Understanding TheDAO

Transcript

Okay, welcome everybody. My name is Paul and my co-host today is Yan Burgers. We're very happy to talk to my old buddy Griff Green. Um I think currently in the States. Thanks. Hi Griff. Um you're going to tell us everything about the DAO which um is is at the moment very popular. It's it's also uh being reported on in mainstream media and a lot of people want to know more about it because it's currently the most successful in terms of dollar amounts successful uh crowdfunding uh in uh in history and of course we want to know more about it.

what's your involvement also your company Slocket uh we want to know everything about it but let's first start with you you um as a person Griff you've been traveling across the world for years we met in Ecuador actually where I was living and you were living there um briefly as well and then I think around two years ago we met in Chicago at a at a Bitcoin conference what have you been up to all these years and what what does drive you wow what drives me wow um well first off I want to thank you for getting me into that uh that Bitcoin conference cuz I I wouldn't have even gone without you and you set me up with an awesome uh table. I was, you know, I was kind of new to the Bitcoin scene and then I hang out with you and I'm having lunch with Andreas

Antonopoulos and Trace Mayor and I just I had uh I was pretty blown away. So that was really awesome. Um but um yeah, so I guess I can give a quick breakdown. Uh I got really into Bitcoin when it went up to uh a thousand just like a lot of other people. Uh, I I made some money off of Litecoin actually and uh I was applying to be a chemical engineer and then I tore up all those resumes cuz Bitcoin was just so exciting for me. Um, and uh and so then I actually ended up just I loved Ecuador. I had been a nomad for maybe three years and of all the places I went to, Ecuador just stole my heart. I love Ecuador. Especially the fruits. Fruits are amazing. Incredible.

Avocados. I don't know how avocados just always stay green, you know? You always get the brown ones everywhere else, but man, it it's just amazing. It's like they just came fresh off the tree and are handed to you, but um so yeah, the fruit uh and there's this little hippie town in southern Ecuador called Vila Bomba that I have a lot of friends in. And so I just always end up going back there. And when I found out about Bitcoin, I was like, "Oh my god, perfect for Ecuador. They need this." So I thought I thought the same. Yeah, exactly. Right. Uh, I mean, because they use the US dollar and they have a lot of issues with change and there's just a lot of use cases for Bitcoin. Um, so I went down there just like you did and uh I I was kind of modeling myself after

Andreas Antonopoulos. I wanted to be an evangelist, you know, and just uh spread the good word. And I gave out I would break into colleges and give little uh like I I would bastardize oh, sorry for the swearing their the Spanish language and try to talk about Bitcoin in my broken Spanish to like college students and uh give everyone a little bit of Bitcoin and it was really fun. and we do the meetups with you guys in Keito and uh just uh you know just roaming the country spreading the good news until eventually we found out that they were going to start their little cell phone currency and uh which is which is not which is not a success at all yet. I know they put a lot of money in it but um I think they're going to force people to to pay taxes with that um new digital

fake dollar currency of them but yeah that's so funny. Yeah. Yeah. No, I'm sure they have 100% reserves in a bank somewhere backing up every dollar in their digital currency. 100%. Sure. Sure. And then afterwards, you went to you left Ecuador because wasn't it because it was a disappointment in terms of how you could spread uh because it was very difficult to to convince people of Bitcoin. We re we ran a meetup, but there were not too many people coming and it was also becoming sort of illegal at some point in Was it one of the reasons why you left there? Yeah. And um Bernie man was coming up and so I always go to Bernie man. And and then there also visa things, you know, you can only be in the country really for 6 months before they kick you out. And so I um

yeah, I just kind of it seemed like the writing was on the wall. Bitcoin was going to be illegal. So I kind of gave up my dream and and ended up uh I ended up joining getting a master's degree with uh University of Nikicoia in uh in digital currencies. So, I just focused on that and continued my nomad lifestyle. You know, it's like, well, if Ecuador is not going to work out, that's okay. There's still Thailand, right? There's still Bali and New Zealand and and so I just danced around and went to other Bitcoin groups. Uh actually had an interview with uh the guy from Bitcoins in Bali, uh Gary, who I hung out with for a couple months. So, I was just like going around the world meeting really cool Bitcoin people. I It was a pretty good life. How did this How did you like

this master degree program? It was great. Are you on site or is it only long distance? It's all long distance. And um you know any kind of long-distance learning is what you make of it. And so I focused all of my stuff on the topic that really interests me. Like every homework assignment was dedicated toward decentralizing the sharing economy and doing exactly basically what uh we're doing with Socket. And that's how I got the job too. You know, I mean um I feel like if you just put in the hours and you dedicate yourself toward any one task, you'll get there. if you're persistent.

And so I wanted to uh decentralize the sharing economy with digital currencies. And what do you know, someone else did too, and they're way smarter than me. So I just had to join up on their team and uh you know, see where I could fit in as a you know, potential person. I wrote a bike sharing white paper for a homework assignment and lots of other little pieces and parts of uh how to decentralize the sharing economy. And I just sent it all to them and they said, "Yeah, come work for us. This is this will be great. We need we need more people who are when when was that the when did you start working for Slocket?

Um that was right before DevCon. I was actually the fourth uh member of the team. Um and I just you know I just said hey I I will work for free like I'm so obsessed with your project. Like please let me in. I didn't know anything about Ethereum. I didn't know anything about um coding. I didn't was there like November last year or so like Defcon was when was that? Yeah. I I I was uh on the coast. Uh so it was October. It was October of last year. So Slocket, tell us more about SLocket. It I think it stands for smart lock it, right? Yeah, it's smart, safe, secure uh lock, right?

