The DAO: are we taking "The Wisdom of the Crowd" too far?

[Teleos]

You have your opinions. And a pedantic ambience about you that prevents an authentic discourse in my view.

However, anything you or I say are frankly, totally irrelevant. The terms of this DAO are set in the code s8c. We cannot change them, nor can all of your bluster.

I suggest an experiment. You go start your own DAO and show us how it is done? Clearly you know precisely how this should be done. Clearly, the amount of money raised demonstrates unmet demand. Sounds like you are really saying you have found a market opportunity. Sooooo..... why not put it in action? Since you think you have the "right" answers and we have the "wrong" answers, why don't you really prove the point by creating an alternate DAO and show, not just us. Show EVERYONE... that is..... unless you simply, cannot. (which is what I really think )

[Dex]

i agree, noise vs info, so you note that we need filters. Of course! We need reeders, expets tech even tourist who shared.
Be synthetic in our pushed content shared (kind of tweeter mode)
the red line process is an unfair test, bad luck here, im working every day with hundred people in the same pattern, and it's work! you missed a point, we're not crowd but individuals sharing a same goal. That's enough so far

[mfitze]

The Gaussian or more commonly "Normal" distribution (also bell-curve) cannot be used to describe discontinuous variables (e.g., yes/no), nor (especially) binary variables. You would need a non-parametric distribution like a chi-square. A chi-square distribution would consider the total number of votes as well as how many more votes there are in one direction (e.g., how many more "yes" votes there are than "no" votes) to determine if, (again for example), the number of "yes" votes more than "no" votes was not just due to chance.

For example, on any given yes/no vote, the chi-square distribution could tell you: Based on the number of people who voted, there is a 95% chance that the number of "yes" votes more than "no" votes is not simply due to chance (i.e., people really do seem to be voting in the "yes" direction - it is not just random noise creating a vote in the "yes" direction). Of course, there are limitations to this method as applied to voting in the DAO. 1) A vote could pass with only one vote. 2) The higher the p value (the probability level at which you reject the null hypothesis that the difference between the number of yes and no votes is simply due to chance), the more difficult it becomes to make a decision one way or the other.

With regard to the first limitation, a minimum level of vote participation could be enforced in any decision (as is currently the case). With regard to the second, the probability level could be a function of the amount of money (Ether) requested.

Clearly, this is not the end of the discussion. But I just wanted to point out that voting does not have to be based on finding a simple majority - as we have grown accustomed to in political voting. It can be adjusted and refined using existing statistical methods.

[Humanist1]

Agree, similar take on it... I like incorporating probability of funding instead of a binary. A yes/no spectrum with a funding threshold based on some factors that could be different for different projects.

I invest on other sites, like Angellist, and the thing that I'm most concerned about here is that a company requesting funding and not being vetted beyond the popularity contest. Angellist uses Syndicates, which aren't perfect, but you at least have a person or people vetting the company before you decide to invest. I think we need some hoops for companies to jump through before we start handing out cash. To expand on the idea of vetting... perhaps we could start an Accelerator.

[mykljonzun]

Stay tuned. I have an answer for your core concern. Will be posting it shorty...

[franklili]

I think the wisdom of crowd maybe more than the wisdom of experts. I suggest you read the book "the perfect swarm--science of complex in everyday life". The author think the wisdom of crowd maybe more than the wisdom of experts even in complex problems.

[cybernatic]

Just stumbled upon this very well written piece by Louis Rosenberg (UNU platform):

https://www.singularityweblog.com/super-intelligence-and-hive-mind/

[jpitts]

History provides answers to the challenge of fostering intelligent thinking in groups. What appears initially to be a democracy can evolve to be more of a republic, and I expect this to happen in The DAO. Experts and leaders will emerge, and people will for practical reasons start to outsource some of their thinking to the experts that they trust.

But we have to work to make sure that the structure of the group discussion and the culture of the community can allow for intelligent thinking.

[seki]

Hey, I didn't read any other, but "根回し"

That's the domestic form of lobbying, only applicable in that specific limited culture of region, no more and no less.

Sorry to cut in.

[mykljonzun]

www.ideologi.org

[s8c]

Slock.it security proposal, great reading:

• Slock.it publicly admits that theDAO framework has bugs and is prepared to teach everybody a lesson on "responsibility".... by charging theDAO to fix it. Wow. Wait a minute, who promoted this? Yes, I like "responsibility".

• The proposal to fix the security problems is...... centralisation! I could not avoid a big laugh on this. Suddenly, the crowd does not have wisdom... in the main domain of the crowd!. Now the security comments of the crowd are "alarmist" and the crowd needs guidance. But no, the very same crowd does not need guidance in investing $150M. Very coherent.

