Blockchain developer There is Martin Krung Recommended Decentralized Autonomous Organizations (DAOs) are replaced by what he calls a Decentralized Hierarchy Organization (DHO). Specifically, he proposed elected leaders and hierarchical decision-making as a compromise between pure decentralization or centralization.
Krung acknowledged that DHOs are better suited for simple organizations like hobbyist communities than for financial applications like decentralized exchanges (DEX). Regulators such as the Financial Action Task Force (FATF) and the Securities and Exchange Commission (SEC) will likely assert jurisdiction over financial platforms, forcing them to choose between compliance with regulations or complete decentralization.
Krung admission“For money protocols, hierarchy is difficult because many cannot be compliant, so complete decentralization is the only way.”
Shapeshift DAO: Could a DHO be a better choice?
In fact, many financial platforms do not comply with regulations. For example, One of the oldest crypto exchanges, Eric Voorhees’ Shapeshift, chose to become a DAO in the summer of 2021. After financial regulators forced Voorhees to implement Know-Your-Customer (KYC) and Anti-Money Laundering (AML) checks.
In the end, Shapeshift decided to avoid many KYC/AML requests under the guise of its permissions Fox Governance token holders to decentralize the platform.
However, in reality, an increasing number of people care about managing shapeshifts. FOX Token has lost 98% of its value since April 5, 2021.
Voorhees was once a Bitcoin proponent. calling It is the first step toward “an open, irreversible financial system” that would be difficult for any government to control. These days, he spends most of his time promoting Shapeshift competitor, Thorchain. He recently Dr Recommended ThorChain is an explanation of that Conclusion“ThorChain loan free payment. Free money. F*cking fantastic. Go go Thorchain“
A DHO would probably be a better choice than a DAO for Shapeshift.
Read more: Curve absorption shows that DeFi is still far from decentralization in 2023
People began to suggest different types of Decentralized Hierarchy Systems (DHS). For example, some to call For decentralized autonomous corporations that would allow eligible voters to periodically elect senior officers. The duties and authorities of each position can be coded.
Others, meanwhile, seemed skeptical that any system that allowed elected officials could work well. Reflecting their cynicism around real-world “democratic” governments, they cast doubt on the long-term viability of a DHS.
For his part, Krung seemed to think some problems could be solved with checks and balances, similar to a Kleros-like decentralized arbitration system. Making subtle adjustments to the code can easily drive someone out of the organization. The organization may anonymize voting to protect voters in the event of a controversial issue.
Others have suggested “reputation weighted voting”, where voters have more influence if they have a higher reputation. It may also provide the option of favoring wealthier voters who can afford more governance tokens. Delegations have also become an issue in blockchain governance, where token holders convince community members to delegate their vote to an ally, which has been a problem for UniSwap and many other DAOs.
In short, Krung suggests a new type of blockchain community that is neither decentralized nor centralized. His so-called DHOs can solve some of the problems with DAOs struggling with autonomy. Any organization needs a way to make decisions; Sometimes, these decisions need to happen quickly. Naturally, the idea of DHO was not universally popular, with many comments in support and controversy..