Vitalik shares his views on DAOs

GM. We're back again to give you some Web3 news. Sit back, fasten your seatbelt, and enjoy the read.

Estimated read time: 4 minutes

Today's agenda:

• Vitalik on DAOs

• Celsius 2.0 – ‘Project Kelvin’

• Pay your taxes with crypto in Colorado

Vitalik on DAOs

Vitalik posted another thinkpiece on his site this week. You can read it here.

This time, he’s talking DAOs – those friendly neighborhood Decentralized Autonomous Organizations.

According to VB, DAOs have been getting a lot of shit recently, as more of a vague pipedream for decentralization than a serious & functional business model:

So, are DAO fans naive and needlessly sniffy about traditional governance structures?

Vitalik says: not always! He thinks that DAOs can help organizations out in three important areas:

• for making better decisions in concave environments

• for censorship resistance

• for credible fairness

So what does that mean?

Concave environments

Buterin describes concave decisions as ones in which a compromise is usually a better outcome than picking either individual option.

He thinks that DAOs can do a good job at governing when compromises are the right outcome in a particular space.

“When decisions are concave…relying on the wisdom of crowds can give better answers.”

Compromises are more useful in some industries than others. For example, funding organizations can often do more good by splitting money between applicants than giving it all to one. However, companies that need to make clear decisions on tech or strategy can see “confusion and low-quality” results if they decentralize decision-making.

Censorship resistance

Censorship resistance is about stopping interference from external actors, whether from competing businesses or hostile governments.

Vitalik references the centralized torrent search engine Pirate Bay, and the decentralized torrent network BitTorrent, as a way of highlighting the increased resistance that comes with decentralization.

Pirate Bay, as a more centralized organization with a core team, is only partially agile. It uses a “Wack-a-mole” approach whenever it receives a Take Down issue:

“When the hammer comes down, move out of the way and re-appear somewhere else.”

BitTorrent, on the other hand, as a fully decentralized network, can maintain its service and infrastructure with far less disruption.

So, where DAOs can decrease “instability and disruption,” they should be encouraged.

Credible fairness

On the flip side, organizations also need ways to control their actions and govern effectively. Vitalik uses the term credible fairness to describe governance that’s “robust” and “convincing.”

He thinks DAOs can be a good way of getting credible governance in difficult web3 environments, where members might be anonymous, online, and spread across the world. That’s because DAOs:

“Distribute decision-making power among more deciders, so that each individual decider has less power, and so collusion is more likely to be whistleblown and revealed”

He’s a smart boy alright. Read the whole thing on Vitalik’s site.

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Celsius 2.0 – ‘Project Kelvin’

In 2021, crypto bank Celsius was ballin. They had more than a million users and assets of over $20 billion thanks to their incredible perks – interest rates up to 18% and absolutely zero fees.

Celsius filed for bankruptcy in July.

Thousands of users who’d trusted the company with their digital assets are still locked in, with reports of Celsius owing billions.

Despite their ridiculous IOUs, Celsius is already angling for a comeback

A leaked recording of CEO Alex Mashinsky speaking at an all-hands revealed plans for Celsius 2.0 – a switch to crypto custody and a far more traditional fee-based structure. The comeback project will involving promoting “trustless” forms of cypto holding and is codenamed “Kelvin.”

Mashinsky said that Celsius will start by working through legal processes to return people’s deposits before relaunching the company under Kelvin.

Alongside attempts to drum up employee enthusiasm for a transaction fee-based business model, Mashinsky said some wild things about the stigma of Celsius entering Chapter 11 bankruptcy this summer:

“How many of you guys drink Pepsi vs Coca-Cola? …well, Pepsi filed for bankruptcy twice, right? Does it make Pepsi taste less good? Delta filed for bankruptcy, right? Do you not fly Delta because they filed for bankruptcy?”

Dude… //Joe

Pay your taxes with crypto in Colorado

Holder in Colorado? Now you’re one step closer to leaving fiat behind, by paying the government for your roads, hospitals, and dispensary write-offs in BTC or ETH.

Residents can submit income tax and other tax payments in crypto via the PayPal Cryptocurrency Hub. Fees are a dollar plus 1.83%.

Gov. Jared Polis is a crypto-forward politician, who’s previously used NFTs for campaign funding.

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Disclaimer: Nothing in this article/newsletter should be considered financial advice. The purpose is to inform readers of the current trends and news in the web3 space. We encourage every reader to do their own research and not act upon information put forth by Decentra Daily.