DAO 2.0: Evolution of Decentralized Autonomous Organizations Driven by GenAI

BytomDAO
8 min readJun 3, 2024

Introduction

In the rapidly developing digital economy, Decentralized Autonomous Organizations (DAOs) have become a driving force behind the application and innovation of blockchain technology. However, the traditional DAO model faces significant limitations in flexibility, security, regulatory adaptability, and information processing, hindering its widespread adoption and further development. To address these issues, BytomDAO is developing an innovative DAO system based on Generative Artificial Intelligence (GenAI) technology, called DAO 2.0. This concept has the potential to revolutionize the operational models of current entities and organizations.

This paper will explore BytomDAO’s implementation plan from the perspectives of organizational structure, economic systems, and related technologies. It will analyze how it overcomes the shortcomings of traditional DAOs, providing a more flexible, efficient, and secure governance model — DAO 2.0 — thereby promoting the future development of decentralized autonomous organizations.

What is a DAO?

A DAO, or “Decentralized Autonomous Organization,” is a management structure that uses blockchain technology to automate certain voting and transaction processes. DAOs are a crucial component of blockchain ecosystems, including cryptocurrencies and Web 3.0, which rely on the decentralization brought by blockchain technology.

DAO governance typically involves the following steps:

Proposal Submission: Any member of the DAO can submit a proposal, describing the decisions or actions they want the organization to take. The proposal should include a clear problem description, the proposed solution, and any relevant background or context.

Discussion Period: Once a proposal is submitted, it usually enters a discussion period where members can ask questions, provide feedback, and suggest modifications. This period ensures that all members have the opportunity to weigh in on the proposal and thoroughly review it before a decision is made.

Voting Period: After the discussion period ends, the voting period begins. Members can vote on the proposal, typically with a certain number of voting rights determined by the number of DAO native tokens they hold.

Decision: Once the voting period concludes, the DAO makes a decision based on the voting results. If the proposal receives enough votes in favor, it is implemented; otherwise, it is rejected.

Execution: Once a decision is made, the proposal is automatically executed on the blockchain through smart contracts and code. The DAO can also appoint a team or individual to oversee the implementation process to ensure effective execution.

DAO governance is divided into on-chain and off-chain governance:

On-chain governance fully allows for open-source governance contracts (e.g., OpenZeppelin / Governor) to automatically execute proposals based on token holders’ voting results without needing trusted third parties.

Off-chain governance decouples voting from on-chain execution. After off-chain voting is completed, a trusted group of people (usually early DAO members or major stakeholders) called signers are responsible for executing transactions on-chain to reflect the voting outcomes.

Limitations of DAO Governance

However, the current DAO governance model also has its shortcomings:

Lack of Adaptability: DAO governance typically relies on smart contracts, which are written in static code and predefine conditions and outcomes. While this ensures transparency and consistency, it struggles to adapt to rapidly changing environments. Many complex scenarios and decisions cannot be easily summarized with IF-ELSE branch code. Moreover, the code is vulnerable to attacks, limiting the adaptability of the DAO. For example, when the market environment suddenly changes, traditional DAOs may not be able to adjust strategies in time, leading to missed opportunities.

Additionally, the reliance on smart contracts for “vote execution” may struggle with nuances — the real world is full of complexities and subtleties that are difficult to encode with simple IF-ELSE statements. DAOs may need to make decisions involving multiple factors and interdependencies. Smart contracts may fail to capture these complexities, leading to erroneous or unfair outcomes.

Lack of Execution Power: The DAO constitution is a crucial document defining the rules and governance structure of the DAO, essential for its healthy development. However, in practice, there are frequent cases of inadequate execution of the DAO constitution, leading to issues such as difficulty in decision implementation and community division.

In governance practice, decisions stipulated by the DAO constitution may be affected by member behavior. If members do not adhere to the rules, decision execution becomes difficult, leading to resource wastage and impacting the DAO’s efficiency and reputation. Moreover, if DAO members do not comply with the constitutional provisions, it will be difficult to execute decisions, affecting the DAO’s normal operations. Frequent violations of constitutional provisions can significantly reduce the organization’s efficiency and lower external trust in the DAO, affecting its reputation and long-term development.

Cumbersome Governance: Current DAO organizations exhibit cumbersome governance processes. Every rule adjustment requires a proposal and voting procedure, which is time-consuming and may lead to delayed decisions due to insufficient participation or conflicts of interest. Although the decentralization of DAOs offers democratic and transparent advantages, it is insufficient in rapidly responding to changes and improving organizational efficiency. For example, a proposal to invest in a new project may take weeks or even months to pass and execute, significantly impacting the organization’s ability to respond quickly.

BytomDAO’s DAO 2.0

4.1 Introduction

BytomDAO’s DAO 2.0 represents a paradigm shift in decentralized governance through the integration of AGI. DAO 2.0 is a revolutionary innovation aimed at utilizing Generative AI (GenAI) technology to build a new decentralized autonomous organization (DAO) system.

