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Autonomous corporation “The DAO” has become the biggest crowdfunded project

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Re: Autonomous corporation “The DAO” has become the biggest crowdfunded project

#31

Post by street »

joshuaheard wrote: post #14

A corporation, being a legal fiction, can only act through physical persons. So in that respect, no corporation can be truly autonomous. It sounds like what they have done is taken all the paperwork associated with corporate activity: by-laws, annual meeting minutes, resolutions, etc., and put them into a block chain. A more proper description would be a paperless corporation.

And in fact, in many countries, the DAO actually is a legal company/association, just not officially incorporated. But incorporating is not required everywhere for the normal laws to apply.

Just the fact that people put their money together and are acting as a group gives them various legal requirements. The fact that the DAO limits what they can do might interfere with their ability to follow the laws; that does not mean that the laws do not apply. You don't get to throw your hands in the air and say "we cannot pay taxes on our profits, it's physically impossible" when you made it impossible yourself by creating and/or associating with the DAO.

Re: Autonomous corporation “The DAO” has become the biggest crowdfunded project

#32

Post by tinkerrr »

drcode wrote: post #4
alttab wrote: post #3

This could be interesting. What does this mean for hostile take overs though?

I think you're asking "what happens when someone captures 51% of the voting shares?" - This is actually the #1 problem with these types of systems, since the majority could just vote to put 100% of the funds into their own bank account. The slockit-authored DAO in the article addresses this through two failsafes: 1. Shareholders can vote to split the company in two at any point to extricate their funds from majority…

Anyone can 'split' the DAO at any point of time, which renders the 51% attack moot. A 51% attack works only when the attacker can get more than what he puts in.

Consider this obvious attack vector: Let's say today is the last crowdfunding day, and the DAO has raised $150 million so far. A wealthy attacker can immediately put another $150 million, effectively controlling 50% of the voting for the DAO, and then vote to send all the money to his own Ethereum address. This is perfectly possible, since this is all written in Ethereum contracts anyway.

To avoid this, the rest of the people can 'fork' the DAO, effectively leaving the attacker with 100% control over his share of 50%. The attacker gains nothing. The other 'fork' can now continue on.

This forking described above is also going to be used (I think) when it comes to funding new projects. I am sure some people will disagree with some proposal, and they would fork the DAO away to not invest in that proposal even though the majority agreed they would. They are free to do so.

Re: Autonomous corporation “The DAO” has become the biggest crowdfunded project

#33

Post by mathattack »

DigitalJack wrote: post #27
drcode wrote: post #19

Earlier quoted context omitted.

That's like saying a car can't be autonomous because some programmers wrote the software that it uses.

No, a corporation is a legal entity that must have directors and officers, aka people. Without that, you don't have a corporation. And after reading the article, they aren't a legally recognized corporation.

The ownership chain also has to ultimately go back to people.

Re: Autonomous corporation “The DAO” has become the biggest crowdfunded project

#34

Post by dandelany »

drcode wrote: post #19
joshuaheard wrote: post #14

A corporation, being a legal fiction, can only act through physical persons. So in that respect, no corporation can be truly autonomous. It sounds like what they have done is taken all the paperwork associated with corporate activity: by-laws, annual meeting minutes, resolutions, etc., and put them into a block chain. A more proper description would be a paperless corporation.

That's like saying a car can't be autonomous because some programmers wrote the software that it uses.

No, it's a bit more like saying a car can't be autonomous because it still has people telling it where to go.

Re: Autonomous corporation “The DAO” has become the biggest crowdfunded project

#35

Post by drcode »

dragontamer wrote: post #29
drcode wrote: post #7

TLDR; A computer program living on the ethereum blockchain is currently in control of 107+ million dollars, making it the second largest crowdfunded project in history. Shareholders vote on proposals to give money to other entities (probably also programs on the ethereum blockchain) that they hope will make money and send it to the parent contract. All votes are managed by a program written in EVM code, which runs on…

Last time I checked, Apple Computers is worth $500+ Billion and is a public company. Don't forget that the stock market is the original mass-crowdfunded project. Anyone can become an owner if you go to a brokerage account, and ownership rights entitles you to a vote for the board of directors and a share of the profits (ie: the dividend)

Agreed, "crowd funding" is an inexact term- I described it that way to help explain why some people think the project is novel. Certainly there is a lot of arbitrariness as to what belongs on a list of "top crowdfunded projects".

