
Explanation of DAICOs - sethbannon
https://ethresear.ch/t/explanation-of-daicos/465
======
matthewbauer
So that 51% attack seems pretty critical if you don't know who owns the coins:

"Dishonest" developers could start with 100% of coin and then sell 49% of
coins. As long as the developers retain 51% they can control the entire voting
process.

This makes me think you should have a clear accounting of real people to each
coin for something like this to work. Otherwise you're vulnerable to devs
using shells to scam or bribing holders to increase tap. You're better off
cutting out the middle man and just sending your coins to the "honest"
developer directly because you really don't have any recourse when that
happens.

Vitalik's assumption that developers will always be "honest" seems kind of
silly because if developers are always honest what's the point of this
complicated system he's set up? Might as well just give funds away to our
"honest" developers' address.

~~~
jacques_chester
In the boring fusty old world of law, where the past lives but still somehow
operates pretty well, there are two concepts that render this tractable.

The first is process serving. To start a lawsuit you need to be able to
identify and notify the other party (except in _very_ special circumstances).
If you transact with anonymous counterparties, you won't get much help from
the courts.

The second is a nexus. Basically, it's something the court has the authority
to reach out and grab. It might be property, a passport, a right, money,
accounts, whatever. So long as the court can make an order and someone,
somewhere will enforce it, there's a nexus. Without a nexus a court's order is
just warm paper. Wave it all you like, the other guy won't feel any heat.

If you don't have a nexus -- if trust and authority is totally distributed,
relying on code you hope is the first bug-free code you've ever written in
your life -- then it's pretty hard to go from starting a dispute to receiving
compensation or enforcing retribution.

Distributing trust sounds really cool, but it turns out that the unit
economics suck. There are economies of scale involved for both malicious
actors and those who want to punish them. In the current ecosystem, the
adversaries are few and their interests highly concentrated. The defenders are
many, widely dispersed and poorly able to coordinate their efforts. This is
the sort of situation centralised trust is much better at sorting out.

I am of course not a lawyer and nothing here is not legal advice.

~~~
jacques_chester
I should add that there's one area where blockchain systems have a pretty
strong advantage: establishing a sequence of events.

Court cases often come down to who had the better evidence. If you sue me
saying you never approved something, but I have meeting minutes showing
otherwise, then I am more less going to win by default. Likewise if I say you
never had authority to withdraw money from the company account, but you can
produce a copy of an authority letter held by the bank with your name on it,
you win.

Blockchain promises to shortcut a lot of evidentiary stuff, which is a win.
That's why there are so many banks interested in distributed ledgers, title
registries, supply chain custody and so on.

~~~
tylersmith
All that a blockchain does is establish a sequence of events. It doesn't have
to be a sequence of state transitions, it just usually has been.

~~~
jacques_chester
I don't really follow what you're saying, but I assume you're pointing out an
implication I've missed.

------
thisisit
I really don't understand why people, especially from cryptocurrencies, are
stuck up on the fact that "Game Theory" can explain everything. Human nature
is fickle. Things can happen which are beyond the coded game theory
assumptions, especially when everyone is aware of the rules.

One of the biggest assumptions which has always been made is on the miner's
side. They can't attack the network because 51% stops it. But that has proven
wrong when F2pool manipulated the Status ICO:

[https://steemit.com/ethereum/@dhumphrey/f2pool-
manipulates-u...](https://steemit.com/ethereum/@dhumphrey/f2pool-manipulates-
usd1-2-million-on-the-ethereum-blockchain-during-the-status-im-ico)

So what happens if there is a miner working in conjunction with the devs?

~~~
Steve0
The document sees the 51% attack originating from token holders, not miners.

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maxander
Buterin is in danger of becoming a parody of himself. I literally thought this
was satire for several paragraphs, before glancing up at the byline.

A DAICO is a merger of two dubious ideas, and inherits the flaws of each. It
has DAO problems- that it trusts a large quantity of money to public code that
can't be fixed without breaking the guarantees provided by the immutability of
that same code. It also has ICO problems- the combination of extremely
volatile "stores of value," non-expert enthusiasm, and anonymity of the
developers is ripe for fraud.

Something like this might work for a "distributed Kickstarter," once the bugs
have all been worked out of a standard "form" contract and assuming that no
payout is promised to token-holders. But this requires abandoning the core
conceit of an ICO (that there are valuable "coins" involved) as well as a
reasonably important feature of DAOs (that they can be meaningfully adapted
towards specific use-cases.)

~~~
allanmacgregor
I don't think that is necessarily true, while you might be right in the sense
that more complex behaivour has the chance of introducing more bugs into the
code.

The tools, frameworks and contracts keep getting better and more mature, so
hopefully we won't see occurrences like the ones of TheDAO.

> But this requires abandoning the core conceit of an ICO (that there are
> valuable "coins" involved) as well as a reasonably important feature of DAOs
> (that they can be meaningfully adapted towards specific use-cases.)

I honestly don't agree with this, there is no reason for coins not to retain
its value.

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allanmacgregor
Vitalik initial concept is promising but I encourage everyone to read the rest
of the thread there are some very good alternatives and additional ideas.

Overall, if the main goal is to improve the ICO mechanism to reduce fraud and
increase accountability from the development team, that in my book is worthy
of consideration and discussion.

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fogzen
Why would anyone give X money to a new venture if there’s no mechanism by
which they get Y*X money back?

Wouldn’t it make more sense to dispurse new funds in tranches only after the
first tranch has been repaid with interest?

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m3kw9
Why would I as a founder want the tap rate be controlled via consensus? It
could hinder certain purchases if they are time sensitive.

~~~
wmf
Why would you as a founder want any kind of accountability? Maybe you can
raise more funding that way. In the current environment that's not really the
case, but things have to change eventually.

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UncleEntity
> Any vote is subject to 51% attacks...

Isn't the entire point of voting in the first place to determine what >= 51%
of the voting population desires?

Calling a system working exactly as intended an attack seems a bit...odd.

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contingencies
That fat comment with the _fetch a grownup button_ is mine ;)

~~~
allanmacgregor
Really enjoyed your contribution to that thread.

