Why DAOs Fail (and How to Fix it)

Unlock the full potential of collective action with us today as we navigate the complex world of Decentralised Autonomous Organizations (DAOs). Alongside my co-host Gareth, we dissect the empowering force of inclusivity and transparency in DAOs, revealing how they are reshaping decision-making and accountability through blockchain technology. Yet, our conversation doesn't stop at the surface; we dive into our very own experience with ColivingDAO to share firsthand the innovative solutions we're forging to create a more sustainable and successful future for these revolutionary entities.

The strength of a DAO can often be overshadowed by its weaknesses, which is why we go through the main reasons DAOs fail and how we address those a ColivingDAO, encompassing swift, equitable decision-making and legal incorporation, helping us tackle the real challenges of decision fatigue and voter education. We also shine a light on the pressing issue of security, drawing from painful lessons of past DAO exploits to fortify our community against such threats. Our discussions are punctuated by practical insights into making Web3 interfaces more accessible, ensuring all members, regardless of their tech proficiency, can contribute meaningfully to our collective mission.

As we wrap up, we don't just ponder over the theoretical; we confront the realities of decentralised governance systems head-on. We examine the preventative measures against governance attacks that are crucial to our structure at ColivingDAO, and how we safeguard our decentralised ethos. We invite you, our fellow visionaries, to join the charge in building generative communities that stand the test of time. Tune in for an episode rich in practical wisdom and an invitation to a more equitable future.

Transcript

Daniel: 0:04

Alright, welcome everyone to another ColivingDAO Insights. This is your co-host, daniel, and I'm joined today by my co-host, gareth, as well. Hi, gareth.

Gareth: 0:13

Hey, dan, good to be back, and it's a little early start today, so let's get going.

Daniel: 0:19

Let's get going, and today we're going to be picking up just where we left off, because in the last episode we spoke about DAOs, what a DAO is and a little bit of history, and today we'll go more in depth on what the pros and cons are. We're also going to be discussing what some common reasons for DAO failures we've experienced in the past, and we'll tell you exactly how we address all of them at ColivingDAO, what improvements we bring. So this is what we'll be doing, and for the ones of you that are not too familiar with DAOs, I suggest you go back to our previous episode, because that's where we explain everything. So, gareth, we got something very important today.

Gareth: 1:03

Yeah, this is going to be great. So this is the second part of a two-part episode on DAOs, as you mentioned, dan, and we covered a bit of the sort of general nature of what DAO is is, what does DAO stand for, and in this episode we're going to go a bit deeper into what actually happened in practice with DOWs that were created and set up, of which there are thousands now, and what's going on with DOWs currently. Where is the state of the art and what does ColivingDAO add to the state of the art for DAOs? So we're going to dive a bit deeper in this episode.

Daniel: 1:39

Absolutely, and just to give a little bit of context for people that did not watch previous episode DOW DAO stands for Decentralized Autonomous Organization, and we're looking at organizations where decisions are making collectively, and again, for the details I referred to in the previous episode.

Daniel: 1:56

But what matters here is that we're looking at novel models to make decisions together and to make sure that an organization can not only survive but also thrive in this new world. And all this has been enabled by the introduction of Work3 and Blockchain, because usually shared decision making happens on chain using Blockchain, and this has also been enabled by the decentralization of ownership as well. So, thanks to Blockchain, people can hold quote unquote shares In a DOW. They're not technically shares, they're tokens. Sometimes they can also be shares, as we will see, and these tokens effectively can give not only voting rights but also distributed ownership, and that's why these organizations can effectively be decentralized. So this is a DOW in a nutshell. But, garth, let's see what the pros are for DOW, so what the advantages are, and then we can dive more into the negatives that we've been experiencing so far and then how we're addressing them.

Gareth: 3:01

Yeah, let's dive straight in, Dan, that'll be good. So, yeah, I mean. So what is this all about? Right? Why are DOWs in existence? What is the point of all of this? And I guess this is our attempt to create a better future world, right? So the people that created a DOW think that decentralization is one part of the recipe for creating a better future world, and that's why it exists. So if we start with, okay, what does a great future look like? Where is the hype around DOWs? What does that vision look like, and what would it feel like in the future if that goes right?

