On the edge of Yellowstone National Park in Wyoming, a group of cryptocurrency enthusiasts have started a new experiment in urban planning – just don’t ask who will become mayor.
The CityDAO collective has no official leader. Its members organize yourself with the Discord chat app. Every important decision must be put to a vote.
Nonetheless, the 5,000-strong group successfully mobilized in less than four months to purchase 40 acre property in Park County, Wyoming, near the Montana state line.
Members are still debating what’s next, but the DAO’s lofty goals include expanding access and reducing the cost of ownership, as well as developing new systems for public finance. And they want to do all of this with cryptocurrency software.
“It’s a collaborative experiment,” said Scott Fitsimones, the project’s unofficial founder.
CityDAO is one of the most visible examples of hundreds of so called decentralized autonomous organizations, loose groups of cryptocurrency users who band together for a central purpose, be it managing an open source software program or buying real assets.
The groups have recently gained popularity among die-hard cryptocurrencies envisioning a future where software code will play a bigger role in governing large organizations.
DAOs can have more “accessibility and transparency” than companies, said Linda Xie, co-founder of cryptocurrency investment group Scalar Capital. “Nobody controls it,” said Xie. “It’s like collective decision-making.”
But even some of the most ardent supporters of cryptocurrency have struggled to define DAOs, and projects in the US still face many legal hurdles that require companies and other organizations to adhere to strictly defined regulations.
“It’s not a binary thing, as if you’re a DAO or not,” Xie said. “People use the term very freely.”
Proponents of the DAOs said they are more democratic than corporations so that virtually anyone in the world can participate in decision-making. They also argue that blockchains make it easier to keep permanent, immutable records and rule the large, loosely arranged groups.
DAOs take many forms, but are usually organized in digital ledgers like the Ethereum blockchain that allow developers to write software programs or “smart contracts” that automatically execute transactions when the right conditions are met. Many issue cryptocurrency tokens that allow owners to participate in governance.
“Web3 is starting to turn users and contributors into investors and vice versa,” said Ian Lee, co-founder of DAO software company Syndicate, referring to a term for token-based cryptocurrency apps aimed at bringing a new version of the internet.
In practice, most DAOs look like chat rooms with a shared bank account. Most importantly, according to members, DAOs shouldn’t be controlled by a single person, although in practice some look more like centralized companies with venture capitalists and other insiders owning significant amounts of tokens.
DAOs are currently tiny compared to the rest of the corporate world, with a total of $ 12.1 billion in cryptocurrency assets in reserves and approximately 1.6 million members in groups tracked by the data service DeepDAO.
However, they have already caught Wall Street’s attention. Bill Ackman, the multi-billion dollar hedge fund manager, has invested in Syndicate, which aims to make it easier for people to create investment DAOs.
In November, a group called ConstitutionDAO raised $ 47 million to buy an original US Constitution, only to be outbid at auction by Ken Griffin, founder of the Citadel hedge fund.
Some DAO members have complained that managing them can be cumbersome compared to centralized organizations. Like other new cryptocurrency experiments, they are also legally at risk.
The first attempt by a DAO, dubbed “The DAO,” raised more than $ 150 million in 2016 as an experiment with community investment before an attacker exploited loopholes in the code to steal a third of the funds.
In response, members of the Ethereum community voted to effectively change the code that supports the hacker’s funds, create a new version of the blockchain, and return the funds to the DAO. Critics said the decision undermined the supposed persistence of the software network.
The state of Wyoming, which first developed the limited liability company structure, passed a law earlier this year that allows the formation of “DAO LLCs” that are managed by smart contracts.
More than 110 companies have registered as DAO LLCs in Wyoming since the state passed laws, including four that have switched from regular LLCs, a state treasurer said in an email.
Critics of the legislation have argued that its language does not clearly define how DAO LLCs should be managed. The legislature is considering changing the original law. Cryptocurrency lawyers said for-profit DAOs have largely registered as Delaware LLCs, one of the most popular corporate structures in the US.
“A lot of the things people do are probably legal,” said Chris Rothfuss, a Democrat who chairs a Wyoming State Senate committee on blockchain technology. “Probably legal is not a convenient phrase.”
Rothfuss said he hoped the bill would bring more financial technology entrepreneurs to Wyoming and help diversify the state’s economy away from mining.
Fitsimones said he was inspired to form CityDAO because of Wyoming legislation, and he hoped it would make it easier for larger groups to jointly own and manage land using the blockchain.
“There’s something really cool about land because land feels like such a primitive piece of the puzzle,” said Fitsimones. “If you can put land on the chain, what’s the next step?”
CityDAO members must purchase one of 10,000 non-fungible tokens in order to participate in discussions. You can always sell your NFT if you want to quit.
Vitalik Buterin, co-founder of the Ethereum blockchain, and Brian Armstrong, CEO of the cryptocurrency company Coinbase, have both bought the so-called “Citizen NFTs”, which give the owners no share of the physical land or the rights to any income.
Fitsimones admitted the project was still facing hurdles, and members of the core team said most of the time was spent on legal issues.
“The worst-case scenario for this law is that a judge in a court of law says, ‘I’m not reading the smart contract code. That’s a lot of rubbish, ”said Fitsimones. “And in the best case scenario, this law becomes this fundamental link between digital assets, crypto and the physical world.”
Source: Crypto News Austria