tl;dr: Decentralized Autonomous Organizations have an opportunity to more effectively meet the economic and emotional needs of people.
At their core, blockchains are about creating a global layer of trust. No matter what else is going on we can all trust the ledger.
Trust, sadly, is something that is increasingly short supply globally.
Trust Crisis Continues
The go-to source these days for the “state of trust” globally is the annual Edelman Trust Barometer. It shows the trends in how people trust or distrust government, media, NGOs, and business.
The 2019 report is out and this video, in which CEO Richard Edelman shares the findings from the analysis, is informative.
The biggest takeaway for me is that, out of all of the institutions out there, the one that people trust MOST is their employer.
I found this a bit surprising.
It seems to stand in contrast to all of the headlines of the past few years about how “there is no more loyalty from the corporation to employees or vice versa.”
It made me wonder if, when given a choice, people rank their employer as #1 simply because the other options are so devoid of trust for them?
I have no idea, but there are two things that are on my mind as a result.
- The global crisis in trust continues–which isn’t all that surprising.
- People look to organizations where they feel like they have a stake as a source of trust and hope.
Can DAOs Bridge the Trust Gap?
This brings me to DAOs…decentralized autonomous organizations and platforms like DAOstack (disclosure: advisor).
I wonder if they have an opportunity to become pre-eminent sources of trust in the future?
I believe that DAOs will become the employer of thousands and, eventually, millions of people.
However, they possess a few distinct advantages over traditional organizations.
- Opportunity for superior decision-making by leveraging “wisdom of the crowds” and voting by reputation, not power or money, which increases trust in the DAO.
- More transparent processes since they are recorded on the blockchain, verifiable, and up for inspection.
- More “skin in the game” for all stakeholders who can benefit over the long-term.
The last point is particularly of interest as I came across an article about Ergodicity Economics. Essentially, it argues our current model for economic valuations, which is based on ‘expected utility’ is flawed.
The reason it is flawed is that it doesn’t take into account the value over time, just at a moment in time. Yet, people don’t just make a decision about the expected utility of a car today, they think about it over the life of the car.
It’s not just how much utility you get today or tomorrow, it’s how much you will get every day.
With DAOs, reputation holders are incentivized to think, vote, and act long-term. Collectively, the organization is best off when it acts for its long-term interests. Stakeholders in crypto-economic networks benefit as overall utility increases over time…which is perfectly in line with the emerging theory of ergodicity economics.
We may trust our corporate employers, but they are still encumbered by a need to meet quarterly numbers. Though there seems to be a growing resistance to this, these types of changes tend to take a long, long time…if they ever work at all.
Given the need for trust that we all have and our innate desire to seek to optimize value and utility over time, DAOs can position themselves as a refuge within an increasingly turbulent world.
Now, all they need to do is increase their speed, scalability, and usability 🙂
The Yearning for Trust and the DAOpportunity was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.