Technology, as a rule, grows and advances more quickly than the infrastructure it exists in.

Back in 1886, a German man named Karl Benz (recognise the name?) invented something we all take for granted today — the car. But it wasn’t until several decades later, after Henry Ford began to mass-produce cars on his assembly line in 1913, that cars really hit the mainstream.

It’s a common story, repeated throughout history. Despite being developed and fully functional, cars weren’t adopted by the public until things like roads, mass production, and a repair industry were all in place.

Today, we’re facing a similar situation with blockchain technology and decentralized autonomous organizations (DAOs).

DAOs are organizations, like companies, that operate automatically without a central point. That means the decisions are executed using smart contracts, removing the need for a hierarchy of staff and allowing things to run more efficiently and democratically.

In theory, at least. In practice, there’s work to be done. Unfortunately, DAOs are still pretty much just a concept. Just like the good old automobile, we need to develop a more sophisticated infrastructure if this side of the blockchain industry is to scale properly.

The good news is that some companies are focusing on doing just that — and DAOstack is one of them.

DAO Stack

Image source: Xebia

How DAOstack is changing the face of decentralized autonomous organizations

There’s a huge (and growing) number of companies built around blockchain technology. In March 2018 alone ICOs raised over $2 billion, and 165 new ICOs came into existence just this year so far (compared to 210 in the whole of 2017).

DAOstack have seen how rapidly this industry is growing, and how DAOs could easily become the next big thing in the world of blockchain. But there are some challenges to overcome before DAOs can move from concept to reality.

Right now, the issue with DAOs is that they’re extremely difficult to scale, because of several infrastructure problems. This boils down to the fact that there’s no decentralized governance system for making collective decisions smartly and quickly.

Without this ability, DAOs will fail to work efficiently on a large scale, so they’ll be confined forever to the world of blueprints and prototypes. The good news is that DAOstack has a solution ready.

How will DAOstack solve the problems with scalability?

DAOstack’s solution is to build such a decentralized governance system.

One of the ways they aim to do this is through a system called holographic consensus. This works by dividing an organization into smaller groups. Instead of DAOs making decisions as a whole, for the whole organization, they’ll be able to make decisions on a smaller scale.

It’s a little like dividing a large company into smaller departments for easier management. In DAOstack’s case, the individual components of a DAO will make decisions using an internal relative majority.

Along with benefiting their part of the organization, these decisions must also be in line with the overall consensus. This way, the DAO functions as a series of smaller and more agile parts instead of one big chunk — crucial if you want to grow to epic proportions, or just normal-business-size proportions.

Any proposal made within the DAO is automatically added to a queue and is only executed if it receives an absolute majority of votes from members of the organization. This works well in theory, but in practice it can fall apart if too many proposals are listed — it’s simply too many to deal with.

To solve this issue, DAOstack uses a feature called ‘boosting’. If too many proposals are queued, it’ll be possible to boost some of them, so they only require a relative majority to be executed (as opposed to an absolute majority).

To make this happen, users of the network stake GEN tokens on a proposal if they like it; in other words if they think it’ll benefit the DAO as a whole and is in line with its values. This gives the proposal a score, and once that score passes a certain threshold it can be boosted.

The idea is that people take the voting process seriously because their money is resting on it. This ensures that only people with a genuine interest in the organization vote.

Building a decentralized governance system could be exactly what’s needed to solve the problems with DAO scalability. DAOstack have been mentioned time and again as an important development in this industry, and are certainly something to follow.

DAOs are just one example of how the internet is on the verge of a new era of decentralization and much more open information sharing. If the infrastructure can be put together properly, it could change all our lives for the better.