TLDR don’t try to re-implement the current DAO just with better security. Much if not all the core functionality is easily handled by Ethereum itself and the rest can be handled by smaller discrete Smart Contracts.

A lot has been written about the security issues in “The DAO”. I won’t add to that here. There has also been a lot of discussions about how the DAO should have been structured and what to learn from it.

The DAO was meant to be a decentralized investment fund and added a lot of complexity that in the end was it’s downfall.

Instead of one monolithic SmartContract use Ethereum and thousands of smaller Smart Contracts to solve that purpose instead.

Ether instead of DAO Tokens

Instead of a special crowd funding token, use Ether. No need to vote in a centralized smart contract using a crowd funding token.

Proposals are just separate crowd funds

If you want to create a proposal use WeiFund or write your own crowd funding contract like Digix did.

Vote by funding

If you like a project fund it by buying tokens or donating Ether to it.

No more splitting

There is no need for splitting if you aren’t in agreement with a proposal. You simply don’t invest.

No central balance to lose

If everyone keeps their funds in their Ethereum wallet where it is supposed to be, it can’t all be stolen by an unintentional bug.

Failures are not systemic

If someone creates a proposal and is funded it won’t bring down the system. The proposals would by their nature be isolated from the rest of Ethereum and failures can be used for both investors, developers and entrepreneurs as valuable learning experiences.

Anti Fragile

The next proposal can use a completely different system. No need for hard or soft forks or proposal with security updates. The system as a whole gets strong with each individual success and failure.

Diversity in governance models

Rather than use a single governance model to manage all projects. Each project can now experiment with different kinds of governance model.

If a project wants token holders to vote let them do that. If we want a single manager who decides or a board that can also work.

Use Prediction markets

If we think that that a prediction market approach is better use Gnosis or similar. It could even be implemented in a non binding way outside the project in question as a guidance for the parties involved in the direct governance

Token markets

As in the stock market, the final arbiter should be the token price. If you disagree with management or consensus, sell your token.

Conclusion

It is tempting for smart people to want to solve everything at once. I believe this is similar to Hayek’s concept of The Fatal Conceit.

A small group of smart people working together will never be as successful as many people sometimes working together, sometimes against each other but always learning from each other.

In other words my proposal is to use Ethereum for what I believe Ethereum was created. Lots of small Smart Contracts working together.