Um and the real goal of SLocket is to bring about a universal sharing network. Uh and try to bring about an accessbased economy as opposed to an ownership based economy. We really think that like decentralizing the sharing economy, what does that even mean? You know, it's about being able to allow anybody to share any item with anybody just by using their cell phone and maybe uh the Ethereum computer if you're on the entrepreneurial side. So, Slacket is really we create the smart contracts that allow for permissionless access to objects. So, we want to connect any object to the Ethereum blockchain with our smart contract technology so that

people can turn any device on or off using payments on the Ethereum network. What kinds of what kinds of things are you thinking of? Bicycles, cars, what what what kinds of Well, actually, so our first project is going to stay completely focused on non-mobile applications because there's a lot of complications with bicycles and cars. um you know just internet access and and things like that that we're Dutch. We know all about the complications with bicycles over here. It's uh can be very messy. Yeah, I bet. Uh but um but yeah, so we're going to focus on more like um you know, my my favorite model is just like anything you can put in a locker.

So because there's all these little uh smart locks that you can buy on Amazon right now, just like like No, they have just it's just a little padlock, but you can connect it to your phone. So instead of connecting it to your phone, you're going to connect that padlock to the Ethereum computer. And the Ethereum computer is listening to the Ethereum network. And so uh the universal sharing network effectively is just all the different uh it's kind of a UI to search all the different smart contracts that are attached to real world objects. So uh so that anyone can go on the universal sharing network, find the address for the object they want to borrow and then send it money so that they can actually have access to that

object. And that way they don't ever have to coordinate with or ask permission from any person to access the actual thing. And how how complex do these contracts uh get? I mean what hap what happens if you uh I don't know you break something? Well, I mean they can be as complex as you want, but that's uh that's where Socket comes in because no one has to write the contracts. Uh in fact, the contracts won't be viewable on the universal strain network unless they follow our uh our like what do you call that our format. So they'll need to give the DAO a percentage of every transaction and they'll need to have the correct uh the standard framework around you know who how do you pay the deposit.

So the the contracts are not that complicated. It's literally it's literally just how a deposit price and a price per unit time. That's it. Really simple. And um and then the complications end up building themselves out of that base layer. So for instance um one thing people always say, well if I rent because we there's lots of smart door locks. They don't work that great right now, but they'll work a lot better when there's an actual use case for them. But um uh these smart door locks, it's like you're not gonna put a deposit of $100 for someone to access your house, right?

I mean, that would just be silly. So, uh they'll just come in and rob you. Why not? It's on the universal sharing network. Let's do it. Um but no, so there will be opportunity for third parties to actually offer insurance or uh dispute resolution organizations or third party certifications that can they can they are part of the universal sharing network. So there's a base layer of entrepreneurs with stuff and end users that want stuff their interactions and then there's these third party services that are can offer an economic buffer. You know there's incentives for insurance and and uh other really cool opportunities for you know like even as simple my favorite example is like hey you're renting a power drill you know um

and what if someone breaks your power drill? So, well, you can you could use a reputation system. Like maybe Yelp could make a global reputation system that manages everyone's ability to access your object. They have to have a certain score above that. You could set that easily using Yelp's system. Or you could your neighbor who is always like pulling down the curtain watching everything that happens outside the outside his house because he doesn't want anything to change ever, right? um he's he's he's the guard dog of the neighborhood. So, you could just actually pay him to watch when somebody is returning a drill and he could, you know, this would all be

done automatically on the universal sharing network. He'd like get an alert on his phone like, oh, someone wants to return this drill. Okay, I'll walk outside. Hey, how's it going? Uh yeah, okay, this works. Here you go. Click, click, I approve. And then he gets a couple bucks and then your power drill is secured and safe. So, it could be it can be it's such an open network. there's so many opportunities uh because there's no official um like uh limitations on who can participate or what creative ideas they can come up with. Yeah, I've been in the blockchain/bitcoin/ whatever uh space for us for quite a few years. Uh um nowhere near an expert, but some of these promises have been made of course for years now. And at the same

time you hear um skeptists saying well a lot of these uh solutions are just solutions looking for a problem. If you look at things like Airbnb and and Uber um to what extent is it more interesting uh or more user friendly to uh for an ordinary user to use the universal sharing network instead of just using Airbnb. Well, so the thing is they will go hand in hand. I mean the universal sharing network is like a new it's kind of like a new internet for objects. So in no way is it competing with Airbnb.

If anything Airbnb users that are already using that network to support people would want to use our network as well to hand off the keys, not have to coordinate with people or maybe they want um specific insurance. Uh I mean we hope eventually and we've had discussions with Airbnb that they will integrate our backend directly into them so that you know their insurance could be cheaper because instead of having a global based insurance that covers everybody's use case they could actually ensure per house per use when it's being used and just like because it's all the information will be able to be accessed on the blockchain they can uh do those actuaries can go crazy you know they can

just they just go nuts with all that info and get uh get down an exact price of what it'll cost for people to rent specific houses for instance. Um so we think there's a lot of advantages. Um the biggest one is the centralized databases are insecure. They're security risks and they are very expensive to maintain. Well I the blockchain is cheaper. I mean, well, there's also security in the middle, right? Yeah. I mean, it I guess for Airbnb, it probably is easier and cheaper to just run a centralized database. And that's the biggest problem that I have with the sharing economy as

it is, it's really incentivized to for large players to take the the, you know, economics of scale to mass because they can use centralized servers and and handle their own issues. Whereas in a decentralized system, everybody's on the same playing field. Everyone's using the Ethereum network. So if somebody wants to have like just four houses in Seattle that they rent out, they can do that on Universal Australia Network. They don't have to put them all on Airbnb. They can do all they have access to all of the abilities that Airbnb does except it's more secure and uh and cheaper for them.