Gareth: 3:39

So if we dive into the pros with that lens that this is a construct to create a better future world, what can a DOW actually enable us to do? So the first thing is that a DOW is basically a variety of individuals that can come together collectively around a shared mission, and with a DOW, you can do that with people all over the world, just like you can with an internet community with a special interest. So they can come together and really work towards that shared mission as a single entity. That's the first major benefit of a DOW. It's a way to coordinate a group of people towards a common mission. So this is a really powerful stuff and it takes what's already possible in Web 2, but it just gives it a bit more coordination and a bit more structure to enable it to happen. And, as we spoke about in the first episode, that's enabled by those people coming together and creating maybe a pooled treasury for the DOW. So they have some money that they can use to act towards that mission and they have some decision-making tools that they can use within the DOW to collectively organize how they're actually going to spend that money towards their mission. So that's the first major benefit of a DOW.

Gareth: 4:54

The second one is that more individuals have a voice in the planning, strategy and operations of the entity. What does that mean? It means that everyone that's coming together is actually able to take a major role and actually be an active part of that community of people, not just a commentator, not just someone on the side. Like other communities or other structures, there's a lot of participants that are passive participants, but in a DOW you have the opportunity to be actively involved because of the way it's structured. As I say, everyone has a little bit of power to guide the decisions. So that really changes things right. Everyone is involved, everyone has an active voice, no one is left out. That's a great benefit.

Gareth: 5:45

The third pro is that, because we're on the blockchain, or this entity or organization is on the blockchain, every decision is publicly viewable inside that group of people. So that group of people coming together, any decision that's made, any transaction that's made, is going to be viewable by everyone else in that organization. There are no secrets, there are no, you know, no one is left out and the transaction record is all there. That's one of the major advantages of blockchain technology that there is this, you know, reliable ledger, a public record of what's happened in the entity or organization. So token holders within the DAW are then naturally incentivized to act a bit more responsibly because every decision that's made is visible.

Gareth: 6:40

And, last but not least, the members of ADAO may feel empowered to collaborate with like-minded individuals with similar goals within a single community. And, again, that's kind of an extension of a group of people that are coming together in ADAO towards a common mission. But you can even have subgroups within ADAO that have, you know, one small part to play and they think that they can contribute in one way and another subgroup can contribute to that mission, that bigger mission in another way. So basically, to wrap it up, you know, the pros of ADAO is it can get as nearer to a much better future. It's not a utopia, but it enables a lot more participation for people who join a group or an organization to actually make something happen and to do it in a fair and balanced way where power and decision making is shared equally amongst all participants. That's the kind of basic utopian vision of ADAO and a huge number of benefits, as we've spoken about before, dan.

Daniel: 7:44

Yeah, that's a very good description of the benefits, the pros, and we've experienced a lot of that.

Daniel: 7:51

If we look at the ADAO's history we mentioned a few very famous ADAO's in the past episode as well We've seen how this really contributed to a sense of community, a sense of shared purpose for a lot of people, and also this idea that we've found some sort of new way of managing organizations and structuring organizations as well, which feels like okay, this is the way of the future.

Daniel: 8:17

So definitely a lot of benefits, and it's not just benefits for the sake of themselves, but I definitely see how these particular characteristics can enable a new type of society where things are fairer in general, wealth is distributed more equitably and, more importantly, everyone really has a say in what happens in the future. So we're moving away from this old centralized vision of the world, where power is concentrated in the hands of the few, into a new reality where people can make decisions collectively in a way that effectively benefits the organizations as well. So we're not just taking from someone to give to someone else. We're looking at ways to really maximize the benefit for everyone. When everyone's voice is heard, the net benefit for society is higher. So this is what we're looking to do. But, as we said, there's some cons as well. There are still some challenges. So now we're going to go deeper on these challenges and we'll see exactly how we address them so that we can maximize the benefits.

