Decentralised workplace: Why DAOs can be a double-edged sword – their pros and cons

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Blockchain products such as NFTs appeared to enter a golden age in 2021, with a rallying market of altcoins and established tokens like Bitcoin. But 2022 has arrived as a mixed bag for the blockchain community, with these coins struggling to recuperate losses and NFTs facing growing ridicule on social media. At the same time, decentralised autonomous organisations (DAOs) have started gathering momentum, with their backers looking to democratise the internet.

What is a DAO?

The blockchain is a complex concept now more than a decade old, and DAOs are its newest form.

They act primarily as a base for venture capitalists to take advantage of and democratise the developing crypto space.

DAO spaces allow people to gather in a leaderless collective that empowers members to take investment decisions together using pooled cash.

So far, they have primarily focussed on collecting rare and highly expensive NFTs.

DAOs operate from the bottom up, with members holding a specially minted token.

Smart contracts, coded programmes that execute actions depending on conditions, nix the need for managers or high-ranking personnel to make decisions themselves.

Token holders have a “stake” in the DAO that gives them voting rights, with contracts guiding rules on what makes a majority and an open-source base keeping the organisation’s inner workings transparent.

What are the benefits of a DAO?

DAOs have inherent benefits, according to Brian Penny, a DAO member and senior account executive at Cryptoland PR who represents BitDAO, the world’s largest DAO with over $2 billion in crypto assets.

The first, he said, is the lack of upper management necessary in the organisation.

With leadership distributed “horizontally”, he said, there is “no more climbing a corporate ladder”.

He added: “You simply do whatever tasks you can.

“Typically, a DAO uses a bounty list and gives out its own proprietary token as payment for voluntarily performing tasks.”

The organisations also give people more scheduling freedom, as, without an employment contract, Mr Penny said, people can become independent contractors, taking pay based on performance on their own hours.

Finally, he added, they give people “true ownership”, thanks to the staking system, making it easier for them to have their voice heard.

The power held by DAO members was recently demonstrated with SpiceDAO, a Dune collective.

Earlier this year, the organisation paid $3.8million for a copy of Jodorowsky’s Dune.

They secured the book, which collects an unfulfilled film pitch by Alejandro Jodorowsky Prullansky, a celebrated Chilean-French filmmaker, intending to realise his project.

Although the DAO’s plans to realise Mr Jodorowsky’s project was ultimately ridiculed online and thwarted by copyright, the occasion showed the significant capital capabilities of decentralised organisations.

What are the issues associated with DAOs?

DAOs, like other services currently located on the blockchain, also come with a host of issues.

At present, Mr Penny said, they are legalised in one US state – Wyoming – and “no government” truly recognises them.

He said things could “get sticky” for those trying to enforce smart contracts in court.

The lack of upper management is also a double-edged sword, as no leadership means little productivity.

Mr Penny added that while they can do “amazing things”, the culture is “not for everybody”, and some will ultimately fail.

DAOs also don’t emulate legitimate workplaces yet, as they don’t come with any benefits.

Members in the US can’t count on receiving all-important health insurance, paid time off or leave, and while some backers have described it as helpful for unionising, there is no evidence of this yet.

At the same time, there is no accountability network such as HR in place that can handle accusations of harassment from other members, nor is there a parent company to sue.

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