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One of the many aspirations for “web3” is that you could potentially take certain messy, emotional human processes and clean them up by putting them on the blockchain. “Smart contracts” write their terms directly into code, and actions they take are both public and irreversible. Enthusiasts believe this sort of “trustless” system can enable people come together to work on projects that they otherwise might not.
If you get enough of those people together to work on a project, you might have a decentralized autonomous organization, or DAO. The Ethereum network, on which many DAOs run, describes them as “a safe way to collaborate with internet strangers.” Remember when thousands of people came together within days to raise $47 million in an effort to buy a copy of the Constitution? A DAO is how they did it.
DAOs can be governed in various ways, and one way is to issue governance tokens. The cryptocurrency exchange platform Uniswap, for example, issued tokens to community members, employees, investors, and advisers, and lets them vote on “development proposals.” Imagine that Instagram let you vote on which features it should develop next, and you’ve got the basic idea.
One web3 startup that created a DAO is Ethereum Name Service, or ENS. If you’ve been on Twitter and seen someone whose username ends in “.eth,” you’ve found an ENS customer. ENS handles can be bought and sold like web domain names, and could represent the start of an identity layer for web3: like logging in with your Facebook account, but for crypto. (The project is still quite small, by the standards of the wider internet: ENS says about 300,000 people have registered names to date.)
I became familiar with ENS last summer as I began to familiarize myself with the crypto world. My goal was not to become a trader or investor. Rather, I wanted to use crypto products just enough to get the hang of them, so that I might ask better questions and write more interesting stories. And so I set up a couple crypto wallets, one with Coinbase and one with a company called Rainbow, and funded them with $100 each in ETH, the currency of Ethereum.
I tweeted something about these explorations, and some nice people at Rainbow reached out and asked if I had considered setting up a name on ENS. I hadn’t, but when I looked at its website, I saw the appeal. My crypto identity at the moment consisted of an un-memorizable string of letters and numbers. With ENS, I could simply be caseynewton.eth. So I registered that name, along with platformer.eth, for what struck me as the bargain price of $5 per year apiece.
I have since done nothing of use with my new web3 identities, because at the moment there is basically nothing to do other than to log into cryptocurrency exchanges.
Anyway, on November 1st, a few months after I had acquired my .eth names, ENS announced a DAO. Here it’s worth saying that ENS has a confusing organizational structure, even by the standards of web3. As best as I understand it, there is a Singapore-based nonprofit company named True Names Limited that leads and supports ENS. ENS itself is a decentralized protocol that runs autonomously.
The DAO represents a further effort to decentralize the project. Brantly Millegan, who was then the director of operations at ENS and the project’s de facto spokesman described the effort this way:
The core components of ENS are decentralized and self-running (e.g., no one can take away another person’s .ETH name), but there are a few things that require some human discretion. We believe that both ENS and the DAO space have matured enough that now is the time to pass ENS governance over to the community via the creation of a DAO and the $ENS governance token.
If you owned a .eth address on October 31, you could claim your share of governance tokens. The precise number was determined by how long you had held your name, how many names you had registered, and how active you had been in the community. Once you claimed your tokens, you could use them to vote on proposals directly, or you could delegate your vote to someone you trusted.
I had no particular opinions on how ENS should be run; most of what I know about the company I learned writing this column. In November, though, this seemed like exactly the sort of exploration of crypto I had hoped to undertake when I began the project: a low-stakes effort to understand DAOs and community governance by becoming a passive participant.
I bought a little more ETH to cover the transaction fees — here is your periodic reminder that Ethereum is the slowest, and most expensive, and hardest to use computer in the world — and soon, 251 ENS tokens belonged to me. I delegated their voting power to someone I follow on Twitter, and stopped thinking about it.
It was then that something unexpected happened: the ENS tokens, which can be bought and sold on cryptocurrency markets, quickly became very valuable. At one point, the crypto wallet showed the value of my holdings at more than $20,000. As a journalist who had yet to fully consider an ethics policy around crypto usage, this struck me as a fairly catastrophic (if hilarious) development. This was more crypto than I had ever intended to own, and worse, I might need to write about this company someday, at which point my token ownership would leave me hopelessly compromised.
While I thought the problem through, the news cycle forced my hand.
Specifically, Brantly Millegan forced my hand.
In keeping with the complex nature of the ENS project, Millegan served many roles. For three years he was director of operations of True Names Limited. When the DAO was formed, he became one of a handful of official “stewards” guiding its development; and also as its top delegate, receiving more delegated votes than any other person or company. (Coinbase and Rainbow are also top delegates in the ENS DAO.) There’s more: the ENS tokens are governed by a separate foundation; Millegan was (is?) a director.
In recent weeks, as their profile grows, some leaders in the web3 community have been the subject to one of the world’s most dangerous acts of scrutiny: a search through their old tweets. Last month, the investor and influencer Cooper Turley was removed from the Friends With Benefits DAO after he was found to have used racist and homophobic in a series of 2013 tweets. (He apologized.) This week, a community manager for the NFT trading platform SuperRare “parted ways” with the company after some old, racist tweets were unearthed.
Source: TheVerge