Gareth: 9:30

Yeah, absolutely. So we're going to make it real by going into some of the weaknesses and we're going to talk a bit more about what are the criticisms of DAOs and how can they be made better and where we're at at the state of the art. Where are we right now with DAOs? So one of the first criticisms of DAOs is that it might take longer for decisions to be made because there are more voting participants. Right, you can have kind of like what people refer to as the nightmare of democracy, where decisions can't get made quickly. If you rely on consensus decision making, if you're trying to improve democracy and get everyone to agree on a decision, then obviously it takes much longer to get to a conclusion, right, so it's going to take a lot longer if you need a thousand people to agree to something than if it's only 10, it's just numbers, right, but this isn't entirely true, because you can arrange the decision making structures within a DAO so that you don't have to have everyone vote on every single decision, right, dan? You don't need to have. You know, there are small decisions and there are much bigger decisions that need to be made within a group. You don't need everyone to vote on how much money you're going to spend on snacks, for example, if it's a very you know, to keep the organization going, if there's going to be a meeting, people need snacks and drinks. You don't need to have a big decision that everyone takes part into to reach a consensus on something like that. Whereas if you want to vote on a change in the mission for the DAO which would be a very big decision to change the direction of where they want to focus, then that's something that you'll want to pull in more people in the DAO perhaps all of them to make a decision on.

Gareth: 11:27

But the point is there are different levels of decision making and you don't need to involve everyone so that a DAO can be structured so that decisions are made appropriately by the right people within it.

Gareth: 11:39

And here at Co-Living DAO we use a structure called the fair shares commons to structure our DAO, which is a legal incorporation, which makes the DAO a legal company, which is great. It's one of the major advantages to address the first major weakness of a DAO that it's not a legally incorporated entity. And anyway, through the fair shares commons we're able to have a multi-stakeholder structure with stewards who guide the organization and take part in the really big decision making and sort of take care of the essence of the DAO, and that structure has decision making within the structure so that the right stakeholders are involved in the right decisions. So you don't have to have everyone involved, and so decisions could be made very, very quickly within the co-living DAO structure, and so it's not entirely true that it takes a long time for voting decisions to be made in a DAO. Anything to add to that, dan.

Daniel: 12:40

Yeah, that's a very good description. It makes a lot of sense and, again, it doesn't have to be a slow process. It's all about making sure the process is designed in the right way, and that's exactly what we're doing here at Co-living DAO making sure there is a specific distinction between categories of decisions and making sure that people don't have to constantly vote on everything, because that would give some sort of decision making fatigue or burnout, and it's not really necessary. People can certainly trust that a group of people can make decisions on some topics, on some matters, and then when something is very important, then of course everyone is to get involved, and we spoke a lot about consent versus consensus as well. Like, we don't always need everyone to agree on everything. As long as people think that the current course of action is good enough and they might be OK with that, they can be fine with it and things can progress so that there is no reason to waste any time or go slowly. It's possible to move fast and act as a collective as well.

Gareth: 13:49

Great, yeah, exactly, and then? So another criticism of DAO's is that there is more burden to educate users, as your collective voting population might be diverse, with different degrees of education, different levels of knowledge. This is also true for their familiarity with technology like the Web3 and blockchain, and it can be a bit more complicated to interact and make decisions within a Web3 interface. Now, again, this isn't necessarily something that needs to be true, because if you create a platform with a really good user interface, a really good onboarding process and a really streamlined educational process to get people up to speed on the basics of how to interact with the platform, then these things are much less of an issue, right, and they're actually an issue with any big group of people that you get together. Even a thousand people in a company are going to have different levels of education and ability, but then they can get involved at an appropriate level.

Gareth: 15:00

And so in co-living DAO, one of our main priorities is to make a Web3 blockchain platform user-friendly, just like the best Web2 platforms are very user-friendly, to enable that interaction to occur much more smoothly. And, yeah, if you give people a chance and give them time to get some education, knowledge about how to best interact with a platform. Then you can really go at the speed that people require different levels of ability or different levels of activity. So some people will naturally want to be more involved and some people will naturally want to be less involved, and that's okay. You know, that's okay. We don't need to have everyone at the highest level of awareness and education within a DAO. Again, it's not a utopia. This is a real-world use case for a group of people coming together and all the messy differences that real people have with each other.

