Cologne, Frankfurt When Nils Jonalik and Daniel Kremerov want to relax from programming, they go to the roof terrace. There are few other places where you have a better view of Cologne Cathedral. The two graduates from RWTH Aachen University and Maastricht University do not spend a lot of time out there. Your software start-up Sidestream is working on a number of projects, such as software for intelligent sensors for mechanical engineers or innovative real estate portals. Recently also for MakerDAO.
DAO is the new magic word in the crypto world. It stands for “decentralized autonomous organization”, is a digital company without a manager and with rules of procedure that are difficult to change. With the help of the decentralized database technology blockchain, the employees organize themselves via the Internet, vote on the future of the project and place orders – as with Sidestream.
DAOs are gaining in importance. According to the industry platform Coinmarketcap, the ten largest cryptocurrencies and tokens in the DAO area alone have over 30 billion dollars in market capitalization, and the value is rising continuously.
The development does not go unnoticed in the traditional financial world: The French bank Société Générale wants to provide up to 20 million dollars in virtual bonds as security for the DAO currency Dai. Industry observers are already calling this step historic.
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A company that doesn’t belong to anyone
DAOs are “coded” by computer programs. This means that the rules according to which decisions are made in the company are written down in the code. If they are to be changed, a clear majority in the community is required.
The ideal is decentralization: Nobody decides on their own, the organization “belongs” to the community, intermediary institutions such as banks or stockbrokers are replaced by pre-defined conditions, secured in automatically expiring contracts, so-called smart contracts. Payment is made with cryptocurrencies.
The MakerDAO project was started in 2015 by the Danish developer Rune Christiansen, who helped build the maker protocol on the Ethereum blockchain. “We found Maker’s concept exciting from the start,” says Kremerov.
The Cologne residents are won over by MakerDao’s currency, the Dai. It is linked one-to-one to the dollar and is therefore stable in value, a so-called stable coin. “Maker avoids the extreme fluctuations in the price of Bitcoin and makes the currency usable for everyone, not just speculators,” says the Sidestream founder.
The special thing about Dai: In order to ensure the link to the dollar, the maker team’s protocol does not rely on coverage by real dollars – as is supposed to be the case with competitor Tether, for example. The latter requires a central body that holds the dollar. Instead, everything is decentralized at Maker, true to the DAO idea. Dai users store other crypto currencies as security, controlled by smart contracts.
The Cologne start-up Sidestream is working on an auction system for virtual coins. It works like this: If the crypto coins that Dai holders have deposited lose value, investors have to shoot more in order to ensure the stability of Dai. If this does not happen, the collateral will be liquidated, that is, auctioned. “In the best case scenario, our solution doesn’t even need it,” says Sidestream founder Kremerov.
MakerDAO pays the Cologne-based company in euros. This is made possible by a company from Mandaue City, Philippines. The local financial supervisory authority allows accounts to be kept for DAOs.
As you can see, crypto arrives in the real world. Michael Geike, Managing Director of Advanced Blockchain AG in Berlin, also spends the salaries of many employees in Dai. Geike’s programmers work in over 20 countries including Australia, Romania, Cyprus and Portugal. DAOs allow him to organize “globally, across the globe”.
And that’s just the beginning for Geike. He hopes for far more: “In my perfect idea of the state, everyone could vote on anything. They could either use their votes themselves or delegate them to experts or representatives. ”He mentions the concept of“ liquid democracy ”:“ At the moment we only vote every four years. But the technology behind DAOs would make it possible to bring democracy much closer to the people. ”
The idea that the G20 can one day vote as a DAO? By no means utopian for Geike. “One day all of our governance systems will run through DAOs.”
Dai has a market capitalization of just under $ 6.5 billion
MakerDAO is controlled by a small group, the so-called core or core teams. There are 16 pieces, in which around ten to fourteen comrades-in-arms gather. So less than 200 people take care of the core.
Two of them are the Belgian Wouter Kampmann from Ghent and the Argentine Juan Guillen, who now lives in Portugal after working in Barcelona and Berlin. Kampmann was the head of engineering of the Maker Foundation, which has now existed, and today he heads one of the core teams. Guillen is also active there.
After a difficult start, Dai is a success today. According to data from the analyst firm Coinmarketcap, Dai currently has a market capitalization of just under 6.5 billion dollars. And, more importantly, a Dai is worth exactly $ 1.00, with minimal fluctuations in price. And all of this on a decentralized basis.
“We built the basic mechanism,” says Kampmann. “Now we want to increase the level of security and use Dai in the real world.” With this, the developer puts his finger in the wound. “The problem with the crypto world is that it exists in its own bubble. The scene is dominated by speculators. At Maker, we believe in real benefits. “
Application in reality: According to Kampmann, this could lie in offering people in inflation-plagued countries a secure form of storage of value. Or to enable simple investments from anywhere on the planet in future industries. “Anyone can take part,” enthuses the Belgian. “Anyone can look at the protocol. Anyone can make suggestions in our forums. And we post our team calls on YouTube. We are completely transparent. ”Ultimately, success is not based on the hope of increasing profits, but on a“ real flow of income ”- based on the real benefit.
“I’m paid by a piece of software on the blockchain,” says Kampmann. In Dai, of course. This is branched off from fees that investors have to pay. Today, this “real flow of income” feeds nearly 40 individuals, says Guillen. Some made up to a million and a half dollars a year. The DAO regularly votes on whether new teams are to be accepted – hot candidate for the future: Sidestream from Cologne – or whether they have to leave the project again. The latter has never happened before, as the Argentine admits.
As exciting as the idea of the DAO sounds, many questions are still unanswered, Katharina Gehra warns. The blockchain expert sells her own crypto investment products with her company Immutable Insight – and knows the dark side of the scene.
MakerDAO sees Gehra as a kind of “modern commune”. “As is so often the case, there is the same and the same: Even at MakerDAO, a very small group earns money as risk takers on the security for many.” Capital income would be generated through liquidation fees and stability fees. In other words: The DAO idea is not as democratic and egalitarian as it is in the eyes of its fans.
Money also rules at DAO
Rune Christensen says something similar. And his opinion has weight: the 31-year-old Dane is co-founder of MakerDAO and was head of the Foundation in the meantime. He has since retired from the head of the project. “I had planned it that way from the start. Maker should manage itself, we didn’t want a foundation that would exert influence over the long term, ”he explains.
He still believes in the vision of the decentralized financial system and its opportunities for people in emerging countries without bank accounts. He is also enthusiastic about the environment: “The smartest programmers in the entire industry work at Maker, real geniuses.” The request from Société Générale is proof for him: “The DAO works.”
There is only one thing the founder, who has since stepped down from the team, always thinks about: “DAOs are not democratic. They, too, are ruled by the powerful nature of capitalism. ”As in the world, money ruled the DAO. “Maker accepts that. We have to arrange it in such a way that the capitalist self-interest of all members is steered in the right direction.”
According to Christensen, the best way to do this has not yet been determined. He advocates a “one member, one vote” approach. This is in stark contrast to the “Proof of Stake” approach, which is very much hyped in the crypto world. In this case, the owners of most coins decide the future of a network.
Another point is problematic: At Maker, the core members still decide who becomes part of the ruling class and who remains outside. It shows: As in the analog world, not everything in blockchain-based concepts is so decentralized and automated.
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