• In the same package, in a fantastic exercise on circus juggling, Slock.it proposes itself as the central security authority... the very same company that is going to ask for money in a parallel contract!. A little conflict of interest? of course not. Oh dear.

Interesting times.

[Stephen.Black]

I also support this thought. I am hopeful the DAO voting will be based on the funds held even thought I am not one of the top 100 holders. It only seems fair that those with the most invested, and the most to lose would have the most power when votes are cast. I am hopeful it will a vote based on some sort of per token basis. Am I foolish for thinking this way? I admit I am still learning about the DAO.

[GroTheNetwork]

In my view, from an economic perspective theDAO current design is not compatible with providing a return for participants.

Won't debate that because I accept that theDAO design needs lots of work to protect participants.

Innovation is trial-and-error.

No time like the present to start the trials and errors. I favor locking down an initial service agreement and then fix voting before moving on.

The first design problem is on the investment proposition.

This appears as sporting negotiations to me. We are bidding on star players, first round draft picks that go for high dollars. We don't want to sign them up for only two year contracts. We don't want to let them take all the call profits on hundreds of thousands of ETH. We could place an arbitrary cap on the total value in a stable currency we agree to pay - x number of ETH up to one-million dollars for example.

It is a transfer of wealth from DAO participants to the pockets of entrepreneurs. I have already being very vocal pointing this out.

Long term contracts, a cap on their total take based on a stable currency. I would agree, I would like a piece of their operations but at this stage of speculation it might not hurt to be viewed as developer friendly even though it is to a fault.

No professional investor in the world would fund a start-up under these terms.

From an ultra-high-risk professional sports club owner building my team frame of mind all I can do is grin and realize that I'm most likely partnered with a thousands of other prospective sports team owners.

theDAO governance structure. Its current decision making process is dysfunctional. I believe this is evident for everybody

You have a witness. Get a big contract up front with the star players and take a deep breath and spend a good while developing governance issues.

Therefore, I argue that the optimal solution for an investment vehicle is a balance of centralization and decentralization

Which is interesting because, if I recall, VB envisions a hybrid proof of stake, proof of work mining method and people would compare to centralized and decentralized blockchains.

The problem is, of course, the “specific conditions”.

The hiring of a security contractor who doesn't show up in the middle of the night during a network emergency and the next day, 20,000 wallets splitting.

Taking a break here...

[s8c]

https://www.reddit.com/r/ethereum/comments/4ljp5i/thedao_a_call_for_responsibility_vote_for_the/

[Patrick1]

The Idealism can solidify with the right experiments and a large enough network effect.

This big experiment entirely depends on the actions of each individual player, so why not act on the inspiration and morale values? Its a least a great place to start testing from.

Example: I believe we can leverage this tech on a local level to empower the people and profit.

This is definitely has the potential to be more than just a regular fund. Its up to us

[Hibryda]

I see that I'm not the only one who finds Slock.it proposal about security a farce.
The crowd has no wisdom, which is obvious. Every group tends to be as wise as those who are below the median. It's just natural, it can be easily spotted in everywhere, from monkeys to politicians.

You probably noticed that until now there were no big concerns about security without even a trace of proof (will disregard so called audit that Slock.it was so proud of that never published any in-depth details about). From my favorite book by Nietzsche: "What the populace once learned to believe without reasons, who could refute it to them by means of reasons?".

Now there is need because the scenario was as follows (IMHO):

• EF et consortes planned to raise some funds while keeping control over the business with own/friendly funds. They never thought about security matters as the whole development was always guerilla like. They probably reasoned: we'll fix it later as we have it under control, so there are no concerns about whether the voting/organization/software is botched.
• then large inflow started and they started realizing troubles. I suppose there were two fractions, those who opted for collecting as much as possible (and I assume they won as some clues regarding engineering sale process could be observed on the market that behaved erratically) and those who realized that problems are coming and started preparing countermeasures (mainly curators as they can be deemed responsible later).
• now, risking even large corrections on the market and partial loss of credibility they started two initiatives: moratorium and Slock.it "security" proposal. The first is a real expression of fear, because they can no longer control voting with own funds, there are other unknown funds in theDAO that belong to unknown entities. These entities can be really disappointed if they will lose their funds because of botched voting/whatever. There is too big risk that they can legally or not try to seek responsible ones (pretty big money is involved at last). The second so called "security" proposal is a damage control. In a way "let's grab something to keep us alive as our main proposal can be possibly shredded and at the same time sweep problems under the rug to keep our populace as clueless as before".
• one more damage control vehicle is Otonomos proposal regarding finding legal solution for theDAO. Here one can see the power of ignorance of the crowd, as this proposal is neither about legal nor about solution. Is about again centralization and isolation of theDAO from real possible solutions.

