Open DAO Network: A New Paradigm for Exploring the Unknown

Written by: olly.eth

Translated by: Roy Chou, The SeeDAO

DAOs are likely to become collaborative networks with unique roles in the future. To determine whether they possess such roles, we need to look beyond the current state of DAOs and envision what they might become. Today's DAOs are like a child learning to walk—immature, unstable, and prone to falling.

Especially in the realm of "serious" innovation, it is very natural to overlook DAOs, but their structure gives them a unique capability as tools for discovery. We conducted a brief review of their structure and arrived at the following conclusion:

DAOs are a new paradigm for exploring the unknown, capable of inspiring many collaborative teams to collect and integrate stepping stones to more effectively explore a search space.

Innovation Search: A New Paradigm for Discovery

Imagine you are by a lake. You intend to reach the opposite shore and must do so by stepping on the stones on the lake's surface. However, the lake is shrouded in thick fog, obscuring everything except the stones closest to you. As you step across the stones, the shore behind you disappears.

Eventually, you find yourself at a crossroads; a decision must be made. Which path is the best? The fog prevents you from seeing where each path leads. Yet, you must make a choice.

Stanley & Lehman (2015) connect this metaphor to discovery. The lake represents all the possibilities of an abstract space, while the stepping stones represent navigation strategies. Your journey is a search process within a space that contains all possibilities. The question is, how do you navigate to your destination when you are unaware of the nature of this domain?

Now, let's rethink this question, viewing the space of all possibilities as a room, and imagine you are an artist searching for the next Monet within that room. If we conceive it as a search space, we find that this rare diamond has already been there. Your goal is simply to find it among a multitude of meaningless dead ends.

You paint while searching the room. Your artwork will be influenced by the rooms you have already visited. If you spend time engaging with modernism, you are likely to be influenced by it. If you have not visited the corner of watercolor, you are less likely to invent it. Here again arises the lake problem. How can we become Monet? What stepping stones can take us to the other shore?

We can think of all complex fields in this way. We understand that as long as we know how to get there, new discoveries will arise. Unfortunately, apart from the stepping stones we can see directly in front of us, we can hardly see anything else.

This reminds me of vacuum tubes; no one anticipated they would lead to the birth of the first computer. It only became clear after vacuum tubes and related computational discoveries were invented that someone could connect the two. If you had tried to build a computer in the 19th century (like Charles Babbage), you would not have been able to arrive at such insights.

We tend to assume that intermediate steps and the ultimate goal are consistent, setting temporary goals that seem to lead to the final destination's stepping stones. However, without understanding the nature of the domain, these temporary goals are likely to lead us into a quagmire.

There is also the possibility that getting closer to the goal does not actually increase the value of the objective function, even if it brings us closer to the goal. ------ Why Greatness Cannot Be Planned - Stanley & Lehman (2015)

Now, let's talk about education. We measure educational progress by exam scores; the higher the scores, the smarter we are deemed to be. But is it a good thing if math scores improve? Certainly not! Continuously improving math scores through such assessments forces us to invest time in raising short-term scores while hindering exploration of a larger search space.

So, what other options are there? Innovation search is a form of aimless exploration. Instead of following those stepping stones that seem to lead to a goal, it is better to simply collect those stepping stones that lead to interesting directions. Focus on novelty, regardless of where it leads.

Because ultimately, you must acquire some knowledge to continue generating novelty, which means that "innovation search" is an information accumulator about the world it inhabits. The longer the search lasts, the more information it ultimately accumulates about that world. ------ Why Greatness Cannot Be Planned - Stanley & Lehman (2015)

Every stepping stone you collect brings new possibilities. New ideas often arise from combinations of existing ideas, stemming from the combinations of the stepping stones collected. From time to time, you will find a combination that elevates you to a whole new environment.

The more stepping stones you collect, the more interesting combinations you can create. You cannot predict where they will take you, but by continuing, you know you will certainly arrive at some interesting endpoint.

Aggregation and Dispersion

Companies and DAOs are not simple concepts that can be explained in just a few sentences. However, their core structures exhibit different organizational characteristics, allowing them to play different roles in future innovation.

