I'm basing this question on information from the whitepaper.

The Slock.it DAO is meant to decentralize a trust. In their system, proposals are smart contracts DAO participants vote on. My issue is with the fundamental logic:

Why do potential investors need to go through the DAO to invest in these proposals, when they could directly access the proposal smart contracts (that can manage budgeting etc.) instead?

What added benefit does the DAO really have?

1 Answer 1


What slock.it are delivering is the mechanism to deploy key novel concepts for any investment and the corporate governance subsequent to that investment. By utilising the transparency of the blockchain this brings:-

  • Real Corporate Democracy
  • Real Operational Transparency
  • Real Reputation
  • Real Performance
  • Real Easy Termination ;-)

So the Decentralized Autonomous Organization (DAO) is established and raises funds. Once the funds are raised the DAO selects a primary Service Provider (SP) who has demonstrated significant / the necessary expertise.

Corporate Democracy: Deployment of the funds raised are voted upon, there are no cosy deals, bribes, backhanders. The process is open and transparent.

Operational Transparency: The DAO votes for the selection of an SP, within the SPs Smart Contract (SC) with the DAO are the operating parameters which are most likely timebound, measurable, quantifiable and contractual.

Real Reputation: The SP does not come out of nowhere, in the legacy system one would wake up with a new provider and say whooaa - where did they come from?, inevitably they would be a C level person's sister, brother, mother, father, 'sponsor'.

Real Performance: The SC will most likely have clauses that are triggered by time, by a numerical / measurable metric. Overall they will be contractual and non-performance will most likely trigger non-payment automatically.

Real Easy Termination: Termination will essentially be automatic, if you cannot perform your stage will cease to exist.

This is very elegant, no lawyers, no court, no recriminations, no lost time arguing or fighting just move on to a new SP who signs up on the belief that they are able to deliver - Subject to the approval of the DAO.

The DAO structure really delivers:-

  • it allows the DAO to control 100% of its funds from day one
  • it is immutable code-wise
  • it removes the layers of intermediaries
  • it negates corporate paralysis due to corruption & ineptitude

Further elaboration of the slock.it concept can be viewed via:-

A primer to Decentralized Autonomous Organizations (DAOs)
DAOs, or how to Replace Outdated Governance Models
The DAO Token Sale

Real time discussion on the DAO can be viewed via Slock.it Slack channels:-
The DAO Forum | The DAO Framework | The Art of the DAO

  • This to me sounds like "DAO for the sake of DAO", and doesn't answer the question: how do investors benefit? What is the reward from participating in this DAO vs. direct smart contract investment?
    – Joël
    Commented Apr 3, 2016 at 4:48
  • ..you said your issue is with the fundamental logic, i.e. the logic of the DAO. The answer elaborates on the fundamental logic behind a DAO and addresses your question "What added benefit does the DAO really have?". Your comment asks new questions which would probably be better being asked as new questions.
    – Donnelly
    Commented Apr 5, 2016 at 11:58

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