Cybernetic organizations — BORGs — are doomed to fail

what makes a decentralized autonomous organization (DAO) a dao? In practice, the democratic structure of these organizations has been compromised because several self-sufficient DAOs are operating as traditional corporations.

With this in mind, the developers at Delphi Labs proposed an alternative framework, incorporating so-called BORGs (Cyber ​​Organizations) into governance structures to automate decision-making so that action could be taken without a DAO proposal. In effect, a BORG would be an artificially intelligent bureaucrat implementing the law through code.

However, the democratization project must not be abandoned yet. DAOs should work to involve their community in governance early on.

The BORGs entered the scene

As BORG proponents admit"BORGs are not meant to be fully transparent, fully decentralized, or fully autonomous."

So how can these entities coexist with DAOs? By design, the BORGs further cement the vision of founding core teams that establish these entities and then shield their interests from criticism under the guise of trust-minimized and programmable government. When this technology is adopted, projects are forced to divert decision-making to the BORGs for convenience, falling into a democratic deficit.

Related: OpenAI needs a DAO to manage ChatGPT

It's worth noting that Delphi Labs argues in favor of BORGs on the premise that DAOs cannot function as intended. DAOs require significant levels of coordination and commitment. Not to mention, DAOs now face an uphill legal battle, with a recent court case in the United States ruling that legal liability could extend to token holders.

In the absence of a functioning DAO, BORGs represent a more democratic entity than a traditional hierarchical corporate structure. But if decentralized governance can be achieved, automated decision-making pales in comparison to the results that can be obtained from inclusive governance.

The history of DAOs

To appreciate DAOs, we need to understand the problem that this decentralized structure was designed to solve. Over the past century, corporations have become increasingly centralized, with almost every decision made to put more money in the pockets of the largest shareholders. This has come at a tremendous cost to employees and consumers in the form of low wages, poor quality of service, and price inflation.

This is one of the most interesting articles I've read on DAOs.

It proposes BORGs, essentially spinning off DAO-adjacent entities that have a legal personality tailored to their specific action.

I resonate with many of the definitions here, the most important thing is that the DAO is a DAO https://t.co/lZrbTMtxMm pic.twitter.com/WgDGi6wLWB

— Drnick (@DrNickA) April 20, 2023

As the cryptocurrency industry rose from the ashes of the 2008 recession, leaders in the space advocated for cryptocurrency companies to operate with decentralized government to avoid the frustrations of corporate greed that caused the collapse of the Wall. Street.

Throughout history, democracy is the only system that has been shown to optimize the diverse interests of a community so that no one benefits to the detriment of others. As the industry seeks to democratize finance, extending opportunities to previously disenfranchised communities, it is critical that these services develop democratically. Otherwise, the final product is bound to serve the interests of the founders and the main stakeholders.

Related: Brian Armstrong promised me $100 worth of Bitcoin. So where is he?

Members of the DAO community must have a voice in critical decision making, especially as DAOs diversify their membership and need to balance the preferences of people from different socioeconomic backgrounds. By design, community-driven solutions will serve a broader range of preferences than decisions made behind closed doors by smaller groups, or automatically executed by BORGs developed by these individuals.

DAO as legal entities

One of the benefits of BORGs, as described by Delphi Labs, would be to reduce the legal liability of DAO members for off-chain activities, such as investing in new projects or hiring workers, which would then be delegated to a BORG. However, it is difficult to say whether this delegation would be recognized by law in all jurisdictions. Also, the existence of the BORG does not remove liability for on-chain activities, so DAO communities still need to be prepared for these events in the future.

This is an ongoing problem for DAOs, one that can be addressed with greater transparency and accountability while adhering to existing laws and guidelines. So far, the benefits of the BORGs do not outweigh the risk that this framework poses to the democratic structure of the DAOs.

engaged community

Scalability remains a key draw for BORGs, with the potential to streamline decision making as projects expand and diversify. However, the benefits of automation result in the sacrifice of democratic ideals.

Engaging community members in the decision-making process should be the first port of call before a DAO turns to automation. This requires developers to reflect on whether the product is people-centric, tailoring the mission to one that attracts community interest and engagement. Additionally, coordination with a larger group of stakeholders requires coordination and flexibility.

While running a non-hierarchical organization can be difficult, these sacrifices will have long-term benefits for the sustainability and impact of the project. Otherwise, community members may become alienated from the project and leave it altogether. With the potential to undermine democracy and erode community support, BORGs are doomed to fail.

Although DAOs come with their own set of problems that need to be addressed, the solution should not be to reduce transparency and community involvement, but rather to create tools that allow efficient management of a DAO.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.