'Blessing and a Curse': The DAO's Developers on Blockchain in 2016

The DAO loomed large over 2016 – now, its developers have their sights on new steps that can be made in the year ahead.

AccessTimeIconDec 27, 2016 at 1:27 p.m. UTC
Updated Sep 11, 2021 at 12:49 p.m. UTC
AccessTimeIconDec 27, 2016 at 1:27 p.m. UTCUpdated Sep 11, 2021 at 12:49 p.m. UTC
AccessTimeIconDec 27, 2016 at 1:27 p.m. UTCUpdated Sep 11, 2021 at 12:49 p.m. UTC

Christoph Jentzsch is the founder of Slock.it, the ethereum smart contracts company that this year developed The DAO, the largest-ever (and most contentious) application on the second-largest blockchain network.

In this CoinDesk 2016 in Review special feature, Jentzsch gives his overview of the year that was, discussing how he believes his project helped advance the industry even as it came to challenge many of its core concepts.

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Looking back, I have to say it was quite a ride.

As much has been said (and written) about my firm and its contributions to the blockchain industry this year, I wanted to give a short opinion piece on what happened inside our part of the ethereum world, not from a neutral, outside perspective, but from our ('biased') inside perspective.

At the beginning of this year, Slock.it was working hard on making the vision of a decentralized sharing economy come true by developing an Ethereum Smart Home Server using Ubuntu Core and Samsung Hardware.

It was an exciting time, and we made quite some progress.

That changed when it came time for us to raise money – we decided to help build a decentralized autonomous organization (DAO) instead of doing a centralized token sale or using classic venture capital-based funding.

With this, the story of The DAO began. Much has been said and written about it (a detailed summary can be found here). It was an amazing journey and (I would argue) proved the large-scale interest a truly decentralized autonomous organization had on a large group of people.

It brought a lot of mainstream media attention toward the blockchain, and especially the ethereum blockchain. We all know what happened next though, it failed due to a software bug in the smart contract and started a debate about how to resolve this situation.

The ethereum community has never before had to face this kind of challenge. It was both a blessing and a curse that there was 28 days time to find a solution (after this, the option of doing a hard fork would have become unfeasible).

It not only challenged the ethereum governance system, but prompted deep questions about the nature of blockchain governance itself.

What we learned

So, what is the ethereum governance system? We're a bit closer now to understanding that.

At its core, ethereum is a protocol that brings very different people and interests group together – the Ethereum Foundation, miners, exchanges, loosely coupled groups building products on it, developers, users and pure speculators.

As per its protocol, ethereum is currently a proof-of-work blockchain, and in terms of governance, there is not much more beyond "whatever people choose to run". Of course, it is not as simple as that. There are only a few people who have the skills to develop a client and safely make changes to it.

Additionally, there are strong network effects. Nevertheless, the developers turned out to be very receptive to the wishes of the community – not enforcing their opinions, but instead listening carefully to the users, adding their expertise and solely offering choices.

I think the ethereum client developers have done a very good job, and I respect them a lot for the challenging work they do.

After much debate, a majority supported the hard fork by updating their clients and despite the extreme time pressure, it went very smoothly. It also added a new group that supports the old blockchain, proving that every user is free to choose the blockchain they wish to run.

Some wrongly argue that it was the centralized decision of a few elites that arbitrarily led the change to the protocol.

As someone who was in contact with many different groups during that time, and actively promoting and writing the specifications for a potential hard fork, I can tell you that I have never seen a decision process more fraught with hardship than this one.

Centralized systems are very efficient in making decisions, but this was about accurately aligning the community with all its parts – and a lot was learned from this work.

I hope we can improve the ethereum governance system, and some suggestions, such as controlling protocol parameters via a smart contract or using a stake vote to activate a hard fork and simultaneously disable the old chain are now being discussed.

Much less contentious hard forks have also been used this year to cope with denial-of-service attacks and to improve the protocol. Through all of that, ethereum has shown its resilience during the various attacks, and it may be that The DAO had a part in bringing awareness to these limitations.

Evolution continues

As we end the year, the ethereum ecosystem is getting stronger and stronger.

The strength, determination and skills of its developer community displayed at its annual developer conference Devcon2 were overwhelming to me, and I am excited to see the progress being made in terms of smart contract security, developer tools, dapp infrastructure, client development and, last but not least, ongoing research in protocol improvement.

Although "The DAO" has ended, the concept of the DAO is not dead, and we want to continue working on it and experimenting with it. As such, we started a new project called the Charity DAO. On this project, we want to apply the lessons learned to date and improve a domain close to our hearts: charitable giving.

Going forward, Slock.it is also continuing to work on projects that we believe will help decentralize the sharing economy, such as Share&Charge, a project that was recently noted by the German Government. Together with Innogy, we will launch this project, paving the foundations for a smooth peer-to-peer experience sharing charging stations for electric cars.

In conclusion, I remain excited about what 2017 will bring us.

We hope to bring as many physical objects on the public ethereum chain as possible to allow people to rent, sell and share them directly, and I personally expect the launch of actual products and services that will make use of the public ethereum blockchain.

With this, the lessons learned and the continuous development of dapps, I believe we will see the bits and pieces of ethereum's Web 3.0 vision coming together in 2017.

Have an opinion on blockchain in 2016? A prediction for 2017? Email editors@coindesk.com to learn how you can contribute to our series.

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