Daniel: 16:02

Absolutely so. It's definitely something that can be user-friendly, that can be streamlined, and there's literally no reason why things need to be more complicated when, in reality, we're just designing a system that is fairer, that is more effective and it can be operating quite seamlessly as well, as long as it's designed the right way, which is literally what we're doing here. So that's exactly how we're addressing all this. Gareth, have you got any other cons that you'd like to share, or shall we dive into the reasons why some of the historical DAOs failed in the past?

Gareth: 16:41

Yeah, this is a great link. So we're about to jump into some of the juicier stuff with DAOs and some of the controversies and the major events and the evolution of the DAOs, and basically this con is exploits and security. The big issue around DAOs, or one of the big issues, is security, and this is really important because we've seen some examples of severe exploits and thefts, even of treasury reserves within DAOs, and so, yeah, let's dive into security.

Daniel: 17:15

Yeah, that's very important because we're talking about organizations that are based on code hard code that is written very often by individuals. Of course, humans and humans can occasionally make mistakes, and sometimes it's not even one human making a mistake, it's just the way the whole infrastructure is designed. Sometimes it's just not perfect and some people didn't think that some occurrences could happen and some edge cases have not been taken into account, and that's when there might be some vulnerability. And I remember I think we briefly mentioned last time the DAO, the first DAO that was created in 2016,. In fact, the first DAO in history effectively eventually failed because of the vulnerability of its code, and this is unfortunate, but this is something that makes sense if you think of this phrase.

Daniel: 18:12

Accidents will happen. Yes, it was a very new technology. We're talking about 2016, so that's eight years ago when the DAO was created, and so obviously there's been a lot of advancements in technology as well. So it is true that, historically, some DAOs failed because of intrinsic vulnerabilities in the code. What's also true is that in the meantime, there's been many, many years of development, and right now, this reason is becoming less and less common. So the code being accidentally poorly written is something that is less and less common, and all we need to do is just utilize the experience we have right now to make sure the code is written well. So it is work that is done, especially in the beginning, and of course, it's an ongoing process of making sure that everything is fit for purpose. But certainly this is something that can be avoided by ensuring quality. So this is not so much an intrinsic vulnerability of the system of DAO as a system. It's really more a matter of making sure that quality is assured all around, right, gareth?

Gareth: 19:20

Yes, absolutely Dan. And just to jump into one of the first major advantages again of Co-Living DAO is that we use the Fairshares Commons legal incorporation structure. This means that DAO is a legal entity, co-living DAO is a legal company and this adds to the security level, right, dan? Because a lot of these DAOs didn't actually have a company or a legal entity, which was one of the major issues when these types of exploits actually happened, because who is liable if it's not an actual company with a legal incorporation? So just having a bit of legal backing really helps to give a bit more security around preventing these kinds of exploits.

Daniel: 20:07

Yeah, and this is very important, because in blockchain, there is this expression, which is the code is law, and there's a lot of DAOs where, because there is no legal infrastructure there, really there's no order law other than what the code allows for. So we've seen a lot of examples in history where there was effectively a hack. Even Ethereum was hacked, for example, at some point. Some of you may be wondering why is there a project called Ethereum and then another one called Ethereum Classic? And the reason is back then, when it was a major hack, some people said hey, you know what? This hack was unfair. Let's just arbitrarily revert things to what they were before the hack. Some other people said hey, wait a minute, the code is law. If someone did it, the code allowed for it, we should just stick with that, because who are we to say, hey, this person did something wrong, the code effectively allowed for that. So that's why there was a so-called fork.

Daniel: 21:04

So two groups of people decided to take separate ways and create it to parallel projects, and this has happened many, many times in history. So right now, what we're creating here at Co-LivingDAO is something that goes beyond that, because if we say that the code is law. What happens is, if the code is not perfect, then there might be a lot of situations that are clearly unfair. So having a legal wrapper around the DAO allows for situations like this, where surely something happened, shouldn't have happened. There are ways to really address that, and it's possible to do that without really sacrificing the centralization. Because of the way the fiershares comments are designed, a lot of people will be worried. Hey, if we act against the code, it means we're not decentralized anymore. And it doesn't have to be the case, because the company incorporation structure is decentralized in the first place, so we don't need to rely just on blockchain technology to ensure that this is decentralized. Does that explain that well, garth?