Of course the above is just my pure imagination.
The funny thing is that you seem to be surprised by present situation. I watch and read your comments on a perpetual basis and really appreciate your reasonable and cynical comments. I presume your astonishment was only for a dramatic effect.

[Nink]

Members came here and invested with the understanding the DAO was DECENTRALIZED hence the name. If people want to start a CAO go ahead but we should be looking for ways to make this work as a Decentralized Autonomous Organization and not how to wrestle control away from members who all have 1 equal vote.

I appreciate there are really smart people hear who are investment savvy and I also understand that they believe the funds would be better off in the safe hands of experienced investment brokers but the genesis of this experiment is for establishing a decentralization system of economics and we need to work within the boundaries of the experiment.

So how about we all refocus our efforts and try to help architect a solution that leaves the power with the community and not with a centralized body. If the decentralization experiment fails we have a lot of lessons learned but if it is successful, it will change everything.

[s8c]

I am not surprised at all, it was clear to me this could not possibly work as an investment vehicle. I reached this conclusion very quickly when I started the diligence. I initiated this thread purely out of intellectual curiosity.

Now, I have to admit that I expected that a technical crowd spotted security problems much earlier. The decision process is even worse than I thought. It is dysfunctional even for situations were participants have a comparative advantage over the average population.

With regards to Slock.it, I am familiar with this type of behaviour. I use cynicism to point out the obvious, but I don't take it personal. Problem is, I thought it was a team with some attributes, now I simply think they are incompetent. I have written them off as entrepreneurs: it is not possible to trust millions of dollars after seen the rush for a quick buck. They have killed any shadow of reputation. It is ironic how they have taken the crowd for stupid.

With regards to the curators, I just think they have been dragged into this without thinking too much on the consequences. They are just naif. Now they have to deal with the mess.

I think the only way forward is an orderly wind down. Creative destruction. Then, putting together a more sensible solution, at a much smaller scale. Maybe a DAO can work with some purposes, maybe non-for-profit? I don't know.

A DAO cannot work as investment vehicle. Sorry. Good intentions alone are not enough. You have to design a decentralised investment process. None of the people involved in theDAO, Slock.it, curators, professors, etc have any experience whatsoever in professional investing. Zero. They don't even know what an investment process is or how to execute a VC deal. They are replacing something they don't know with... nothing, there is no solution, just the hope that it will magically work. In the current format, all money invested will be lost.

It is interesting to watch the social dynamics. The next big move will be when people realize that security risks are not a joke and theDAO is incapable of sorting them out. I support the Moratorium as the only safe exit, but people don't seem to care. Reality will kick-in, it is only a question of time.

I think theDAO is a beautiful experiment. It just has been poisoned by the $150M honey pot. This one will not work, but maybe there is another try. This is innovation, trial and error.

[s8c]

Hey, I understand that people don't have sympathy for investment professionals. I think myself that the profession is rotten. I also understand that people can do with their money whatever they want.

However, there is a big difference between having the right to be wrong and the having knowledge to be right.

If you want theDAO to work as an investment vehicle, you first need to know how an investment process works, how do conduct due diligence, negotiations, execution and financial management of a portfolio of private investments. Good intentions don't replace ignorance. Once you understand the complexities, you then see if it is realistic to implement them in a distributed environment. I'll tell you the conclusion: No, it is not possible.

Why? for the same reason that the security issues are going to be resolved by a centralized team, curators, slock.it or any other group with the expertise. For the same reasons that the legal issues will need a centralized solution, a team of lawyers with the technical knowledge. For the same reasons why Ethereum or Slock.it themselves are centralized organizations. Sorry. This is reality. Knowledge is not evenly spread among the population. Unqualified opinions are irrelevant to solve complex problems.

[Nink]

This is probably where we view the purpose of the DAO differently. I personally view it as a $100M R&D project in decentralization. If we manage to make some profit on some of the proposals then the project was a success and we can take the lessons learned and move forward. If we make a profit on the overall fund I would be pleasantly surprised.

I think if people are interested in get rich schemes there are a number of ways to make money, example go buy some bitcoin there is a halving in 4 weeks and historically when there is a halving we have a sudden peak in volume due to a reduction in supply and an increase in demand or just wait until next stock market drops and the PPP kicks in and BTFD.