Figure 1 World’s first quiet treehouse provides safe magical haven in a noisy world. Image source: Inhabitat
Abstract
The main pillar of the decentralized society of the future is decentralized governance. In this paper the concept of blockchain organizations is developed to strengthen community participation on the decision-making process in a first move opening room for subsequent incremental improvements.
Introduction
Power and Governance
For millenniums power has been strongly associated with governance roles. The roman army brought a great revolution for its time with a novel governance model, it was highly hierarchized and followed a 10 to one fashion. With this technological breakthrough romans could become the greatest ever empire on earth. Still today organizations concentrate power following a similar scheme.
Ten to one means:
- A commander is a commando and has besides his, the power of its 10 underlying commandoes
- A commando can also be a commander with another underlying set of 10 commandoes.
To better understand the roman power model, a two to one scheme is presented on Figure 2. In this example, the cohesiveness of the organization depends on the strength of the six instance-links. The main problem about this governance model is that it was conceived to make war, not peace. A “enter war” order from Cesar won’t ever be contested by its peaceful commandos just willing to live a happy life because no other commando has overall greater power.
The reduced autonomy each commando has leads to an increased unhappiness of the organization.
And with the concentration of power, abuses are more likely to happen. In this scenario there is strong evidence that decentralizing the power increases motivation and drives growth at a faster rate.
Automation revolution
The more automated the processes are the less human interaction is needed and hence a higher productivity level is usually achieved. With automation productivity naturally rises consequently but there is still an important bottleneck. The decision-making process is traditionally heavily dependent on human interaction.
To increase organization’s overall productivity level, the automation of the decision-making process is also key. That is one of the main reasons why The DAO[1] grabbed a lot of attention, see Quote 1.
The DAO technology stack
Merging the following two key technologies allowed the birth of the alleged first decentralized autonomous organization:
Consider.it played an instrumental role at providing a governance model to The DAO and child organizations.
Principle of operation
Ideas were submitted to be curated by the community. Once the idea was properly curated it became a proposal and moved to the technical analysis of required resources to be implemented. Once operational costs, resources, etc. were agreed upon by the community, the proposal was accepted and smart contracts started being implemented by technical team. It was an iterative process that pursued the maximization of positive outcome to the community.
Blockchain Organizations proposal
Power decentralization is the process in which individuals naturally gain power, happiness, freedom, health and productivity. With individuals feeling divine, collective productivity and well-being is maximized. At the core of power are there organizations.
With the advent of the blockchain, unprecedent levels of privacy and transparency when needed are possible within organizations. It allows the automatic enforcement of smart contract clauses to secure the correct behavior of operations.
The DAO was a social experiment considered to have failed. But it had great merit which can’t be just forgotten in the past. There is the need for a robust organizational framework that utilizes state of the art technology to organize people and projects around worthwhile causes.
In this paper we take the lessons from The DAO and develop the broader concept of Blockchain Organizations.
Blockchain Organizations
Modern institutions are transparently purposive and that we are in the midst an evolutionary progression towards more efficient forms
Quote 2 Modernization theorist Frank Dubbin
DAO
Organizations if they have a website are internet organizations (IO). But people just don’t call them “internet organizations” though because almost all organizations are IOs. The Internet represents decentralized communications and is a fundamental pillar of the decentralized society of the future.
The same analogy applies for decentralized governance. Almost all near future organizations will most likely be blockchain governed organizations. A whole country government can take advantage of this technology.
Are pillars of the decentralized society of the future:
- Decentralized Communications – Internet
- Decentralized Manufacture – 3D printers
- Decentralized Power Generation – Solar panels
- Decentralized Finance – Bitcoin
- Decentralized Law – Ethereum
- Decentralized Food Generation – Raise your own meat
- Decentralized Governance – Blockchain Organizations
These type of blockchain governed organizations are going to be called from now on as simply Blockchain Organizations.
Social Organizational theory – Less is more
Organization foundation
A member attempts to join an organization when it feels it becomes stronger packing together with other members who ideally share common goals. And the organization accepts that member when it also feels that it will make the organization stronger. This means there is a virtual social contract celebrated by the organization and the member and if violated would potentially result in membership cancellation. This contract basically determines how the member and organization make each other stronger.
A member of an organization could be an individual or another organization. For example, nobody knows the identity of Satoshi Nakamoto if it was an individual or an organization, naturally or artificially intelligent, alien or terrestrian. It does not matter here; what matters is that this member strengthens the blockchain organization and vice versa. This is why, in the diagram, I will leave the idea as most generic possible to avoid limiting organizational possibilities.
As can be seen on Figure 3, this opens an interesting recursive possibility where an organization could be a member of itself. To better understand the social contract, it is necessary to understand what each member brings to the table, basically resources and goals as can be seen on Figure 4.
