Topic: Introduction of DAO Governance (Read 136 times)

The Decentralized Autonomous Organization (DAO) is an model product of cryptographic technology.
The origins of DAO’s can be traced back to the organization described by Ori Brafman in “Starfish and
 Spiders” (2007), and the "peer production" described by Yochai Benkler in " Wealth of Networks" (2006).
 However, the two concepts are linked to cryptocurrency-related technology.

Dan Larimer proposed the concept of a DAC (Decentralized Autonomous Corporation), which regarded Bitcoin as a DAC.

About DAC

We summarize 7 characteristics of a DAC, in order to have a clear definition:

Openness. The DAC system design is of transparency and openness, which gives it its foundation.
 A private organization cannot be treated as a DAC, and the current open source software is a classic example of openness;

Decentralization. No centralized individual and organization can control the entire DAC.
This feature determines self-similarity, and the characteristic of decentralization ensures the vitality of the a system;

Autonomy. Everyone in the DAC system can participate in the program. Participants are subsidiaries, or sub-units,
of the DAC system, and they contribute to DAC development from their perspective. The natural behavior of participants'
guarantees the operation of a DAC;

Value. A DAC system must be of value in its use, with similar characteristics of Bitcoin’s system, including international
payment networks, anonymous transactions, tax avoidance, value storage, inability to be frozen, and anonymity. These
features add value, which determines the profitability of Bitcoin’s DAC system;

Profitability. DAC participants will receive rewards from the development of DAC system, profitability is determined by
the value of the DAC itself;

Self-similarity. Even if only a part of the DAC nodes exist, the DAC system is still operating and developing, the destruction
 of some of the unit nodes will not affect the development of DAC, which is guaranteed by decentralization;

Democratization. Core changes in a DAC system require the vast majority to agree on a vote. The features of decentralization
 and autonomy determine that the DAC must be a system that can vote democratically.

Vitalik Buterin extended the concept of DAC, by proposing a more general concept: DAO (Decentralized Autonomous Organization),
 unmanaged crowdfunding and service splitting are the components of a DAO, as well as cryptographic technology management
and trust-based automation, which allows the DAO to operate.

As Stan Larimer said, " No human involvements are required under the control of a set of business rules”, however, if not strictly
controlled during the system design stage, such an autonomous organization under the ideal state can also cause serious consequences.
 In June 2016, The DAO, the largest crowd-funding Ethereum project ever, made distributed self-governing crowdfunding of more than
$ 150 million US dollars, and suffered hacker attacks because of code loopholes, and at the time the loss exceeded $ 3.6 million, in value
of more than 60 million US dollars. It also leads to a split in the ETH community, resulting in a fork, subsequently forming ETC and ETH.

Within Hcash's system, 5% of the tokens are sent to a DAO, and the Hcash holders decide the use of funds through instant dynamic voting,
 for example, developing infrastructures such as wallets, public relations, or promotional activities

The features of a DAO provide a steady flow of liveliness and positive motivation for the Hcash community, meanwhile the Hcash DAO code
 is undergoing rigorous audits, and will initially incorporate necessary human intervention (a Third-party invited by the Foundation, for code
security auditing), to prevent major mistakes in the early stages of the DAO.