TL;DR – A DAOgorithm is an algorithm managed by a DAO. It’s a powerful hybrid tool that allows an organization to place key parts of their operations into a community managed structure without having to move the business itself on chain.
Stop me if you’ve heard this one before…
A startup creates a wonderful piece of tech. A community forms around it, evangelizes it & pushes it into the mainstream. The startup experiences growing pains & makes tough decisions. The community doesn’t like the change but supports it as necessary growth. After a scaling crisis, the company realizes it needs to professionalize. The internal culture changes, monetization takes priority & the product becomes less wonderful, possibly abusive to users. The community feels betrayed and screams. The company promises to listen to users, but the cycle repeats again and again. Eventually, people want to leave, but they can’t because there are no viable alternatives.
I could be talking about Google, Twitter, Facebook, Uber/Lyft or any of a hundred consumer tech services. We’ve all experienced this & we all know the culprit for our dissatisfaction.
They changed the Algo!
Many of us were first introduced to the power of the algorithm with the granddaddy of them all, Google’s Page Rank. Page Rank & copying Overture made Google. Page Rank also introduced the love/hate affair between power users & algorithms (WebmasterWorld chronicles the 20+ year history of this specific codependency). More recent examples include Facebook ruining Facebook. Facebook ruining Instagram. Uber ruining the livelihoods of drivers & Twitter elevating Elon Musk over anything you were actually interested in.
Ok, so algorithms are bad mmm okay.
Nope. They are a tool & like all other tools, it comes down to how they are used.
At this point, everyone is hip to the game. No one’s going to get super excited about a startup because the arc ends in user betrayal as key algorithms are pushed to maximize growth & profit.
But does it have to end this way?
Enter the DAOgorithm!
For those of you who don’t know what a DAO is, DAO = Distrubuted Autonomous Organization. It’s a set of smart contracts designed to facilitate the operation of an organization without human management. Overseeing DAO’s are a community (people) who vote on the rules governing the operations of the organization. So while machines run the day to day, humans manage the machines. An organization could be anything, a corporation, a non-profit, a community of users.
DAO’s are largely an Ethereum construct and they form the basis of decentralized management on that network. The idea is that a creation can be governed by its users for the benefit of the many instead of a few maximizing the benefit.
A DAOgorithm would then be an algorithm that is managed by a DAO. No more secret sauces that determine who sees what. The important aspects of a service’s behavior would be governed transparently by a community (DAO) who votes on changes & management of the underlying algorithm (DAOgorithm).
In Ethereum, if an overall entity is managed by a DAO, there may not be a need for a DAO to govern a sub-process within the organization. No arguments from me, but not everything is on chain & not everything should be (yet).
A DAOgorithm is a powerful hybrid concept for organizations that run services off chain, but want/need to empower users with the authority to control key algos inside the product.
Here’s a bunch of potential use cases:
- Communities powered by user created content
- Government consent (i.e. settling a monopoly case)
- Association marketing
- Two-sided marketplaces
Communities powered by UCC
Would you have given as much to Twitter, Facebook or Insta had you known your favorite platform powered the worst timeline?
Did that experience impact your ability to fall in love with another platform? Was a trust broken?
What if you had a say in what you saw on those platforms? What if you all voted on content sorting rules? Would the existence of a DAOgorithm be enough to get you to trust a new platform? I think this could be an important feature that the next generation of social platforms employ to knock off today’s incumbents.
We don’t hear a lot about a potential Facebook Monopoly case now that Liz Warren’s dropped out, but that doesn’t mean FB won’t face one in the future. Say the last thing Zuck wanted to do was breakup all his properties into little pieces. What could be a possible settlement tool? If you think I’m going to say DAOgorithms, you’re right.
Association marketing is having your favorite sport team on your credit card. In a DAOgorithmic world, it means replicating your key algorithms so that multiple organizations can customize their own views of your platform. Said really cynically, this means there’s a MAGA Twitter, a Progressive Twitter, a Crypto Twitter, a Celeb Twitter, etc… Each those have a different view of content based on their DAO’s control of the display algorithm.
A company would do this to give the illusion of control to users, to increase engagement, to not lose people by customizing the product in a manageable way. There’s a lot of reasons why I could see Twitter offering a generic vanilla version of its product & a subset of views which are controlled by DAOgorithms.
I recently wrote about decentralizing delivery using a very expansive view of what decentralization is. In that post, I was talking about a traditional off-chain service bureau that would provide the restaurant ordering infrastructure that regional non-profits would then operate & manage.
I skimped pretty hard on the management of those regional delivery apps, but they would be done by DAOs and what happened within the apps would be governed by DAOgorithms. Instead of paying Grubhub a 30% mark up for placement in app, local restaurants could collectively decide which eateries get shown where and when.
There’s a good case to be made for existing marketplaces to open up their governance to the buyer & seller communities through DAOs. It would be very difficult to move the existing infra on chain, but you’d get most of the bang for the buck by moving the administration of key algos into DAOs.
A DAOgorithm is a hybrid tool that allows an organization to place key parts of their operations into a community managed structure without having to move the business itself on chain. Said another way, get all the positive benefits of Ethereum community governance without the technical hurdles of migrating the stack.
There’s a host of reasons to consider DAOgorithms from increasing engagement, to competitive differentiation, to mitigation tools against enforcement actions (that sounds sexy). I’m sure there’s a ton of others as well. This was a quick & dirty write to formulate the idea & I’d love to hear some feedback on it.