Gareth: 22:11

That explains it perfectly, Dan. I couldn't have said it better myself.

Daniel: 22:18

Brilliant. Moving on to another reason why DAO's have failed in the past, this is something a little unfortunate, but this is something that is probably by design. Just a lot of people, of course, they have no idea is going to happen. It's the so-called rug pull, in other words, a system that is designed to be a scam in the first place and then, eventually, the founders just steal the funds and run away. This can be done in a number of ways. I'm just going to give a brief example. Rubik's DAO in 2020 was actually very popular DAO. What happened is, one day, the founders just decided to run away, steal everyone's funds, and that's what happened. As I'm going to read more about this story, you can go and find more information on Google, but what matters here is that normally, when something is designed to eventually be a rug pull and, by the way, the term a rug pull is a very common expression in the web-through space I just imagine someone is pulling the rug from underneath and everyone is left with nothing.

Daniel: 23:29

For this to be possible, usually there has to be some vulnerability in the code, but in this case, it's not really an accidental vulnerability. It's more of something that is there by design. It's more like a backdoor or some sort of system for the founders to just steal everyone else's funds, and this is something that is usually there from the beginning. Also, sometimes it's not only that. Sometimes there are very clear warning signs that people can see.

Daniel: 23:58

So, even if someone cannot read the code and identify that there's some backdoors in the code, when a project has a major lack of transparency around it, that's really a warning sign. Okay, maybe if all the founders are anonymous, for example, okay, maybe this means that it's kind of easy for a founder to just run away. So very important, what we do here at Call of Endow, we don't have any of this. We don't have any anonymity in the way people are involved and the garth. You can go a bit more in depth on how exactly we make sure that people's identity is verified and we make sure that there is enough transparency so that people know that there's not going to be any rug pull, because if it's not there by design, then people can see that effectively, that the project has been designed with the right intentions and therefore people can trust that things are going to go well.

Gareth: 24:59

Yeah, absolutely, dan. In a nutshell, to keep it simple, we use in the fair shares commons legal structure is one person, one vote, not one share, one vote, and what that requires is really strong proof of identity. So each individual that has any kind of share in the Call of Endow community or a token will have to undergo an identity check to prove that it's them that's voting whenever they vote on a major decision, if it requires a shareholder decision, and so that's really important. Obviously, we're not anonymous, right? We're the founders of Call of Endow. We're here. This is real. We're real people. This is not an AI voice, and so our faces are up there front and centre.

Gareth: 25:51

And, in all honesty, when I look at scams and rug pulls, I just think, if you've got enough talent to pull that off, why are you wasting that talent? Why not create something much more valuable than a scam, right? I mean, it just doesn't make sense for people to do this. It's such short term thinking. I would much rather build something of long term value and of much bigger value, and something that's going to be positive for humanity. Right, rug pull is like a very cheap trick and, yeah, I just I don't understand how people can think that way. But yeah, call of Endow, we have some strong mechanisms to prevent these kinds of situations.

Daniel: 26:35

Yeah, exactly so. When you look at future communities that are joining the Call of Endow families and having their own dowes, which effectively is enabled by the Call of Endow in the abler itself, then there's plenty of mechanisms in place to ensure the new communities are genuine, that they're coming in with the right intentions and there's no way for them to literally just put all the funds under their arm and I just run away with that. I mean, we're not. We're not allowing that in a number of different ways, so that's, that's not something that is going to be an issue whatsoever, so we design things in a very safe way.

Daniel: 27:11

Another problem that has been observed in many dowes and I mean again, if someone wants to read a story about this, you can read about the MCC Dow in 2018. Another problem is a governance system that is not really fit for purpose. We probably spoke about this many times in terms of what we're introducing, but yeah, I mean, as we mentioned before, slow decision making, lack of planning. These are things that can happen in a Dow and, in particular, the MCC Dow just run out of resources, and you can argue that this can happen to any organization. It doesn't have to be a decentralized organization, so really, it doesn't have to necessarily be a problem with the Dow itself, but certainly if decision making is either slow or done poorly, then this is something that can happen.

