Steem: The Structure Of The DAO As A Force In The Future

Much of my writing focuses upon the DAO. I do this because it is a superior business structure compared to what we have now. This becomes obvious when the components are broken down. One of the biggest advantages to decentralized blockchains is they are, in fact, DAOs themselves. At the same time, we are seeing more DAOs built on top of them.

William Mougayar is an angel investor who wrote a great deal about DAOs in the past. I find some of his writing to be the best on this subject.

He breaks down a DAO into 6 pieces' phases if you will. The key is to realize that it is always a fluid situation with the entire platform moving in that direction.

This is also a lens to look at Steem through. For those who have been on Steem a couple of years, we can see the shift through the different phases.

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• Participative: All participants enter the ecosystem based upon a personal decision. The users are all there voluntarily.

• Collaborative: the users collaborate to add value to the entire platform.

• Co-Operative: A system is in place that shares the gains with the users.

• Distributed: the multiplication effect takes place with these spreading further across the system.

• Decentralization: scaling allows for power to keep being pushed out further to the edges.

• Automated: Self sustainability takes place as smart contracts, AI, and other automated features keep the entire platform going.

When we look at Steem, we can see traits of all 6 in play. Obviously, there are areas that are more evolved than others. However, this really emphasizes the fact it is all a process. The evolutionary nature of these systems means that they do not start at the end.

In other words, a DAO is achieved, not established.

This is a stark contrast to what we are accustomed to. In the present system, a corporation is set up just as that. There is a great likelihood the structure does not waver from the original Articles of Incorporation. Power is in the hands of a few, people who occupy roles that are clearly defined. While others are likely to be added to the mix as the organization grows, the basic structure remains in tact. The CEO and President still occupy those positions along with the power that comes with them. Everyone, even those on the outside, knows exactly the power these people wield.

One of the major values of a platform like Steem is that expansion can come from anywhere. A single individual is able to join and develop an application that adds to the ecosystem. This innovation could help to further each of the 6 areas.

Steem-Engine can be seen as one of the biggest advancements in the evolution of Steem. The reason I state this is because it enabled the creation of other tokens, some of which are gaining in value. Thus, the ability to further distribute rewards became a reality. As this chart shows, this is all part of the evolutionary process.

It is easy to fall prey to looking at a snapshot of a platform, i.e. how it is today, and drawing conclusions based upon that. Again, these are evolving unlike the corporate structure that we are so familiar with. In fact, the starting of a DAO is more theoretical than practical. DAOs do not start out as such since they tend to be highly centralized and top heavy. However, over time, with others joining the system, things start to change.

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Ultimately, a DAO comes down to value creation. For this to truly take place, a reward mechanism needs to be in place that fosters this. With Steem, we not only have the STEEM reward but, at present, a variety of Steem-Engine tokens. The next step in this evolution is for SMTs to go live. This will provide another layer of rewards for those who are bringing value to the platform.

Of course, there is a great deal of subjectivity here. What is valuable to one is not so much to another. That is where the participants, collectively, make their decisions. If 90% of the users opt for one application, that is the decision. Obviously, anything related to that application will have a lot more value than the other ones.

Anyone who was on Steem the last few years knows it has not been an easy path. DAOs are a different business structure, they are not a short-cut to success. Many of the same obstacles that confront traditional businesses exist with this. The difference is the evolutionary nature of the DAO helps to take advantage of the network effect. We also see the target of where to focus attention.

The key is to keep spreading things further out. A centralized organization seeks to consolidate power and keep things "tightly knit". A DAO has the exact opposite approach. Power needs to be pushed further out and things can go in a thousand directions at the same time.

It is for this reason that DAOs have the potential to be a lot more powerful than centralized structures. Over time, those that are successful will attract more users with ideas. This will lead to more innovation. As rewards are shared across the spectrum, the incentive to contribute more grows.

Steem reflects all of this in my opinion. Where we stand today is radically different than it was two years ago. I surmise that two years from now will also see marked progress as compared to right now.

The DAO is something that people are going to become very familiar with over the next half decade. I firmly believe this is the way many organizations are going to be structured in the future. It simply is too powerful to ignore.

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