So is it your position that uh I mean one of the main motivations people are really interested in cryptocurrencies and all these ideas is basically the idea of access for people right so access to a financial system access to financial services and all kinds of other services that they now don't have is it your position that in order to grant this kind of access you need the decentralization I mean aren't there other ways we could Okay no I mean the thing is so SL we we thought about this a lot of ways. I mean we have a very specific plan. We need the DAO or a DAO at least uh to be the at the helm of our network. We need the Ethereum computer which is the gateway

between physical objects and the Ethereum network and then we can have the universal sharing network. So we need the DAO because you can't decentralize the sharing economy if a bunch of VCs and vanilla corporations are running the show. there's going to be um limits to access uh just like you know Coinbase kicks people off their ex uh their exchange all the time and you know that would be the same thing with VCs because they would have to follow all these rules. It's just like Bitcoin. I mean, Bitcoin is the first DAO, right? And Bitcoin is has gives anyone access to its services without any regulations because it's just simply computer code and that's going to be the same with the

universal sharing network because it's all just computer code. Computer code managed by computer code. Let's go one step back, but then we just start talking about the Dow. First of all, as there's quite a few people watching live, so please ask questions using the Q&A tool and also of course don't forget to like the video, subscribe to the channel. Um, so Griff, you already mentioned the DAO a few times. Um, please explain what is the the DAO and how does it relate to SLET and universal sharing network. Okay, so um I guess I need to step back just a little bit and say what is a DAO? Cuz there's the DAO, which is the Dow that has raised $150 million. And then there's a DAO. And a

DAO is simply just computer code. It's computer code that incentivizes human actions. And the first DAO is is Bitcoin. Hooray. Thank you, Bitcoin. Um, all other Dows have basically come out of Bitcoin. Uh, every altcoin is a Dow. It's literally they use uh I got to turn off a notification here. Um, literally they use uh computer code to incentivize miners to support their network, right? That's what how Bitcoin incentivizes humans to act. The problem is it has to debase its own currency to do that. So it has to inflate its own currency and it also doesn't have a full touring complete programming language behind it so it can

incentivize people in more creative ways. So that's Bitcoin was an amazing step in in I mean like one small step for man, you know, kind of thing. But uh the Dow takes that a little bit further. Uh and let me just back up just a second because there are some incredible um projects that are very similar to the DAO in the crypto space already. Um the DGBB, digital governance by the blockchain for Dash. Actually in Ecuador, a friend of mine and and my and me uh ran a dark co darkcoin node for a while. So I was very excited about the Dash network. Um especially when they got in the DGBB. So uh they they effectively changed their system so that

10% of the mining rewards would go into a fund where the mastercoin nodes could vote to use that to support projects like Amanda B. Johnson. Amanda B. Johnson was paid by the DAO that Dash has which they call the DGBB to advertise for them. And so the currency this this like decentralized network was able to actually pay for advertisement. You know that was a major leap for in my opinion in the cryptocurrency space. uh new uh new bits they they have a link to the US dollar the new shares and new bits and uh they also have a really cool Dow where they vote on when new currency can be created and stuff like that. So

those those two are the the like the real building blocks toward this point where we have the Dow. So what about what about Bitshares? You know, I don't know enough about Bitshares. They have lots of DAXs and they definitely are doing basic uh very similar things to what uh what um what uh uh people are doing on Ethereum cuz it's another uh Bitcoin 2.0 platform. But I'll be honest, I I don't know nearly enough. I would love to chat with those Bitshares guys and hear their uh their stick cuz they have a lot of criticism toward the Dow actually because they don't think it can work because uh it hasn't been working for them really. So, uh, but we'll see. Uh, we think that we've aligned the

incentives correctly, and that's where the real masterpieces, that's where Slocket really, uh, excels in my opinion, is our ability to write really cool smart contracts that align incentives to make sure everyone is acting correctly because it's one thing to get the contract to not have bugs, you know? It's another thing to get the contracts to actually like get people humans incentivized to act the way people want them to act. So um that's that's where bitshares I think has had their issues but again I really don't know enough about bit shares. Yeah but so so keep on explaining the DAO. So it's a decentralized um autonomous organization and then so how does the crowdfunding work and the tokens um give

us a bit more detail. So, so the DAO uh was created on April 30th and they well at least it started its creation phase on April 30th and for the first two weeks people could send in ether and Dowo tokens would literally be created out of the ether and it would just like come into being in their uh ethereum account wallet. What happened to the ether tokens? Sorry, what happened to the ether? Yeah, they're locked up. So, smart contracts can be thought of as a digital safe. The DAO is just a smart contract. It's just computer code, right? And it's a safe that says the money can only be uh can only leave here. Kind of like a multisig, like a

really complicated multisig that says the money can only leave here if this happens. And for the DAO, the money can only be sent somewhere if the curators approve of an address that it can be sent to. So they know, they kind of do the technical um check to make sure that there isn't someone's not submitting an address that is going to steal money from the Dow or be a danger in some way. And then if the Dow token holders vote to agree that they want the ether that is backing their Dow tokens to be sent to that contract. So uh those are the the main things. The voting is uh we have to have a minimum a quorum.

They have to reach quorum. So 20% of the DAO tokens have to have voted on any proposal for it to go through. And of course it has to be majority vote. So more yays and nays. And so what happens to the people that so let's say 20% votes for some kind of proposal and 80% they don't they don't vote. Uh and then let's say the proposal makes profit. How are the profits distributed? Okay. Well, first off, um, everyone, so it's kind of like voting in, you know, an election. It doesn't matter if you voted or not, the president is still your president, right? So, same with the DAO. It doesn't matter if you voted or not or if you voted no. Uh, if it chooses to make a if

it the proposal passes, everyone is subject to it. So, money will go to a smart contract and everyone will receive rewards from uh that proposal. So, if everyone else has to contribute money even if you didn't Yes. Uh so because they're not contributing money they own they own Dowo tokens. So their Dow tokens are effectively backed by the digital currency that is in the DAO. So when the DAO spends money their the amount of ether that backs their DAO tokens is decreased a little bit and in replace they receive reward tokens and those reward tokens are how they can claim their rewards for whatever proposal they are uh choosing to support