Daniel: 28:06

However, here at Co-Living Dow, we design a very robust and antifragile way of making decisions together, and we spoke about this plenty of times, so we don't need to go in depth. But, gareth, if you want to give a very quick rundown in a nutshell, of why this governance system is now slow, we say something already today. But just in a nutshell, what ensures the quality of the decision making process here at Co-Living Dow? Yeah, absolutely, dan.

Gareth: 28:33

So again in the fair shares commons in corporation, there is a requirement to use what we call a dynamic governance system, and that can be any kind of dynamic governance, from sociocracy to holacracy and other examples, or you can customize it to yourselves. But basically, in a nutshell, decisions are made in small groups of people within that organization, so maybe six to 10 people max. The company is broken down into groups that size and then decisions are made by consent, not consensus. Decisions made by consent mean that when a proposal is put forward, all the members in that circle simply have to say is this good enough for now and safe enough to try? And they give their consent, which is very different from what we call a consensus, and we went into that a bit more in a previous podcast. I'm not going to go too much into it now, but when you have a smaller group of people or do you see anything that's right and voting is done by consent, decisions can be made lightning fast, doesn't need to be slow. We have that structure embedded in the co-living-dow structure.

Daniel: 29:49

Perfect, yeah, so we spoke about this many times for people that want to go more in depth, but certainly slow decision making is something that has been addressed, and we've found ways to make sure decision making can be fast and high quality as well. The other thing that has happened quite often is having a governance system. This is related, really, a governance system that is actually vulnerable in itself. So we're not talking about the code being vulnerable here. We're not talking about the system being slow and poor, but actually vulnerable. So sometimes in the history of dowes, there's been cases where someone has exploited the decision making system itself and has done something that effectively took advantage of the dow. Again, for someone who wants to read a story, mango Markets is an interesting one where one attacker could just exploit the whole system. But there's been many, many examples. I've seen quite a few times.

Daniel: 30:45

Imagine, when voting is only tied to the amount of tokens.

Daniel: 30:50

Some people have been able, using something called flash loans, which we don't need to go in depth on, basically the ability to borrow a huge amount of money in a very short period of time and then buy a lot of these tokens, and once one attacker has bought a lot of tokens, they could just pass a proposal because all of a sudden they have a lot of voting rights, so they can pass a proposal that usually is detrimental to the dow and favorable to them.

Daniel: 31:16

For example, accept that the dow is just going to give all the money to one individual themselves. So if someone is able to borrow a lot of money, buy a lot of tokens, get a lot of voting rights, pass a proposal that gives all the money to them and then with all the money, they can repay the loan and keep a lot of profit, well, certainly there's a way to exploit a system that is poorly designed in the first place. But, gareth, this is very easily addressed. Here at Co-LivingDow, we mentioned the proof of identity, the one person, one vote. So this is not something that is even possible here at Co-LivingDow, right?

Gareth: 31:48

Yes, exactly One person, one vote prevents the effect of a whale who has a large number of tokens. But also in the structure that we use at Co-LivingDow, the Fair Shares Commons, multi-stakeholder structure, each stakeholder has a particular voting weight and the stewards have a voting weight. The stewards are like the wise elders who initially have a bit more voting power in the very early stages of the company for formation and because they have a bit more power, they can balance out poor decision making or attempts to break the governance model. So we have double protections in the form of multi-stakeholder waiting, voter waiting and one person, one vote, not one token, one vote.

Daniel: 32:37

Exactly, and the multi-stakeholder waiting is really extremely important, because we no longer tying power to financial resources, in other words, money. So we probably use this idea that the more money someone has, the more power they have, and it makes sense, because money is one resource, but certainly not the only one. So what we're really doing here at Co-LivingDow we're fostering a society where money is not the only or the main by far indicator of how much power in terms of governance rights someone has. There's many other ways to acquire governance rights. So this is crucial because it's a massive game changer where power is longer centralized in the hands of the few.