Traditional DAOs typically use a “vote-execute” model, where members vote to decide the organization’s actions and execution plans. However, BytomDAO proposes a new concept, the “create AGI-decide by AGI” model, which introduces the generative capabilities of artificial intelligence into DAO governance. By leveraging AGI, BytomDAO 2.0 aims to address the limitations of traditional DAOs and pave the way for a new era of intelligent, adaptive, and secure decentralized governance.

4.2 Advantages of BytomDAO’s DAO 2.0

BytomDAO’s DAO 2.0 solution highly integrates AGI, aiming to enhance the decision-making process, create a comprehensive organizational structure, and improve the efficiency and intelligence of decentralized governance.

Integrating AGI:

The role of AGI in DAO governance is multifaceted.

Firstly, the traditional “vote-execute” model is transformed into the new “create AGI-decide by AGI” model.

On one hand, the DAO 2.0 with AGI integration can enhance decision-making efficiency and intelligence. BytomDAO has developed CryptoGPT, a large language model (LLM) specifically designed for the cryptocurrency industry, trained on the CryptoInstruct dataset, and optimized across different parameter scales. By leveraging AGI technology for data processing and decision-making, it provides faster and more accurate decision support — CryptoGPT can process large-scale Web3-related data and extract key information to support data-driven decisions. For example, if a DAO needs to decide which public chain ecosystem project to invest in, CryptoGPT can analyze market trends, project risks, and potential returns, and propose the best investment plan, improving the DAO’s treasury utilization efficiency.

Compared to traditional DAOs, where members rely on personal experience and expertise to make decisions — which may have subjective biases and limitations, leading to the “tyranny of the majority” — DAO 2.0 offers intelligent decision support. DAOs can train AGI models, utilizing AI models like CryptoGPT to analyze historical data and trends, identify patterns and regularities, predict future trends or possible outcomes, and provide data-supported decisions for DAO members.

On the other hand, AGI empowers DAO 2.0 to design and execute more efficient voting processes, optimizing governance procedures. DAO 2.0 not only revolutionizes the governance model but also enhances overall organizational efficiency through AGI-designed and executed voting processes.

As previously mentioned, traditional governance processes are cumbersome, including proposal submission, discussion, and voting steps, which may take a long time to make decisions, affecting the organization’s quick response capability. BytomDAO’s DAO 2.0 introduces the “create AGI-decide by AGI” model, which helps optimize DAO governance processes.

With AGI, DAO 2.0 can automatically verify voter identities using DID and identity verification technologies to ensure only authorized members can vote. AGI can also automatically collect and aggregate votes without manual intervention, helping detect and prevent vote manipulation.

Furthermore, AGI can increase voting participation. With the introduction of AI Agents, DAO 2.0 voting processes become simpler and more convenient, lowering member participation barriers. Large models like CryptoGPT can provide voting recommendations based on each member’s interests and preferences, helping them make informed choices. Additionally, AGI can design incentive mechanisms to encourage member participation in voting, such as providing rewards or granting more rights to voters.

Secondly, the DAO 1.0 era’s constitutional binding force is limited, and humans as “uncontrollable factors” within DAOs often cause execution deficiencies due to personal interest conflicts and other subjective factors. BytomDAO’s DAO 2.0 introduces AI Agents to significantly enhance DAO execution power.

On one hand, unlike traditional DAOs, DAO 2.0 envisions achieving automated execution. DAO 2.0 can train AI Agents to automate decision execution. AI Agents can handle a range of tasks and processes related to DAO operations, such as information gathering, data analysis, and report generation. They can automate task handling and execution through algorithms and programs, improving execution efficiency and accuracy while reducing human and time costs.

When DAO decisions are reached, AI Agents can automatically monitor execution and take necessary measures to ensure execution. For example, if the DAO decides to invest in a project, AI Agents can automatically execute fund transfers and monitor the investment progress.

On the other hand, DAO 2.0, with the aid of AI Agents, can implement governance and monitor its implementation. AI Agents can monitor and audit decision execution to ensure actions are consistent with DAO governance rules and objectives. They can detect potential risks and problems early and provide feedback and recommendations to avoid decision implementation deviations.

Furthermore, AI Agents can support the implementation of DAO governance rules. When a DAO establishes new governance rules or changes existing ones, AI Agents can automatically execute the updated rules and monitor their implementation. This reduces reliance on human participants and ensures strict adherence to governance rules.

Lastly, AI Agents can enhance the transparency and trust of decision execution. AI Agents can record and track the entire decision execution process, providing detailed logs and reports for DAO members to review. This improves the transparency and traceability of DAO decisions, allowing members to understand and trust the decision-making and execution process.

Conclusion

To summarize, BytomDAO brings DAO 2.0 , introduces AI Agent, which plays an important role in automated execution, realizes automated management and execution of DAO decision-making and operation through intelligent technology, improves execution efficiency, accuracy, and credibility, and provides important support for the healthy development and continuous operation of DAO.

We have reason to expect that DAO 2.0 will realize a highly intelligent and automated governance mode through the introduction of AGI to enhance the efficiency and fairness of decision-making and execution. With the continuous advancement of AGI technology, DAO 2.0 is expected to make significant breakthroughs in intelligent decision support, legal compliance, personalized member experience and enhanced execution, bringing unprecedented development and innovation opportunities for decentralized autonomous organizations.

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