or the Dow chose. So but then don't you run into a very big problem actually with incentives lots of times in these situations my guess is it'll be very hard to get people to actually vote. Yeah. And you might just have a small minority voting uh voting for some proposal while maybe 80% doesn't actually know how to vote or or just doesn't vote for whatever other reason and then you have a small minority basically deciding what to do with the money of of of a whole big group of people. Right. Yeah. Well, we don't want every I mean in the end do we really want uh I mean I don't want to say that. Um, so I mean the fact is the way the incentive structure is set up,

the people with a lot of money in the Dow, they have more vote in the Dow because they have if you have a million dollars in the Dow, you are very highly incentivized to make sure the Dow votes right and that it supports projects that are going to make you money cuz So we have all of all of those whales not and on top of that all the people who invested a lot of money for themselves that maybe It's just like, you know, $1,000, but that's a lot of money for some people. They're going, everyone's going to be reviewing these proposals and they're all going to be chatting about it on the forums and there's going to be Reddit posts and there's going to be all this information out there and then people are and then when it comes down to it, people will vote. And we

believe that in the wisdom of the crowds, we believe that because everyone is able to actually leave the DAO, that everyone has control of their funds in the DAO, that they will vote in their own self-interest. And so they will choose, they will look at it independently and say, "Hey, hm, yeah, okay, that I think that's a good investment of for me, for my money." and then they will choose their answer and then whoever has the you know most Dow tokens wins. So and that that's the incentive to but in order for the wisdom of the crowds to uh to work right so I did quite a lot of research on this

particular topic. Oh good um for my uh for my PhD. So uh wisdom of the crowds usually works with very selective kinds of questions and issues. Uh and it works with people who are and it work it works in very limited context under very limited kinds of conditions. So you can't just throw people together in any kind of context for any kind of decision-m problem and expect uh you know expect the wisdom of the crowds to work. Now I don't know who the whales are in this situation but we basically have a situation where there are a whole bunch of people who probably are not people who are experienced in professionally investing money uh deciding how do they uh because that's

also a practical question like I mean do you actually interview the people that come up with proposals do you go look at their office uh do you go investigate their books and all these things so you know in order for the wisdom of the crowds I'm Not sure that it would be very appropriate to rely on that principle here because you're basically dealing one uh with people who don't have direct access to a lot of kind of information like personal interviews with the people who are uh doing the proposals. Uh you're missing uh you know you're using forums like Reddit which are very prone to all kinds of you know sort of extreme outbursts. I mean how do you how do you see this? How do you see this? Do you know I mean the thing is

the onus is on the contractors. The onus is not on. This is the great thing about the DAO's setup is that the contractors are highly incentivized to be open and transparent and to actually instead yeah the Dow tokens can't interview the guy, but hey, look at me right now. We are a contractor. I'm trying to tell you guys about the universal sharing network. I'm trying to explain all these details and get my get the information out there so people will vote for us. We're I'm on Reddit every day answering all these trolls, man. It is is difficult. Okay, I'm not a troll. No, you're not a troll at all. And I think you have a valid point that um wisdom of the crowds does not always work. Uh it works in very

specific uh situations. And we believe this is one of those. It is still an experiment. Hey, like don't don't don't just hope and pray I mean that the Dow is going to work out. I mean or don't assume the Dow is going to work out. It may not. Uh it's that's totally possible. Uh but we believe it will and we're we've been willing to work for free for the last eight months to make this possible. So may may I make a small prediction? I mean one of the things that might happen here in this context uh which I think if I remember correctly also happen with Bitshares you're inevitably going to have people who are probably going to start acting as proxies who people are going to turn to and and look to for how they're actually

going to vote. So rather than all of them perusing all these uh you know proposals themselves, you're probably at some point are going to get you know naturally in some way you're going to get uh hopefully they'll be leaders. Uh hopefully for you not they won't be demagogues because that's also a possibility. Um but yeah, that's that's that's possibility. But uh we we really want to um so when we were building this Dow contract, we made sure to make it really easy to update. Um because we had to go for security over everything. I mean, we didn't know it was going to have $150 million in it, but a couple million dollars was we thought, you know, oh yeah, it might have a couple

million dollars in it. We spent a lot of effort making it as secure as possible, but that limited the actual ability for complicated governance structures. We really want liquid democracy like that. That's that was what uh for the standard DAO framework that the DAO came out of that we eventually want to put liquid democracy in there where it's basically delegated voting. But there were a lot of complications to it. So um it looks like there won't be an issue and Slacket won't have to do anything because there's uh like probably 10 proposals to change the governance structure in one way or another. Um the guys from Nosis the prediction market they want to create future archy so that you can bet

against a bad vote and have like secondary Dow tokens. And I mean there's like four or five people working on delegated voting colony. I mean, this is the really cool thing because of the way the incentives are set up. There's a $150 million out there that people could potentially, you know, work for. I mean, there this is a a big not a bullseye, but an opportunity that all these devs are like, "Holy crap, I've always wanted to create delegated voting, and the Dow needs it, and they're willing to pay me for it. I know it. So, I'm going to create an awesome project. I'm going to get out in the social media. I'm gonna tell the world about the DAO and tell the world about uh my project to improve it and then hopefully the DAO token

holders will vote for me in mass because my idea is great. But they're going to have to compete with all the other proposals. And so we think the wisdom of the crowds will pick the one that is going to be most profitable for themselves individually and that will and it will probably some people will listen to other people and and uh you know use that kind of prox delegated proxy thing but um I I think it's going to work out really well. I'm blown away with the amount of support that the DAO is receiving from the community. So, have you read the book Damon by Daniel Suarez? No, I haven't. Yes, you have to read it. It's very It's a very cool uh