Re: Autonomous corporation “The DAO” has become the biggest crowdfunded project

#36

Post by street »

The DAO isn't actually worth 120 million. For one, it's based on the price of ETH, which would completely crash if you attempted to sell even a few million worth.

Secondly, everyone can withdraw their funds from the DAO before any funds are sent to projects. Many have invested because those who invested early make money from those investing later, since the number of "DAO tokens" you get per "ETH" has gone down over time. (cough pyramid cough)

Re: Autonomous corporation “The DAO” has become the biggest crowdfunded project

#37

Post by mfringel »

beachstartup wrote: post #20
mfringel wrote: post #13

Earlier quoted context omitted.

"Do the paperwork for creation" has only a passing resemblance to "found and fund."

"found" means to do the paperwork and setup a bank account. that's it. there's no deeper meaning. "fund" just means putting some money into a bank account for it. you could fund a company with a dollar (and many people do, for symbolic reasons).

You have just enumerated the "passing resemblance" noted above.

Connotations matter.

Re: Autonomous corporation “The DAO” has become the biggest crowdfunded project

#38

Post by dragonwriter »

street wrote: post #31
joshuaheard wrote: post #14

A corporation, being a legal fiction, can only act through physical persons. So in that respect, no corporation can be truly autonomous. It sounds like what they have done is taken all the paperwork associated with corporate activity: by-laws, annual meeting minutes, resolutions, etc., and put them into a block chain. A more proper description would be a paperless corporation.

And in fact, in many countries, the DAO actually is a legal company/association, just not officially incorporated. But incorporating is not required everywhere for the normal laws to apply. Just the fact that people put their money together and are acting as a group gives them various legal requirements. The fact that the DAO limits what they can do might interfere with their ability to follow the laws; that does not…

Right. In fact, an business entity that doesn't go through the formalities of becoming a legal corporation, LLC, etc., may expose its members to unexpected legal responsibilities. E.g., if the agreement were seen as forming a general partnership, each member would be jointly and severally liable for all legal liabilities of the partnership.

Re: Autonomous corporation “The DAO” has become the biggest crowdfunded project

#39

Post by capote »

Zikes wrote: post #17
archgoon wrote: post #9

> Currently only the privileged can found and fund new companies. What? It's about $200 in Seattle to file to register a Limited Liability Company. It's a stretch to call that 'only the privileged'.

> The individual must have a net worth greater than $1 million, either individually or jointly with the individual’s spouse. [1] http://www.sec.gov/info/smallbus/secg/accredited-investor-ne...

Think about how many of the major and wonderful companies we have today wouldn't exist if this were true.

Re: Autonomous corporation “The DAO” has become the biggest crowdfunded project

#40

Post by drcode »

tinkerrr wrote: post #32
drcode wrote: post #4

Earlier quoted context omitted.

I think you're asking "what happens when someone captures 51% of the voting shares?" - This is actually the #1 problem with these types of systems, since the majority could just vote to put 100% of the funds into their own bank account. The slockit-authored DAO in the article addresses this through two failsafes: 1. Shareholders can vote to split the company in two at any point to extricate their funds from majority…

Anyone can 'split' the DAO at any point of time, which renders the 51% attack moot. A 51% attack works only when the attacker can get more than what he puts in. Consider this obvious attack vector: Let's say today is the last crowdfunding day, and the DAO has raised $150 million so far. A wealthy attacker can immediately put another $150 million, effectively controlling 50% of the voting for the DAO, and then vote to…

> which renders the 51% attack moot.

Well, I'm not sure I'd use such absolute language. For one thing, people can still perform a 51% attack and try to influence decisions covertly, without triggering a split.

Also, the spectre of a 51% attack required for some major compromises to be made in the DAO design- Having a company that can arbitrarily split at any moment is likely to have a major impact on the future operations of the DAO.

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