Companies are aggregation tools pursuing a single vision.

Great ideas often arise from a singular thought that collects and synthesizes a series of unusual stepping stones.

Companies operate hierarchically, led by one person who ultimately makes decisions. For ideas that require collective effort to realize, a company is an ideal organizational structure because the leader is empowered to optimize resources to pursue the vision.

This is not a flaw but a function. It is both the reason companies are strong and the reason they can become weak. A leader with strong beliefs can lead a company to incredible achievements. Conversely, a leader lacking strong beliefs will achieve little and may even cause harm.

Regardless of the type of leader, the significance of a company lies in enabling everyone to achieve specific goals; aligning everyone's work along a single axis. This is "strong alignment," meaning everyone must work together to achieve a convergent outcome.

Maintaining "strong alignment" necessitates setting goals. Leaders use goals to distill their vision into something easily understood, ensuring that everyone's work aligns with the overall vision. Without goals, it is like mosaicking a powerful vision, diluting it into a vague understanding.

Companies use goals to pursue convergent outcomes.

The advantage of a hierarchical structure is its ability to pursue a leader's singular vision by integrating the work of the majority of individuals, thereby achieving a convergent outcome. To do this, companies must carefully define the problems they wish to solve and maintain ongoing focus by measuring their progress against interim goals.

However, companies cannot attempt to collect stepping stones that do not align with their goals, nor can they explore other possibilities related to them, leading to a loss of new combinatorial possibilities.

DAOs are decentralized tools for expanding territories.

DAOs are networks defined by nodes and links, corresponding to people and relationships.

Networks have flexible topologies, reorganizing according to changes or adopting new shapes over time. Leadership is distributed situationally, and individuals have the right to make purposeful changes to the organizational structure without needing permission or consensus. We can call this ability self-organization.

Imagine a large network structure as a democratic nation, composed of many individuals and organizations that all contribute to the nation's development and change. However, the complexity of the nation means that no single individual can represent the entire nation, not even the president.

Instead, everyone exists within an environment, such as a local community, business, or social circle, and defines the nation in their own way, making decisions that impact that environment. When they make decisions—such as starting a business, voting in government, or forming new relationships—the structure of the network undergoes meaningful changes.

Thus, it is very challenging for a nation to pursue a specific, unified agenda. Instead, they are better at focusing on highly collaborative goals, such as increasing GDP and improving quality of life.

Similarly, in a mature DAO, individuals can understand a part of the network (their local environment), but they cannot consider it as a whole (the larger environment of the nation). Individuals will define the DAO in their own way and explore directions that impact their local environment without considering the larger context. When they make decisions, the network's structure will self-organize in response.

Through this mechanism, the network possesses an information advantage. Individuals know themselves better than anyone else and can decide how to make the best contribution.

It is intuitively clear that standardizing and pricing the efforts of all individuals is impossible. A person's talents, motivations, workload, and attention can change incrementally in just a single day, let alone over months.

Hierarchical organizations are a medium with losses. All information that could be relevant to decisions regarding each production factor, if not introduced in some form or at some location to be "counted" in the agent's decision… will be lost.
------ Coase's Penguin - Yochai Benkler (2002)

Networks can also allocate personnel more effectively because anyone can take on any role, allowing the network to benefit from optimal combinations.

Different individuals will have varying productivity in projects with the same resource package and collaborators, and the differences can be significant.

Peer production has advantages over companies and markets because it allows more individuals to search for more resources, seeking materials, projects, collaborations, and combinations…
------ Coase's Penguin - Yochai Benkler (2002)

At the same time, tokens create a mechanism of "weak alignment," where everyone in the network increases the network's value through shared incentives. However, the way this value is realized is understandable.

The conclusion is that DAOs are not suited for pursuing a single vision; they are better at simultaneously exploring many different visions that arise from individuals' decisions based on their local environments. This is not a flaw but a function, and it will become a source of power for future networks.

Some may feel uncomfortable with this idea, complaining, "No one is at the helm!" "There is no roadmap!" "There is no xxx," which is the crux of the issue. DAOs are autonomous, and autonomy comes not only from the logic of smart contracts but also from the ongoing process of distributed self-organization.