um science fiction trailer about also a computer program that starts hiring contractors to to work for it. It was written by a uh developer that then died and but he wanted then to to live forever through the code that he created that would be activated upon his death and then it would grow over time and start hiring people. But it was pre-blockchain era. But you you should really really um read it. It's very interesting. Yeah, I think Stephan was telling me about that actually. Yeah, it's called Damon. Uh so how how does it work then if a contractor uh gets paid? What what then is the legal relationship between the DAO and the contractor? You know, that is a really interesting thing. That was one of the things that was holding us up um from being able to

uh really get behind the DAO and uh and a DAO and any any DAO being coming using our standard framework because what happens when a company gets paid from a DAO? The DAO just sends it ether? Well, how does that company pay taxes? What's the DAO's tax ID number? It doesn't have one, you know. And so we ended up um uh helping to uh create another company called Dow Link which is a bunch of lawyers in Switzerland that they're willing and the law in Switzerland is such that they can take payment from a DAO from a non-legal entity and then uh send that payment to us. So then we can connect with Dowink and say, "Hey Germany, here's your millions of dollars

in taxes. Um don't hate us because we're giving you millions of dollars, right?" So, but these we're getting it from the these lawyers in Switzerland and so Dow link is probably going to do that for a lot of people. Um, anyone who No worries. This is your favorite question too. Uh, yeah, maybe maybe repeat the last part for for VM. So, what the relationship between the contract and the Dow? The DAO wants to pay a contractor. If you're just a blogger and you can take ether, it's not a big deal. The DAO will send money to a smart contract and then that smart contract which is a proposal will slowly divvy out the money as according

to the rules of that smart contract. So, and then uh the if you're a blogger, no big deal. Hey, I got some ether, whatever. Pay taxes on it yourself, you know. Um but if you're, you know, a large corporation, you're going to need a little bit more than that. So, uh, we created Dow Link, which is a secondary company that, uh, is really just a bunch of lawyers in Switzerland that are, uh, really good at this stuff. They work for an exchange called Biddy, and they are going to make sure that anybody can interact with the DAO in any way they need. They're kind of just starting to focus themselves on uh, being experts in the legal field around Dows. So the main answer that they're providing right now,

the main uh service that they're providing right now is allowing people to receive payments from the DAO and have a tax ID number. So how would it work then for you guys for slugets? So let's say you your proposals being um is passed and you get paid money from the DAO. How how how are you going to is the DAO then paying ethers to the DAO link and the DAO link is sending you euros. So in the smart contract proposal for the universal sharing network the the address that is being receiving payments will actually be owned by Dow link and then we'll have a legal agreement with Dow link that's legally enforcable and whatever courts handle German and Swiss Swiss uh you know contracts I don't know

um and uh they will have to pay us the ether as they receive it. That sounds like a can of worms. It sounds like a very vulnerable link in the whole DAO. Well, it's not so long subject to human subject to human errors and and lawyers and courts and No, I mean the fact is this is the first DAO and well the first type first DAO of this type and so it's not we have to do all these silly workarounds and eventually Dows will interact with Dows and I I think Dows will be the new LLC uh like limited liability corporation. It just to me that just makes sense. Um but for uh but we'll see. We'll see how the laws all

shake out. I mean it's just like Bitcoin. Every jurisdiction is going to do its own thing and relate to the Dow in its own way and we just have to wait and see. Um but what is the uh what is the legal status now of the Dow? It's a blockchain based entity. So what's the legal status of Bitcoin? Uh yeah, but this is this is this is slightly this is slightly different because uh in contrast to Bitcoin, you're actually pulling people's money together here and they're actually so it is slightly different. So it is slightly different but it's almost it's very similar because it's kind of like Dow token holders are miners. Miners are pooling their hardware. They bought a lot of

that. They lot bought a lot of hardware and they are receiving income from mining, right? And they're creating bitcoins. And so they are anonymous people all over the world and that are in different jurisdictions and have to deal with different laws. And it's the same with Dow token holders. They instead of mining, they send ether to a smart contract. Okay? Let's drop the analogy with the miners because I'm not really sure I I I follow that one. But look, okay, so here's an example. Um, some uh company has a has a grievance against the Dow and now they're going to sue you. Um, a blockchain based company is not does not have a legal is not a

legal entity. So you need to either be a corporation, you need to be an association. H how are you going to deal with that situation? Because I think that's a really important issue. Well, you know, it's going to be dependent on jurisdictions and I mean, there's so many complications. It's kind of like there isn't really a good answer for that. I mean, the only thing I can do is make analogies to Bitcoin because that's the only thing that we have uh as as an example of a DAO that is interacting with the real world in a new way. And I mean, in the end, what I think is going to happen, let's say somebody has a grievance. Well, they're going to, you know, try to litigate against somebody somehow and we'll see how it works out. It's kind of like I

mean, Bitcoin, those Bitcoin miners are laundering drug money all over the place, right? Well, what what what Yeah. Okay. But let's let's stop about Bitcoin. So, what worries me about this context? So, let's say somebody decides to litigate against the Dow, right? Um, and you're, so I'm not a lawyer, so I'm kind of about what I know here. So, you'd have to ask a lawyer to be exact, but my my suspicion is they'll probably say you're an maybe an association or a general partnership or something of that nature. That's kind of what it looks like. And in that case, and you get sued, they can literally pick one person that's involved in this and get the whole amount from them. and they it's then

there the responsibility to find everybody else. So, you know, somebody could get picked out here and could be in a very bad situation if something like that. Uh I mean, I'm sorry, I have to compare it to Bitcoin because it is the exact same situation. Any miners, all these miners that are supporting the Bitcoin network are in general partnership for the Bitcoin network. And the Bitcoin network is laundering drug money, funding prostitutes, you know, doing all these random things. And if somebody wanted to litigate against them for being money for money laundering, they could assume that they are a general partnership and they could sue them and they could say, "Hey, we found this one Bitcoin miner and we're going to put it all on you and then the rest

of you, you're going to have to go collect from all those other guys." Because I think I know what you're talking about. I think I read an article about that or something. Um, and that could happen with Dow token holders as well because anybody anything can happen with laws and prosecutors and and all these things. I mean, it's a completely it's a wild wild west in the world of uh many jurisdictions. You know, maybe that's how Russia will handle it. They'll end up trying to, you know, sue someone for being a general partner in the DAO for whatever reason. I mean, the the the real thing is I don't know what the DAO is going to do to cause people problems. I I can't think of like I mean I could see other Dows that maybe are started for nefarious things. Yeah. But

