In crypto, competition can be fierce in what is mostly a wide open space, in which entrepreneurs and technologists believe that a technological revolution is coming, but who will dominate it is a question that still hangs in the air. While many in the industry feel comfortable saying Bitcoin and Ethereum have, at least so far in this incredibly early stage, have somewhat proved themselves, that by no means guarantees future success.
After Ethereum’s meteoric rise in 2017 from $8 to $734, and the initial coin offering boom that it enabled (Token Data recorded $6.5 billion raised via ICOs in 2017), one would think it was a proven platform. But the crypto winter of 2018 and the recent or impending launches of various potential competitors has a number of Ethereum believers on edge, especially considering that the network is planning Ethereum 2.0, a three-year-long upgrade process that would be complete after these other blockchains could have taken marketshare.
Meanwhile, a number of developers working on core aspects of the platform have stated that they are under-funded or do not have enough funding to leave their day jobs to work on their Ethereum projects. While a number of changes have been afoot to address these issues, a new, crypto-native one has popped up on the scene: MolochDAO.
This decentralized autonomous organization (DAO) was founded by Ameen Soleimani, the CEO of Spankchain, a blockchain for the adult industry built on Ethereum. The purpose of MolochDAO is to help further the development of Ethereum 2.0.
It has members, who are voted in by existing members, and who can either put in money, in the form of ether (ETH), or submit a proposal to do work in to MolochDAO. In return, members receive shares (currently worth 1 ETH), which are used to vote on existing proposals and allocate funds for them. (Those who do work can either choose to cash out or retain their shares for future voting.)
Soleimani was inspired to found this new organization for funding and governance, because “we’ve sort of gotten into this ‘decentralize everything’ ethos, and the people who are building other rival chains are quite centralized in their development, even though the output of their effort is a decentralized system. So maybe it’s time to make some compromises to centralize our development in order to accelerate our pace,” he says during the episode.
Members are not required to use their money to fund projects they disagree with. They are able to “ragequit” all or a portion of their shares during the seven-day grace period after a proposal that they presumably voted against has been adopted. “The thing people are most concerned about is, will I get bullied by the larger voters in this system? Is there way for them to get me to use their power to fund something I don’t agree with? And if you can leave at any time, the answer to that is no,” he says.
The inspiration for this function came from a warning issued after the launch of a previous DAO (unfortunately named The DAO) in 2016, which raised $150 million and then flamed out when a bug in the smart contract was exploited by someone who went on to pilfer about a third of the ether in the DAO, which then led to a rupture in the Ethereum community that resulted in two Ethereum communities — the one called Ethereum and another one called Ethereum Classic.
Mindful of that history with DAOs, Soleimani admits, “I’m also not fully confident it will work. I treat this as an experiment and put safeguards in place. The most likely failure case is that it gets spammed or somehow files out, but ultimately Ethereum is a coordination platform, and what we should expect is that once we have these coordination platforms, as the cost of coordination itself drops, the most disruptive opportunities are the ones that require unprecedented levels of coordination.”
During the show, we also discuss whether there’s a rise in Ethereum “maximalism” (the belief that there will be one dominant blockchain), why the value of ETH matters and, if Ethereum eventually fails, why that would happen.