Pro-Social Investors Need to Engage in DAO-Land or Face the Matrix
Can you describe a Decentralized Autonomous Organization (or DAO)? In a nutshell, it’s a way for a community using same digital currency to create computer driven rules for financial events without human intervention.
“Imagine Reddit memes with a balance sheet”, according to blockchain leader and University of Nicosia President Antonis Polemitis. The Reddit meme world has already impacted the real world — GameStop went from $5 a share to $325 and totally changing the future of a company.
Now imagine if all those Redditers instead of focused on a stock were focused on… paying a powerplant for reducing its carbon admissions? Or paying landlords not to evict tenants? Or providing bond for non-violent felons?
Currently the world of Reddit and DAOs is run by techies, early adopters and traders. In effect, purely capitalistic impulses. The utopian vision of smart contract driven DAOs may devolve into potentially more disruptive uses like leveraging AI to support discriminatory practices or agreeing to pay someone to post racist memes or worse.
And the future is coming fast. The state of Wyoming just passed the first DAO law — effectively giving legal entity status to what to date has been purely science fiction.
When the internet developed, too many universities and social impact investors’ first instinct was to poo poo innovation. Recall how traditional media asked “who the editor” would be of online newspapers for example.
Already, the art world is being rocked by an “Non-Fungible Tokens” where a new Crypto Punk art project is worth over $2 billion and DAOs are gathering together to buy crypto punks.
It sounds like science fiction, but DAOs have a clear pathway to influencing the “real” world. Gamestop is the canary in the proverbial coal mine as DAOs intrude into worlds of impact investing, art, education, finance and virtually every avenue of our lives.
Many post-apocalyptic movies start with the machines taking over — think Morpheus in the Matrix “We don’t know who struck first, us or [the computers]. But we know it was us who scorched the sky. At the time they were dependent on solar power and it was believed they would not be able to survive without an energy source as abundant as the sun.”
At this point in time, pro-social investors have effectively two options: first would be to allow the techies and traders dominate the DAO market. One should assume these short-term early adopters will be focused on one thing: profit at every turn.
But at this stage, there is a significantly more attractive option. The total current market for digital currency is approximately $1 trillion. Impact investors and universities and governments must immediately engage with the decentralized finance community to think through how to leverage their resources to impact the growth of this future.
Already impact investors are playing catchup in the traditional capital markets — think of how impact investors were able to take over the Exxon Mobil shareholder vote.
Decentralization of power is frequently threatening to “established” sources of power. Too often there is an attempt to ignore these innovators. But it is imperative for pro-social investors to engage with the crypto and decentralized finance community or risk a future that looks like Utopia than the dystopian movies like the Matrix.