I think I think the Dow I mean we're just funding projects to you know improve the Ethereum space and to make IoT blockchain you know universal sharing network stuff. If something goes wrong with the universal sharing network they might end up suing Splocket or something. They might end up going after a legal entity because that's just a lot easier. I mean how are you going to track down Dowo token holders? I don't know and what like right now you have uh raised around 150 million um a huge amount so you're also in the crosshairs now the yeah of course so you're now in the crosshairs also of the of the SEC and and other interested parties to what extent are you worried that you're being perceived as a as a stock pusher or someone that's promoting a share

issuance um let's say for example the Dow goes live and then for some reason the e the ether value or the token value plummets I mean, we've seen it before, of course, with several cryptocurrencies, including Ether. Um, to what extent are you worried that the people now involved in promoting the whole setup are being seen as um advising on buying stocks? I mean, we're we're relatively careful to say stuff like, hey, this is your investment. Of course. No, no, not at all. Yeah, grip promises. No, no, don't say that. Um, you know, it's really tough. We're not lawyers and this is a completely new thing. I mean, it's like I can tell you what I think and all these ideas, but it's just BS. You build

like a ceiling where like let's just stop at at a few million instead of just going on and on and on. Isn't there a risk of just making it too big? Um, which possibly is not the most careful approach here. you know, we wanted to get a true decentralization and we didn't want to limit the the we didn't I mean we set up the standard DAO framework such that it could incentivize a complete decentralization. So uh when the people dowhub.org or deployed the DAO. They use our standard Dow framework which is set up so that as many people that want to can participate in the do token creation and we don't want to make some kind of artificial limit. There was

a Digix crowd sale that lasted 14 hours. I was asleep for most of it so I I I didn't get to participate. I mean that's not decentralized at all. uh if we if we would have put a cap of I mean considering the fact that it raised 150 million if we would have put a cap of like 25 million which was pretty much the most we could have thought would go into the Dow or any Dow I mean it's just you know it's an experiment who I can't believe people are putting so much money into this thing right so uh if we would have put a cap that might have been reached in the first day or first couple hours that's not decentralized one person could put in half the money and it's over yeah you guys have like 14% of all all of you guys. I have to be very

careful out of it. The Dow I'm going to be very careful from now on. I wish I don't want to um get you into trouble. But the DAO um has has let's say the address associated to the DAO have in total over 14% of all ethers. Outstanding I think. So it's an amazing an amazing job. We got quite a few questions from the audience. There's also a lot of people watching live. Yeah. Well, one more question. How much is Slacket um trying to raise or is it like how is how does your proposal look like? Is it like a phased uh approach? Um we don't have a we're still waiting to put the numbers together. We're still talking with a lot of people. uh we were blown away by how much was raised and uh the universal sharing network is a

pretty complicated network and um you know we're building the Ethereum computer and we could do that for a very small amount because it's you know it's not it's an open- source hardware job uh but uh you know the 21 computer raised uh $121 million because it's not about the hardware it's about building a network creating partnerships and getting to network effects really quickly to reserve erve the to preserve the ROI for the people that really want to take part in it. So, we're still trying to figure out all of what we can actually pull off. And uh we made a promise a long time ago that we would not take more than 50% of the DAO at any time. Um but that's I can't imagine

we're going to ask for that much. That's way more than we need. So, um we'll see. Uh we're still working on that. We're talking to experts in the field and trying to figure it out. But I can tell you the the payment situation because the smart contract is out already. We're going to ask for a lump sum at the beginning so that we can use it to hedge the volatility of Ether because we're paid the socket will be paid in Ether. And so if it goes up to $20 and then crashes to 10, I mean, it's going to be really difficult on us. I mean, we can't be laying people off of our on our company because, you know, sorry secretary, Ether price went down 20%. So you just got to go. Like that's not going to work. So, we need a lump sum sum to hedge the volatility and then

we'll have um monthly payments every month to incentivize us to keep uh working on the project and at any time if the Dow doesn't like what we're doing, it can fire us, take back the money that's left in the contract. So, that's the incentivization structure there. But, um well, there's quite a few questions also um somehow related to what you just said. So first of all there's uh Mark Moltzson asking the US dollar to Ethereum rate is very volatile. Um how do you propose to protect the value of the token holders because of course it's based on Ethereum based on Ether until there is added value coming from the reward tokens.

Um well that's up to the DAO. The DAO can uh get a contractor to hedge the volatility of Ether if they want. I think most of the people who um put their funds into the Dow that put e sent ether to the Dow to create Dow tokens I think most of them are long on Ether. So I don't expect the Dow to actually hedge its position on Ether because I think that it's mostly uh bulls for the Ether price. So um but if they wanted to, they could get a contractor to basically hold a short. it wouldn't be that complicated uh on the ether price to, you know, keep some stability for themselves. Yeah. So, that's up to the holder him or herself to hedge for that. Yeah. Yeah. We've

seen the ether ether price rise a lot. I'm I'm I'm not unhappy about that. Um it did sell a bit this morning because the the increase was a little bit too much to my taste, but I think it's it's recovered quite a bit. Um another question uh this one is from uh Naylor Zericio in Lyft 2016 Stefan said that for a proposal um a minimum of 50% uh of quorum is is required and but you said earlier 20 yeah 20 did you guys first aim for 50 but did you get to 20 now or what's the No I mean I don't know I don't remember him saying that I watched that conference I don't remember him saying that but he might have uh if he did it was wrong because minimum 20% %

but maximum 53.33%. Because it is actually on a linear scale of the amount requested for the proposal. So like if Socket asked for I don't know 50 million that would be a third of the uh total amount and u it would end up being like maybe um 35%ish that quorum that we would need. uh the way the equation the equation's in the smart contract if you really want to look it up to see how it works. But it's basically 20% plus the amount over a third. So the proportion over a third.

