Prior to the DAO crisis, Ralph Merkle spoke this week at the Decentralized Autonomous Society on Palo Alto. He made many astute points on structural problems in democratic systems and addressed how new technologies (including prediction markets) can be deployed to address these problems.

Everyone who participated knew that all conclusions were provisional and that progress would be made by adopting a gradual, experimental approach to solving them.

Democracies and Crisis Thinking

One key problem in democratic style organizations is the opposite of gradual anticipatory thinking; it is crisis thinking. Take the Iraq War. Someone blows up a few buildings in New York, the media blows various horns until the final conclusion is reached that the best course of action is to send a bunch of tanks into a desert, blow some things up, and call whatever remains a democracy.

The DAO you can see is not the Dao…

Contrast the point of the fifth chapter of the Dao De Jing: “Heaven and earth are not humane / they treat myriad things as straw dogs.” What does this mean?

It means that the DAOist position is to consider things from a larger set of cycles that does not place human emotion (or even humanity in general) at the center. Decisions should be made in light of the overall ecosystem rather than how people feel at any given moment.

Demagogues and Wars

“Never surrender,” the mere phrase suggests that there is some war that we must resist. Perhaps unsurprising, it is a natural course of democracies that they trend towards demagoguery and the idea of perpetual war. Having projects that are “too big to fail” keeps people who are making the biggest mistakes from having any accountability.

It is the natural course for people who plan exploits to find places where they are forever indispensable. This is why it is the Dao to treat people as straw dogs. One day they are useful. The next they are not. The wheat needs to be harvested. The chaff needs to be burned.

Is this really theft?

Were the DAO structured as a $5mm project, our situation might be one of general relief. A hacker discovered an bug in Ethereum and, as soon as it is fixed, the whole network benefits. The value of Ether might even increase.
In the case of the DAO, we have not only the “too big to fail” mentality, we have the amazing public statement that there are no DAO funds at risk due to this particular potential bug. To repeat in their own words, “this is NOT an issue.”

With this case, as elegantly pointed out on hacker distributed, we have an extremely sophisticated exploit that has the goal not merely of siphoning off some amount of ether, but to deliberately extract every last penny from the DAO. As the author points out, this strongly suggest a motivation that is not primarily monetary.

So we are left with the question, is this really a heist? Or is the executor of the exploit making some other broader point? Perhaps something like “this IS an issue.”

Not always clear who is the bad guy

Wake up. Time to die.

DAOs cannot be afraid of death. It is natural for things to die as they take their course. Traditionally even kings die according to a certain cycle. Dying well is an art. The more times you are able to fail, hopefully the more you learn.

There are many options for the future of the DAO and this associated mess. None of them require a wartime mentality. To discuss them requires time and attention not merely to the emotions felt today, but discussing what structure will be most robust and encourage the most adoption in the longer term.

Here in Palo Alto we are continuing on the march. But our first enemy is the local trash.


It’s all for one and one for all as Decentralized Autonomous Society members return from their trash walk after the first ever self-organizing hackathon