Why This Ethereum Co-Founder Isn’t Launching a DAO

Anthony Di Iorio was a founding member of the team that built Ethereum, a network similar to bitcoin but with a Turing-complete coding language that has jumpstarted a still-nascent ecosystem of decentralized applications.

In those early days, the founders already had aspirations to someday convert the Ethereum Foundation that helps oversee the codebase into the ultimate decentralized group, better known nowadays as a distributed autonomous organization, or DAO.

But now that DAOs are real – and one has raised more than $150m worth of the cryptocurrency ether – Di Iorio says he has no plans to convert his own company, Decentral, into this kind of organization.

Di Iorio told CoinDesk:

"I think that this structure is very bold and it’s not something I would be doing with my company. I believe actually in leadership. I believe you need to make quick decisions."

Governance questions

Instead of a single leader, decentralized autonomous organizations are essentially bundles of smart contracts capable of automatically executing whatever digital commands are encoded into their makeup.

Anyone can become a voting member of the DAO by buying tokens in exchange for ether that gives them a say in the decision a DAO makes, ranging from allocating resources to splitting off into a new organization. The largest of these, called simply The DAO, has raised funds and distributed tokens to 23,000 different voting addresses.

Di Iorio believes that a system of widely dispersed voting rights granted based on whoever is willing to spend the most on tokens — 50 addresses own 41% of the tokens, according to public data — isn’t the most efficient way to run a company.

He's not alone. Last month, prediction market startup Gnosis proposed rebuilding The DAO’s governance model to give experts the ability to vote based on their confidence in an outcome inspired by a model called Futarchy.

Shortly thereafter, another governance-focused startup, Backfeed, also submitted its own reimagined DAO voting structure, which it dubbed a “social operating system” designed to help large groups collaborate more effectively.

This concern appears to extend to vote-holders of The DAO itself. At the top of the recently released DAO.report data website, which showcases funding proposals in order of popularity, is an ongoing vote for a moratorium on further proposals until the governance model is “upgraded”.

Hybrid model

But Di Iorio’s objections to the DAO model go beyond the technical components of the governance model.

In addition to legal and regulatory concerns he has about the model, Di Iorio, who earlier this year started a new position as the chief digital officer of the Toronto Stock Exchange, believes companies should work together in-person.

Di Iorio told CoinDesk:

"I think working in one room is very important. Working all at the same time is very important, we’re extremely efficient and we’ve shown that we can create products."

Di Iorio says he's moving to put these thoughts into practice. He expects Decentral will begin work on a project to merge the DAO model with a more traditional leadership-based model following a string of product launches expected to culminate on Wednesday.

Still in its early planning phases, the Collaborative Leadership Intensive Organization (CLIO) is expected to be a hybrid organization designed to provide a “gradual” transition to distributed governance models where stakeholders have more control over decisions. At the same time, final decisions will still fall to a single chief executive.

In spite of his skepticism about launching a DAO himself, Di Iorio calls the idea “fantastic” and is moving to integrate aspects of the project through Jaxx, the cryptocurrency wallet software his company produces.

Later today, the wallet is expected to integrate support for the vote tokens tied to The DAO, in addition to bitcoin and ethers. Next week, developers plan to offer greater functionality that lets Jaxx users view DAO proposals and vote on those proposals from within the app itself.

Decentral team image via Facebook