layers and different levels – a pyramid where there are people on the bottom with less power than the people on the top.’
‘An innovative idea might not even make it as far as whoever’s desk it needs to be on to be put into action,’ he adds.
The DAO model does not promise to solve all or even most of these problems. What it does is offer a new method of governance which challenges conventions now taken for granted. Why is there a large disconnect between shareholders and management? Is it really inevitable that corporate power be consolidated into a small number of individuals?
Perhaps the most well-known implementation of this (‘The DAO’, based on the Ethereum network) was short-lived and ended in disaster – but it is an important part of the DAO story. As Quinn DuPont writes in a chapter for Bitcoin and Beyond:
‘The DAO is an important artefact for attempting to understand emerging forms of algorithmic authority, working through practical modes of governance for autonomous and decentralised systems, and for understanding the ways that designing incentives and modelling action can fail.’
The DAO was built to be a venture capital fund controlled by its investors. Each investor was assigned digital tokens based on the size of their investment, which would grant them voting rights on proposals submitted to The DAO. It wasn’t wholly decentralised – The DAO had curators whose job it was to vet submitted proposals for legality and other practical concerns (the decentralisation also became more questionable as the organisers tried to manage the fallout of security breaches – but it allowed investors to decide the use of The DAO’s funds without relying on a management team, with the process from voting to execution to the return of profits being governed by a network of smart contracts on the Ethereum blockchain.
The DAO’s undoing was a security exploit that led to the loss of almost a third of the funds that had been committed to the project by investors. The ensuing fallout – which ultimately brought The DAO experiment to an end – highlighted the tension between the organisation’s goal of decentralisation and the need to coordinate and respond quickly to the threat.
From DAO to Gorilla DAO
With the proven appetite for corporate innovation like this, it was inevitable that somebody would embark on the DAO experiment using Bitcoin SV. And so came the Gorilla DAO.
To become a part of the Gorilla DAO, you buy ‘Ape’ tokens, which equate to votes that can be cast to decide on proposals submitted by members. As long as you have a vote, you can make proposals.
‘I think what’s unexplored is where creating proposals and having them voted on can take you. In that regard, all the members have a say and anybody can put out an idea,’ Thompson says.
The Gorilla DAO membership lives in a dedicated chatroom, which (not unlike Slack) is broken down into sub-channels. Some of these are spaces for developers to work on specific tasks, like building the voting system, but also other topics of interest relevant to the DAO membership though not necessarily directly tied to the project.
One question inevitably arises when reading about the DAO concept. If there is no ostensible direction, what does Thompson see in the Gorilla DAO’s future?
‘The conversations I’ve had outside of blockchain when it comes to explaining a DAO – it takes a while. It’s not something that clicks immediately with people because they are used to LLCs or other types of corporations, but they don’t know what a DAO is. When they ask, “who is the leader, what does a DAO do?” – it’s whatever the members want to do,’ he says.
‘The differentiating factor for other DAOs would be if they have somehow hammered out a very clear path forward for themselves. For Ethereum, when it came to their DAO, when they launched, right out the gate they said what their DAO was going to do: invest in businesses being built on top of Ethereum.’
‘Gorilla DAO was never hammered out like that – it really is whatever the members want to do and wherever they want to take it.’
An example of how this is intended to work can be seen from the early days and weeks after the platform’s launch. The first proposals to come out of the DAO were about the members collaborating to lay the groundwork – the rules and guidelines which will determine how the Gorilla DAO is to be itself administered.
The Gorilla DAO operates through a chatroom on their website, and the votes cast are tallied manually by the founder, though eventually, all voting is going to be done on-chain. Users can create a proposal in a specific voting channel – for example, ‘should DAO hire X person to provide X service?’ – and members vote on the proposal.
Today, the Gorilla DAO has already attracted over 200 members and much excitement, nearly all of which has been community-driven.
‘No real marketing has gone into it,’ Thompson says.
‘It’s pretty much people who like the project posting their gorilla pictures and memes on social media. But that’s why it’s successful and I think that’s what platforms like Twetch get right: they understand the meme economy that exists and how valuable that can be in attracting people to what you put out.’
‘I think what’s more important is that it’s one thing to have this funny picture and be funny online, but if you have a good message and mission behind it, I think that’s when it really takes off.’
Leading the leaderless
Thompson is well aware of the balance that needs to be struck between the need for direction in the early phases of a DAO project and the ultimate aim of a leaderless organisation.
‘DAOs have to be created. That either means it’s a group of people who have come together to create it, or it’s just one person who creates it and lets it go as a DAO, which is what I did,’ he says.
‘Over time, and what you quickly learn, is that people want to know who is behind something, especially when it comes to buying a membership and buying voting rights. People want to know where their money is going, so I think it is important to have an individual or team that can be identified as something you can put your trust in.’
‘The more members that come and the more conversations that people are having, the more members are able to help other members,’ Thompson adds.
Looking forward, the real catalyst for improving the autonomy of the Gorilla DAO’s governance will be the addition of smart contracts to the organisation once on-chain voting and proposals have been established.
‘What we’re really working toward, after we have that core infrastructure – on-chain voting and on-chain proposals – to me, we need smart contracts,’ he says.
‘In Bitcoin, smart contracts have existed for a while. When there are smart contracts, I can really fall back. Maybe there will still be a customer service element, but it’ll be a lot less intensive and manual.’