DAOs are carriers of "weak alignment" teams.

DAOs and companies have different organizational characteristics due to their different core structures. However, this does not mean they are mutually exclusive; on the contrary, DAOs can be envisioned as carriers of many "weak alignment" hierarchies.

Great ideas often stem from an individual's thinking, and leadership is a requirement for effective human collaboration. Hierarchies have been well-optimized to enable strong leaders to achieve powerful results. DAOs do not escape this reality. The effectiveness of hierarchies lies in their ability to synthesize the contributions of the group.

Leaders with different ideas naturally stand out in a crowd, and people naturally follow the leaders and causes they believe in. DAOs do not replace hierarchies; rather, they create a mechanism through which an organization can allow many tiered groups to explore different directions simultaneously.

Local arrangements of action, from global heterogeneity to local homogeneity. We can observe this pattern everywhere, from magnetism to human society.

Problems often arise within hierarchies because groupthink gradually becomes unable to consider other viewpoints.

Homogeneous groups excel at doing what they are good at, but they gradually become inept at exploring other options.
------ The Wisdom of Crowds - James Surowiecki

In network division of labor, each team finds its direction based on its environment and contributes what it believes will increase the network's value, without needing to align with a singular vision or narrative. Therefore, there is no need to reach consensus or compromise, as each group has the right to self-organize.

…the best collective decisions are products of divergence and competition, not consensus or compromise.
------ The Wisdom of Crowds - James Surowiecki

Thus, a DAO can be viewed as a multi-organizational network. In the past, this organizational structure struggled to survive due to a lack of technology necessary to maintain consistency. Now, the "weak alignment" enabled by programmable tokens provides each team with the motivation to collaborate and share information, while open blockchains make information increasingly easy to share.

Its key principle is cooperation among heterogeneous (also known as "pan-qualitative") members, who may be dispersed across multiple organizations (often small organizations or parts of organizations). Network design has historically existed, but multi-organizational design can now gain strength and maturity because new communication technologies allow small, decentralized, autonomous groups to negotiate, maintain consistency, and act in concert across greater differences and more topics. ------ Tribes, Institutions, Markets and Networks - David Ronfeldt (1996)

Future DAOs will benefit from the strengths of both worlds: one world with a strong, unified hierarchy achieving convergent outcomes on a local scale; another world allowing people to explore many different directions while collaborating to improve the overall state.

DAOs enable many "weak alignment" teams to collaboratively explore a search space.

Tools for Exploration

Let’s return to the question of finding Monet. We know it is somewhere; we just need to find it.

St. George at Dusk - Majorelle, 1908, by Claude Monet

As we have established, when we do not know the nature of the area, goals are of little use. Instead, we should collect those stepping stones that lead to interesting directions, even though we do not know where the endpoint is.

Companies pursue a single vision by using hierarchical structures, helping us jump back and forth between individual stepping stones. However, they cannot escape this, as the same mechanism hinders exploration of a broader space.

The magic of DAOs lies in their ability to embrace complexity by allowing many collaborative teams to collect different stepping stones. These stepping stones can be shared, reused, and recombined in new environments, leading to new directions.

DAOs are generative systems of discovery, composed of people and information.

A generative system is a set of parts and rules for combining those parts. Almost every "whole system" is generated by a "generative system." If we want to create something that can operate as a "whole," we must invent generative systems to create them. ------ Systems Generating Systems - Christopher Alexander (1968)

Thus, DAOs are mechanisms of open evolution. Or rather, the openness of evolution: it is a method that generates not only solutions for a specific direction but also gradually generates entirely new directions.

Rather than viewing openness as a precondition or attribute of evolutionary systems, it is better to see them as a result of evolution itself. ------ Evolved open-endedness, not open-ended evolution - Pattee & Sayama (2019)

Therefore, we arrive at the core argument: DAOs are a new paradigm for exploring the unknown, capable of inspiring many collaborative teams to collect and integrate stepping stones to more effectively explore a search space.

The capabilities of DAOs indicate their unique and interesting roles in future innovation. While we cannot predict the final outcome, we can be certain that the process will be quite fascinating.