Copy
Outlier Ventures Weekly Brief Issue #64 |  View Online
 
  contact@outlierventures.io
 

Don't forget, applications for Base camp are still open. If you know someone who you think would be a good fit for the program, forward them this email

It is hard to think about anything but Covid-19 at the moment. The scale of the devastation is only just becoming clear to millions of people around the World. I have nothing valuable to add to the conversation and in fact, any contribution would almost certainly be ill-informed and wrong. 
 
However, with millions of people WFH looking for distractions, maybe 850 words on the role of DAOs in Web3? Well then, here you are. 

The key theme of Web3 is peer-to-peer trust. Web3 offers the building blocks for trusted peer-to-peer interactions. So the obvious next question is under which organisation form these peer-to-peer interactions will take place?

In the past, it was like this
The limited liability company is a legal form that has come to dominate global business since the 1850s. This legal invention is a product of its time. Specifically, in 1811, to incentivise the production of local textiles and useful goods in New York because of the trade war with the U.K. and France. The New York Legislature needed to scale up domestic production as quickly as possible and made it easier to form and fund a business by limiting the liability of investors. Investors weren't on the hook for when the company bankruptcy. It worked. Just seven years later, in 1818, one hundred and twenty-nine manufacturing firms had incorporated in New York. General limited liability took off after the Limited Liability Act of 1855 by in the U.K; the goal was the same: encourage investors to finance new companies. This drive to promote private financing led to further laws like the unrestricted transfer of shares, primary and secondary share markets, as well as tax breaks. The tension for the Government is how to ensure responsible company financing in the face of limited liability.  

Then something happened 
"One of the big questions for the next decade is: how should we govern the large new digital communities that the Internet has enabled? Platforms like Facebook have to make tradeoffs on social values we all hold dear -- like between free expression and safety, or between privacy and law enforcement, or between creating open systems and locking down data and access. It's rare that there's ever a clear "right" answer, and in many cases, it's as important that the decisions are made in a way that feels legitimate to the community. From this perspective, I don't think private companies should be making so many important decisions that touch on fundamental democratic values." - Mark Zuckerberg

Mark Zuckerberg is suggesting that private companies have got too big and infringing on the role of The State. Is the limited-liability joint-stock company the right corporate structure for digital platforms used by billions of people? Digital services, especially social media and Internet search, are now public services run by private companies with very little regulation. As more of our lives move online to be supercharged by AR and VR, how can we ensure corporate structures have legitimacy and strike a balance between universal access and profit maximisation? 

So the future might be like this
We now have a new invention, the decentralised autonomous organisation. I'm not convinced that a collection of smart contracts running on a blockchain-based network will replace the limited liability company in its entirety. But at the core of the DAO model are two things: 

  1. Anyone can contribute and be rewarded based on resource contribution (money, time, expertise, etc.) (regulation notwithstanding)
  2. Anyone can vote and influence the resource allocation process

Just like the invention of limited liability, the DAO could encourage company formation and financing by making it easier and cheaper to start a company and get funding. The DAO solves for the flaw in the joint-stock limited liability company whereby only a few people can buy shares and get rewarded in the form of dividends, but more importantly, take decisions that impact billions of users. Users of the network contribute all of the value but get no reward. Nor do they have a say in how the network is run. 

DAOs are the antithesis of Big Tech today, in which founders have full control, arguably with some accountability from activist investors and board members. But this is a small group of people who collectively decide what we read, watch, listen to and therefore over time, believe. The DAO is transparent and open; users decide on the allocation of resources. There is a lot of work to be done on exactly how to organise DAOs to achieve optimal outcomes. Still, experiments abound with Aragon, Colony, DAOStack, MakerDAO, and MolochDAO amongst others. DAOs are bringing together engineers, economists, lawyers and governance experts to rethink the fundamentals of what organisation can be in a 2020 context. 

I think DAOs will have the most significant impact in the short term as they become formalised as new productivity software. An Asana Board DAO where each completed task executes a smart contract to draw down a bounty, for example. As Web3 emerges, DAOs will become the de facto organisational structure; digital and global with broad-based governance. An organisational structure fit to support trusted peer-to-peer interactions.
 

Signing out,
Lawrence Lundy
 

From The Stack

  • Fetch recently released more details on their upcoming DAO - Link
  • Ocean Protocol will soon be working with DAC on creating data-driven marketplaces - Link
  • A demo of the Inter-Blockchain Communication protocol cosmos and Agoric have been working on is now live - Link
  • Fission Codes has a public Keybase chat live now - Link
  • The monthly update from Orbs has gone live - Link
What The Team Is Reading
 
tw
 
tw
 
in
 
 
    Email a Friend  
You can update your preferences or unsubscribe from this list
This email is intended only for the person to whom it is addressed and may contain confidential information. No one else may place any reliance upon, copy or forward all or any form of this email in any way. If any addressing or transmission error has misdirected this email, please notify us immediately by responding to us directly, and ensure that the email and any attachments are immediately and permanently deleted and is not used, disclosed, copied, printed or relied upon in any manner. In no event shall Outlier Ventures Operations Ltd or Outlier Capital LLP be liable for any direct, consequential, incidental special, punitive or other damages, whatsoever (including without limitation, damages for loss of business profits, business interruption, or loss of business information), even if Outlier Ventures Operations Ltd or Outlier Capital LLP have been advised of the possibility of such damages. Outlier Ventures Operations Ltd may monitor email traffic data and also the content of this email for the purposes of security.

Outlier Ventures Operations Ltd is registered in England and Wales, company registration number 10722638. Outlier Ventures Operations Ltd is an appointed representative of Sapia Partners LLP which is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 550103).

Crypto-currencies can be extremely volatile and subject to rapid fluctuations in price, positively or negatively. Investment in one or more crypto-currencies may not be suitable for even a relatively experienced and affluent investor. Each potential investor must make their own informed decision in connection with any such investment (after having sought independent financial advice thereon).

The content provided in this email is provided for information purposes only. It is not intended as an offer or solicitation to enter into any proposed transaction or investment.

In this email you will find links to other websites; they are for your convenience or to provide additional information, they are not an endorsement or a financial promotion. Outlier Ventures Operations Ltd Is not responsible for any contents, data, opinions and or reliability of the linked websites, and does not necessarily endorse views expressed on the linked website, and does not accept liability for the accuracy or completeness of any such information or opinions which can be subject to change without notice.
You can update your preferences or unsubscribe from this list






This email was sent to <<Email Address>>
why did I get this?    unsubscribe from this list    update subscription preferences
Outlier Ventures Operations Ltd · C/O Milsted Langdon LLP · 46-48 East Smithfield · London, Middlesex E1W1AW · United Kingdom