An organization can have members and child organizations too. In the other hand a child organization can have multiple parents. Members can also pack themselves to form a cluster with common goals. These associations can be seen on Figure 5.
Organization operation
Members up to this point are well organized and aligned behind common goals, plenty of resources. But the organization is not yet operational. To make it operational it needs to have active directives as can be seen on Figure 6.
The questions that arise are:
- Which directive proposals should be activated?
- From where directive proposals come from?
- How directives are controlled?
These are important governance questions to be answered by the organization. Things change perspective when it is realized that the governance itself is also a directive. This means organizations need to have at least one Governance directive to be able to evolve themselves by selecting most fit directives.
A directive has goals and budgets. It can also have a controller to make sure variables are controlled within desired range. This structure can be seen on Figure 6.
Figure 7 Directive and shared aggregates
Because resources are limited, the main role of governance is to get the most fit directives from a given set of directives population. Ideally the directives population should comprise both active directives and directive proposals, so that active directives can be deactivated and directive proposals can be activated to maximize positive outcome.
Canonical organization class diagram
Combining all structures discussed up to this point the minimum organizational class diagram is completed as can be seen on Figure 8.
Consider the structure above to be implemented as a set of smart contracts on Ethereum chain. It then becomes possible to instantiate a plurality of organizations with radically different personalities. Because the Controller contract is responsible to keep important variables from the outer world within desirable range it needs to get external information through oracles. Here I added Oraclize.it framework as an example of this interface.
Because every organizational class could have issues, Issueable abstract class was created. Every major class inherits from Issueable class. So that they can be associated with open and closed issues as can be seen on Figure 9. UrledComponent abstract class which has a name and url properties was created so that every major component can be displayed by a given webpage with reactive and updated information in real-time based on blockchain retrieved information.
Instantiation of an organization on the blockchain
Assume a hypothetical revolutionary organization that wants to be the first totally managed on the blockchain. And it has already made an ICO in the past, it has its cryptocurrency value swinging relatively high due to unknown market forces. But it has a proven record of 12% sustainable organizational growth per month. Now this hypothetical company has millions of dollars in crypto currency in its accounts but wants to utilize a part of that budget as monetary cushion for dampening quotation swings and to reflect close to real 12% monthly increase to its underlying crypto currency.
This can be managed transparently on the blockchain with a monetary policy directive coupled with a controller that monitors the quotation of the crypto currency through Oracles. Depending on quotation the controller places buy and sell orders automatically keeping quotation within desired range.
The diagram of such blockchain organization is shown on Figure 10.
Conclusion
In this article, a canonical, flexible and simple organizational model was developed. It can be directly implemented as a set of smart contracts on selected capable blockchains. This technology can potentially allow organizations to transparently evolve by creating or sharing directives with each other in such a way they become more productive, transparent and confidential whenever needed.
It naturally provides a novel way to monitor organizational lifecycle in real-time making it easier to stablish cause and effect relationship due to organizational decisions and to fight against corruption.
Not only legacy governance schemes can be used such as democracy, plutocracy but this model can be used to support the development of new ones in the pursue of circular economy growth maximization.
Acknowledgements
This work is a fundamental part of the great vision of the Centre for Citizenship Enterprise and Governance (CCEG) and is totally aligned with the Blockchain Alliance For Good in which key technologies like the internet, the blockchain, new decentralized governance systems among others, free people from a plurality of unhappy lives. CCEG has a clear understanding of the underlying revolution and invites you to be part of this new universe creation.
Regardless of old politics and countries supporting The United Nations, the Sustainable Development Goals (SDG) are one of the purest initiatives humanity has come up with to date. We at CCEG recognize the beauty of the SDG goals not only protecting these values wholeheartedly. But catalyzing them by means of concrete technological shifts.
[1] Wikipedia The DAO was a digital decentralized autonomous organization, and a form of investor-directed venture capital fund. The DAO had an objective to provide a new decentralized business model for organizing both commercial and non-profit enterprises. It was instantiated on the Ethereum blockchain, and had no conventional management structure or board of directors. The code of the DAO is open-source.
[2] The Ethereum blockchain is the pioneer on its space and currently the most widely adopted platform to build smart contracts with blockchain technology. It is possible to build an entire country constitution on the blockchain with a set of smart contracts.
[3] Consider.it was invented at the University of Washington as part of the National Science Foundation funded doctoral research of Consider.it founder Travis Kriplean. Its research objective was to create a method by which large groups of people could civily deliberate together online and find common ground, even on contentious topics. The research was conducted in collaboration with colleagues in Computer Science, Political Communication, Statistics, and Human-centered Design.
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