Understanding D Corps As The Future Of Decentralized Autonomous Organizations


I get asked the same question over and over by people in the crypto space.

“What’s your project?”

I don’t have a project — I’m a co-founder of Chronicled, a company building tools and protocols to support decentralized enterprise networks and ecosystems. But the term “project” gets used by people in the industry because of the decentralized ethos of the space.

Calling something a “project” lends it a more ethereal air. No one can really pin down what’s going on.

Maybe that’s the correct way of thinking about work in crypto and blockchain. A lot of efforts are so early-stage, they are really just like a project.

On the other hand, calling an organization a project also makes it seem that the work being done isn’t serious. It has the potential to trivialize the industry and some of the amazing things happening right now in the space.

Yet, a company is an inherently centralized organization.

In reality, the debate over what the myriad of blockchain and crypto organizations really are is far from settled.

I’ve even seen someone on Twitter posit that independent freelancers in the industry are part of a massive decentralized organization, that people are nodes working towards the success of upholding the network.

All of this begs the question: is the work being done a project, a company, or a truly massive global computer system?

Here’s what the industry has to consider:

Project has a very specific connotation in the tech world

Engineers and technologists often think in terms of projects. A project is something they work on at their job or in their free time. And they’re probably contributing to several different ones at any given time.

“Project” is actually the terminology used for open-source work like JavaScript or Ruby on Rails.

The idea behind these projects is that people will collaborate on a peer-to-peer network. It’s about openness and allowing people to contribute as much or as little as they want, while maintaining a vibrant ecosystem for people to opt into.

Most blockchain-based “projects” don’t line up with that ideal because they operate as centralized companies.

But the term has become so common in the space that people feel comfortable using it — and misusing it — for just about anything.

Defining your work as a company goes against the nature of the blockchain

Companies have owners, org charts, and structure. They’re inherently centralized.

Most overarching goals within these organizations don’t align with those of the blockchain traditionalists. Companies want to own their ecosystems and the market verticals built on top of those ecosystems. They want a level of control. This makes sense, but it’s tough to find a way to combine that idea with the decentralized ideal of blockchain.

Bitcoin maximalists — people who want to maximize effort on one coin — argue it’s better to keep calling organizations working within the crypto and blockchain space projects, rather than companies.

You do have to consider what’s really going on within these projects, though.

  • Is it really a decentralized group of people working together on a project?

  • Or is it the creation, marketing, and selling of a product or service that involves the blockchain?

If it’s the former, then yes, it may be better to call it a project. But if it’s the latter, then it’s a company — no matter what you feel like calling it.

The industry will determine how a decentralized organization will be legally labeled in the future

There is a wide range of organizations out there trying different structures, including Decentralized Autonomous Organizations. But after the DAO hack, most are leaning toward a more conservative approach by operating as a traditional company.

Yet, the way in which these companies will ultimately be structured and labeled is far from being understood.

The definition of a company or corporation is tied up in the legal structure. In the case of a C corp, shares are issued and people can hold stock. An LLC uses membership units. But the crypto and blockchain industry hasn’t quite made it that far into the legal system.

Ideally, an organization would create a network of people who contribute to the overall goal or add value to the network — and who are compensated for it.

This is essentially the way that open source projects already work, minus the compensation.

If it’s a blockchain-based organization, people could be compensated for their involvement in cryptocurrency or tokens. There wouldn’t be a leader or an executive team directing everyone. But yet, it would need governance and legal status.

  • Would a Decentralized Autonomous Organization (DAO) then be known as a D Corp, a decentralized corporation?

  • Will we see hybrids of Organization and Projects that remove the “autonomous” from the DAO concept?

  • Could these organizations gain their own legal status as the space matures?

It’s possible, and this actually does work to some extent when looking at bitcoin. Different factions have arisen, and there are now several different types of bitcoin out there. That’s what happens when you leave things fully decentralized. Even without leadership, there’s still been a tremendous amount of growth.

On the other hand, Ethereum is less decentralized. It does have leaders facilitating the path forward in a more traditional way.

I think the future lies in a hybrid of these different methods.

Decentralization and open source projects certainly seem to be the dream, but it’s unlikely the blockchain and crypto space will end up operating in a fully decentralized manner.

For now, the ambiguity surrounding this issue is what makes it so interesting to see how regulations will evolve, as states like Wyoming and Delaware are working on regulations, as well as countries like Malta.

What comes of these efforts may be an alternate organizational structure that fits within the confines of what has already been defined — or an entirely new legal structure.

This article originally appeared on Forbes.com.

Thanks for reading!

Follow me on Twitter and Quora for more insights on blockchain technology.