The rise of Ethereum’s The DAO is certainly cause for excitement. However, for Dash, the prospect of successfully operating a decentralized autonomous organization is already old news.
Created in 2014 by Evan Duffield as “Darkcoin,” Dash quickly grew from a platform for highly-anonymized transactions to a full service network for payments, project funding and decentralized governance by protocol.
Dash: Two Years Ahead
With all the talk about The DAO, people seem to have forgotten — or simply don’t know — Dash has been providing DAO-like services for a couple of years.
With its Decentralized Governance by Blockchain (DGB) functionality, anyone can propose changes to Dash. Masternode owners host monthly votes on these proposals, which range from marketing and community-based decisions to direct modifications to Dash protocol.
Dash’s project budget is funded by 10 percent of the block reward, which is entered into a fund that can be used to finance Masternode-approved projects.
Unlike The DAO, Dash funds its projects with money internal to the network, produced by miners, and controlled at the protocol level by Masternodes.
This method of funding promotes network strength, creating a positive feedback loop of internal capitalization that gets injected right back into the system for projects to improve the protocol.
The DAO, on the other hand, operates on a system of conflicting incentives, which could set the organization up for bouts of massive devaluation and ether dumping.
By requiring people to purchase DAO tokens with ether, the organization has also set up a system that turn DAO voting rights into a tradeable commodity, opening the door to crypto-token trading and other similar perils, vulnerabilities like pump and dump schemes, fraud and theft.
DAO tokens could even become more of a target for speculative day traders than those with genuine interest in voting and developing new projects.
Meanwhile, Dash, with its “internalized” system facilitating voting across Masternode owners, pushes forward project funding decisions to protocol questions without disruption.
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