Maybe there's some confusion about the minimum number of voters needed for any kind of decision and who votes for what. So you need a minimum of 20% obvious obviously that's the number of votes but then it's of that 20% if I understood correctly what the majority votes of that 20%. Is that right? Yes. Absolutely. Okay. Maybe that's where technically only 11% will say could say yes and they would still pass because 10% said no. Yeah. But apparently according to the bid shares uh people um it's very difficult in reality to get to the 20% core.

Yeah. No, we we agree. We actually we do have uh we do have a set up a couple different things. If quorum is not reached because we just kind of had to pick 20%. I mean, we just had to come up with a number. So uh but uh if the curators believe that number is too high they can actually um uh call a function that will have it or if quorum is not reached in 6 months uh for any proposal then it will automatically have well someone can call you someone anyone can call a function that will automatically have the quorum min quorum to 10%. So and all the rules and and the contract and the bylaws they can all be voted on.

So they also the DAO can vote itself out of existence or the DAO can vote to become a country or to become an army of what I mean is there any limits or is everything possible? Yeah, the DAO is fully autonomous but it's not like it can just vote to do that. So so it can vote to change its contract uh in any way it wants. So it can move all of its funds to a new contract and that contract can have crazy rules. Um but uh that requires that one function call actually requires 53.33% or maybe it's just 53%. I don't remember um to uh of quorum to make that call. So it's going to be really hard to change the contract. You're going to it's going to require some major calls. So we

expect most of the changes to happen through proposals that can interact with the contract unless there's something really big and then it's going to be like you know rock the vote. We got to get out there and get to these Dow token holders and tell them, "Hey guys, if you don't I mean the incentives are such that if they don't make a critical change to the contract, if they don't vote, the value of the tokens that they hold will go to nothing, you know, or go really low. So, everyone is incentivized to vote. I that's if if quorum is hard to reach. If cororum is not is easy to reach. If there's a a few uh if there's several whales that are really on it, then yeah, lots of people will just be like, "Yeah, I have, you know, I sent

some money to this thing. It's not a big deal. There's people handling it. I trust that." If all of a sudden that becomes an issue, those people who are heavily invested in Dow tokens are very incentivized to vote. So, right. Well, let's go to um one more question from the audience. Uh Ner Zio also asks, "So, you're saying that the rich have more weight in votes than smaller investors?" Yeah. Yeah. So, what about oligarchies and is there um do you guys have any idea how how those tokens are distributed amongst holders or is it because you can see of course from how many how many addresses or how many tokens go to a certain address perhaps.

Is there did you do any analysis on the distribution of the token holders as it stands now? Um we haven't but there have been lots of people I was going to look it up but it doesn't matter. There's uh some ether stats and uh DAO stats. There's a few different places to see the distribution because it's all open source. That's the magic of digital currencies. Um, so lots of people are checking it out and I think the there are almost there maybe like 10 people that have more than 1% of the tokens and some of them are exchanges for sure. Um, so um I think it's actually really well distributed, way better than Bitcoin or Ethereum or I mean there was no pre-mine so that helps a lot. Everyone has an

equal playing field for Dow tokens. So, I think it's pretty well distributed, but in the end, you can't really know because anyone can create a thousand Ether addresses and put, you know, equal amount into there. So, I mean, we just can't know. It's, you know, it's a decentralized community. So, who knows? Yeah. And then there's always, of course, because the first thing that came to my mind and I fortunately saw later on that it was addressed, but someone could try to get a majority of the tokens. um and then uh or or or 20% and then vote for um uh vote for sending all the coins to his or her own address.

But that's why you guys have curators. Could you explain that concept a bit better? And I think Vitalik is one of one of the curators. Yeah, I mean the curators are basically like anybody who you know uh in Ethereum is a curator for the DAO. Um, I I really think the Dow is going to end up um, so just an aside really quick before I get to the curator question. I really think that the DAO is going to end up u becoming um, highly incentivized to fund developers in the Ethereum network, especially with all these curators. And I think that might be part of the reason why the curators join up because um, I mean right now it holds $150 million worth of Ether. Every time the Ether value goes up 1%. The Dow makes $1.5 million. I mean, that is a

huge incentive to improve the Ethereum protocol. So, the foundation has been amazing so far. I mean, I they got us through Homestead and they've done all these incredible things, but man, the Dow is uh looking it holds more ether than the foundation. So, some people are saying it could be foundation 2.0. But anyway, um so back to what the curators do. The curators kind of do uh they do three things. The first thing they do is they check the contract code. So when a proposal comes out, it's actually just these numbers. I mean that's what machine code looks like, right? It's just numbers in uh on the EVM on the Ethereum network. So they make sure that the solidity code that the contractors say um actually matches up with the bite

code that they are putting in their proposal. That's should be a quick script. Then they're going to look at the code and make sure that there isn't some kind of um you know major bug or uh some kind of attack that's possible through the code. That should take like just a few minutes for these guys. I mean come on Vitalic he writes Solidity in his sleep I'm sure. Fact he probably writes bite code in his sleep. I don't know. Um and then the the third uh use or the third things the curators do because all their uses are just completely technical. They don't make any judgment on the smart contract other than is there a bug or you know is it true that they're saying this. They also act as kind of an identity oracle. So they don't judge the person subjectively

in any way. They're just uh confirming the identity of people. So like uh if the CEO of MintPal uh MintPal was a really bad exchange and the the moola guys, you know, if he wants to make a proposal and he identifies, hey, this is me. This is I'm I'm uh I'm the old scammer. The curators have to approve him. The as long as he is who he says he is and verifies it, then uh then he will get his uh thing up there. And the Dow token holders of course would never vote for his proposal because that's who he is and everyone knows he's a scammer. So no one would do that. So that's what the curators do. they uh and the way that that is controlled effectively they add

uh contract to the white list. So uh the DAO can only send money ether to contracts that have been approved by the curators. So they they add them to the list. So like if socket if sockets can't put a contract together that doesn't uh pass to the curators then we will never the DAO can never send us money. And that's the main way that 51% attacks are stopped because if someone wanted to send money to themselves, they'd have to somehow com pre create a smart contract proposal that says, "Send me all the money." And they'd have to identify themselves and say, "This is who you're going to send the money to." Then the Dow would be like, "Hey, why should we send the money to you?" You'd be like,