Daniel: 33:21

Another thing that has happened in the DOWs before as well is what we call voter apathy, meaning sometimes a lot of people just don't vote. So what's the point of decentralizing a system if a lot of people are just refraining from expressing their opinion in the first place? And again, this can happen for a number of reasons, but obviously incentivizing voters is one thing that can be done. But also, if the system is designed a certain way, when people get real benefits, then certainly they have enough reasons to express their own voice on the decisions that can be made. So, gareth, in a very short sentence. How does Co-LivingDow address the risk of voters just not voting and eventually ending up in a less essentialized system?

Gareth: 34:11

I think the very first way is not any big technical way, dan the fact that Co-LivingDow is a real-world mission, right, this is where people live.

Gareth: 34:19

They're going to live in co-living communities, and so there will be things that are important to the residents, for example, that they will want to vote on.

Gareth: 34:30

So having a DAO that has a real-world application, a really good mission, is the very first way to prevent voter apathy, right, and from a technical standpoint. The other way to avoid or minimize the effect of that is simply that you know if you get a lot of voter apathy in a particular decision, that's also a good signal that maybe this is a proposal that no one really cares about, maybe it's inconsequential, maybe it doesn't matter, and so, in a technical sense, the way you get around that is, there only needs to be a minimum percentage of people in a group that need to vote what they call a quorum in order for a proposal to pass. And if you collect some data to say that a few decisions were made with the minimum quorum, then maybe we need to look at these proposals. Are they good proposals? Maybe people don't care about them. Maybe it's a good signal to look a bit deeper into things, so voter apathy is not always a bad thing.

Daniel: 35:29

Yeah, that makes sense. And also, as we said, we're talking about real-world projects. So when people live in a place, they certainly care about that, but certainly there's many mechanisms again to make sure that people have enough incentive to vote, and if they don't, then it's good feedback. So that's a very good point. And the last but not least, we have seen that there's some limitations with the on-chain models we spoke a little bit about. The code is law, so the enforceability of something. So if something happens or it doesn't happen, what was supposed to happen, how can that be enforced? On-chain, Can you really do that? And sometimes some of the platform used can be centralized as well. So, even though the code is decentralized, sometimes the servers might be centralized or some other things might be centralized.

Daniel: 36:20

So again, we're not talking about a utopia here where everything has to be 100% on the decentralization spectrum, but certainly we understand that it's important to make sure that decentralization is real and practical. So, again, we addressed this in a number of ways at Kalevendau. We mentioned about the legal wrapper. So that's something that is definitely in place and with these systems we're making sure that decentralization is real Because, again, it's not only the people that have more money in the project that can effectively operate. It's everyone who has a certain relationship with the company has a say, and when we talk about enforceability, having real law involved, it changes a lot of things. So even if there may be some element of centralization in some of the platforms utilized, it doesn't really affect decentralization overall, because the system by law is designed in a decentralized way.

Gareth: 37:27

Right, Gareth, yeah, absolutely Dan.

Daniel: 37:30

Fantastic. Well, so this pretty much concludes what the main reasons DAUS have failed in the past. Surely, there can be more challenges down the line, but we are prepared for that because we are designing a system that is effectively antifragile and is able to not only survive future shocks, but also thrive in presence of uncertainty and turbulence. So this is literally what we've been doing here at Kalevendau, and for the ones of you that want to find out more, first of all, make sure you subscribe to this podcast and you keep joining us every week, and, at the same time, you can check out our website and reach out. If you want to say something, if you want to share something with us, anything, feel free to reach out. We'd love to hear from you and, as usual, gareth, we will be back here next week with more and more about decentralization, web3, co-living and a new way of creating a fear of society.

Gareth: 38:32

Yeah, absolutely. And just to sum up from my point of view and what we've covered today all these vulnerabilities of DAUS and the weaknesses and so on I think ultimately what we have to remember is a really good DAU has a great mission and our mission at Co-Living DAU is to build the future of communities with generative communities that are anti-fragile, that give people a much better way of life by sharing power and decision making and if you have a really good mission behind a DAU, that really helps to mitigate against all of these risks. So we're looking forward to building that future and we're looking forward to the next episode next week.

Daniel: 39:14

Absolutely, and if you feel aligned with this mission and with these values, by all means join us in this wonderful journey. So thanks everyone for being here and we'll be back with you next week.