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BUTERIN BELIEVES COLLUSION AND CORRUPTION CAN BE MINIMIZED WHEN DECIDING POWER IS IN THE HANDS GROUP AND NOT WITH INDIVIDUAL

BUTERIN BELIEVES COLLUSION AND CORRUPTION CAN BE MINIMIZED WHEN DECIDING POWER IS IN THE HANDS GROUP AND NOT WITH INDIVIDUAL

Ethereum co-founder Vitalik Buterin has reiterated his support for decentralized autonomous organizations (DAOs), saying they can be more efficient and fairer than a traditional corporate structure under certain circumstances.


In theory, DAOs are collectively owned and managed by their members and have no central leadership. All decisions regarding aspects such as the use of treasury funds or improvements to the protocol are made by voting on proposals submitted to the community.


In a lengthy post on his website Tuesday, Buterin outlined that critics often argue that DAO governance is inefficient, that DAO idealists are naïve, and that traditional corporate governance structures with boards of directors and CEOs are optimal methods for making key decisions.



However, the Ethereum co-founder believes that "this position is often wrong," arguing that even naïve forms of compromise, on average, are likely to outperform centralized corporate structures in certain situations. Although he believes it depends on the type of decision, which he believes falls into two categories: convex and concave.


Examples of convex decisions include pandemic response, military strategy, and technological choices in crypto protocols, while concave decisions include judicial matters, financing of public goods, and tax rates.


"If the decision is concave, we prefer a compromise, and if it is convex, we prefer a coin toss," he wrote.


According to Buterin, when decisions are convex, decentralization of the decision-making process can lead to "confusion and poor quality compromises". However, when they are concave, "relying on the wisdom of crowds can provide better answers:"


"In these cases, DAO-like structures with lots of diverse decision-making inputs can make a lot of sense."

DAOs typically use decentralization to defend themselves against external attacks and censorship. Due to the nature of the space and the remote and online nature of some projects, it can be more difficult to "conduct background checks and informal personal 'smell tests' of character".


Buterin argues that this is precisely why DAOs are necessary, arguing that a decentralized world needs to "distribute decision-making power among multiple decision-makers, so that each individual decision-maker has less power, and so collusion is more likely to be exposed and exposed." .


However, he admits that DAOs are not without problems. In certain situations, a more centralized structure is required, such as when an organization operates with a central top management and has separate groups that all work independently.


The core of leadership is decentralized, but Buterin says it may be necessary for individual groups to follow a clear hierarchy and adopt a "clear opinion perspective leading to decision-making."


"A system that was supposed to operate in a stable and unchanging way around one set of assumptions when faced with an extreme and unexpected change in those circumstances needs some kind of bold leader to coordinate the response."


Buterin elaborates further, saying that in some cases DAOs may need to "use corporate forms" to "handle unexpected uncertainty."


He concludes that for some organizations, even in the crypto world, "much simpler and leader-driven forms of governance emphasizing agility often make sense:"


"But that shouldn't distract from the fact that the ecosystem wouldn't survive without some non-corporate decentralized forms that keep the whole thing stable."

Source: cointelegraph



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