"Well, uh, because I want you to." And then, um, and then it just it won't fly. It won't fly. Okay. Well, a final question from the audience um from Chris Hower. He asks, "Are no vote tokens locked and can't split?" Uh I think it's interesting um to get a little bit more of of understanding of why someone would actually vote at all if if he doesn't vote. He can uh he can still um he can still split. I can go through the different uh voting. There's like five different ways to vote in actuality.

Even though it looks like just a binary yes or no, there's actually five different things you can do. So you can vote yes. I fully support the project. Uh that's great. You know, you can vote no. The only times you really want to vote no if you disagree with a proposal is when quorum is guaranteed to be reached. So if you know that quorum is going to be reached, then you vote no because you don't want to support that project. Uh but also the vote of no means you cannot split the DAO because you are participating in the DAO's governance process. So you are by voting no or yes, you're saying I'm with the Dow thick or thin, right? Uh the next way that you can vote is by not voting.

That's the most powerful no vote. Um it still means you're sticking with the Dow thick or thin, but then you're not contributing to quorum, which is technically helping the proposal pass a little bit. And of course, you're not giving any yes votes. So, and then the next way you can vote no very strongly is by trading your Dow tokens. It's a it's a totally tradable currency. So, if you don't like a proposal, just trade your tokens and then you're out. You don't have to worry about it anymore. Yeah. Um I think that's what most people will do if they think a bad proposal is going to pass. They're not worried about voting. They're just like, "Oh my god, this proposal is going to pass. It's horrible. This token's going to tank trading it." You know? Um and then, uh the fifth way is splitting. And

splitting is very complicated. I'm not going to go into it because we're almost out of time, but um you can split the DAO, create your new DAO, and then uh you will get the ether that was represent that were back was backing your DAO tokens will be sent to your new DAO, and you can do whatever you want with your new Dow. Well, that's cool because then you get a whole family of Dows and and and sort of spawn new Dow links and yeah, some people say this is the mother of all Dows and because everyone every DAO token holder can split to make another DAO. And so like if a proposal doesn't get minimum quorum or it doesn't get and it's a really awesome proposal, a bunch of people could actually split and create a new DAW to support that proposal and make sure it happens because uh you know I I

think that is the key thing that maybe the DAX of Bitshares probably didn't have. It's like if if there's if problems creep up, everyone can split and solve those problems in their own unique way. There isn't uh there isn't a centralized authority that's really saying this is how you have to do it. There's so many Ethereum devs out there that everyone and they are like cats. I mean they are all very independent animals out there, those Ethereum devs. And so they're going to each have their own way to solve these problems. And in this free market economy, that independence and creativity is going to really be beneficial to the network. and and the and uh proposals that are really good will find a way to get passed and

they will because there's enough freedom out there to allow that to be possible. But we'll see. We'll see. It is still an experiment. Awesome. John, any questions from your end? Uh no, I think uh I think we covered the two uh the few main ones that uh that I had. So yeah. Well, Griffy, you're the community organ community guy for for Slocket, right? Um, I mean, we know each other quite well. We we hang out quite a few times in different places across the world over the over the years, and I've come to know you as a very very honest, cool guy with a with a great mindset. Uh, you still owe me a cup of one day, but but um Well, I'll get there. Yeah.

But so, I really hope this doesn't blow up in your face. I hope you guys can can be successful. It's it's becoming huge, of course. So, that makes me a little bit um fearful and and and skeptical, but I do like u the vision behind it and I like your effort. So, I wish you all the best and and um I will be following this very closely over the over the coming days and and years hopefully. Yeah. Oh, thank you. Yeah, appreciate it. And uh yeah, I need to get myself a smart lock, I think, soon. Oh, yeah. Get yourself the Ethereum computer. So the Ethereum computer will turn any smart device into a smart lock for you. So um where can people um get the tokens or is token the DAO is uh is run by dowhub.org and so you go to dowhub.org and you can

create tokens. You can also get them on exchanges. I know Bitrex is going to trade them. I think Polo is uh trading them as well. Uh pol Pal Poniex and um there'll probably be a few other exchanges that trade them. There's like an Australian exchange. It's on the DEX. There's a few IO IOU tokens. I mean, the Dow, it's got enough notoriety, there's going to be a lot of exchanges that will trade them as well. And then uh yeah, and and then you can always join the Dow Slack. That's where a lot of most of the communication happens is on the Slack. It's uh oh man, I forgot it. It's the Dow.slack.team, I think. Something like that. Let me see. I have it over here. Um uh let's see. Where is that?

It's uh the dowo.signup.team and there you can join the community of 5,000 people that are motivated to make the DAO a success. Um and Reddit is also a great place. There's a lot of talk on Reddit. That's probably where the the uh a it's between the Slack probably has more talk and then Reddit has like very defined points that you can learn a lot from. Right. Great. Well, thanks Griff and keep me posted and uh everyone thanks for watching. Make sure to like, share the video and subscribe to the channel and uh let's do it again in the future. And Griff, yeah, that was great.

Thank you, Paul. Thank you, John. It was great. Okay, see you. Bye. Yeah.