Moloch, a new breed of “Decentralized Autonomous Organization,” or DAO, that today swings onto the Ethereum mainnet, is hoping to dramatically speed up Ethereum dapp development. At the same time, it’s trying out a radically new type of organizational structure that could serve as a model for decentralized governance.

Think of Moloch as a kind of venture studio or incubator, such as ConsenSys (which funds Decrypt). But in place of a shared HR department, resource allocation committees and a CEO, the organization is fully democratic and bounded by smart contracts. At its core is a central “Guild Bank”—itself built on a smart contract—whose funds Moloch members can allocate, leave to grow—or even "ragequit" with.

"We must summon Moloch to defeat Moloch," said James Young, an Ethereum developer, self-described “lowly worm” and one of the project's seven co-founders. "Moloch" is an allusion to the Canaanite god of child sacrifice, presented in modern contexts as a sort of "god of coordination failures"—fitting for the Ethereum's network's current crisis of underfunding.

Also helming the project are Spankchain founder Ameen Soleimani; Connext.network developers Lane Haber, Arjun Buptani and Rahul Sethra; and Brainbot lead developer Heiko Fisch.

How does Moloch work?

In some ways, Moloch has been Soleimani’s life-long quest for organizational perfection. Years ago, when he was a teenager virtually living online in video games, Soleimani had an epiphany: the best, most coordinated and efficient teams were pure meritocracies that arose in spaces where no one knew who you were. There were moments when Soleimani, a mere fifteen-year-old, led real-life ex-soldiers into digital battle. His age was irrelevant. The best ideas won.

“These soldiers spoke to [Ameen] about the power of coordination,” said Young. It was a system “based purely on your merit.”

With the advent of blockchain, a “trustless” construct that eschews politics, Soleimani saw a more natural fit for a healthier, purely democratic system of governance. And now is the time to try it—with ICOs all but banned by the SEC, and the price of ether dropping 90% from its all-time-high last year, Moloch is trying to solve the funding difficulties startups currently face. A vivid example of the funding crisis came last month, when Ethereum inventor Vitalik Buterin dished out $300,000 of his own money to struggling developers.

“We need more funding sources than the [Ethereum Foundation] and ConsenSys,” agreed Eric Lim of Whiteblock, a blockchain-testing company based in Los Angeles.

Whiteblock is a "founding member" of Moloch, and paid 100 ETH ($10,000) to join. He pointed out that among Moloch’s virtues is that anyone with a strong enough proposal can become a member and access funds. Moloch, Lim said, “is a good way to level the playing field and let the community decide, not just an elite group of participants.”

Eric Chung, the founder of dev bootcamp provider DApperNetwork, said Moloch presents an alternative to the fundraising hell of an ICO. Indeed, Chung is hoping to submit a proposal of his own, for a new, as-yet-undisclosed project. “I don’t know if it’s going to be better than an ICO,” he said, “but it’s definitely different because you’re funding different things, for the common good...the things that don’t always commercially make sense.”

Looked at another way, “it’s really just a way to do research grants, without going through the grant process,” Chung said.

So how does one join the Moloch Guild? Prospective members, a limited number of whom can be processed in a day, must submit $5,000-worth of ETH and a proposal for how the Guild’s funds should be spent. In return, they request a number of “voting shares,” which they can use to help steer the direction of the fund and vet prospective members. Existing members then vote on whether to approve these applicants. (For those out of pocket, but full of ideas, Moloch members may vote to grant an applicant free entry to the Guild.)

Members are theoretically pseudonymous, but in all likelihood will be recognized by their public addresses. Nobody will be declining Vitalik Buterin’s motion to join—if he files one.

Solving the Tragedy of the Commons

Moloch is as much a sociological, philosophical and technological experiment as it is a funding one. Where Moloch differs from other funds—Young likens it to an “index fund"—is in Soleimani’s insistence on portraying it as a solution to the so-called “Tragedy of the Commons,” the observation that members of a collective tend to betray the collective when self-interest appears more lucrative, even if it is not.

Soleimani stumbled upon the problem in Meditations on Moloch, an essay by Scott Alexander, a polymath beloved by the technorati. It was Alexander who first presented Moloch as an avatar of "coordination failure," a sort of demonic manifestation of the Tragedy of the Commons, which he described thus:

There’s a passage in the Principia Discordia where Malaclypse complains to the Goddess about the evils of human society. ‘Everyone is hurting each other, the planet is rampant with injustices, whole societies plunder groups of their own people, mothers imprison sons, children perish while brothers war.’ The Goddess answers: ‘What is the matter with that, if it’s what you want to do?’ Malaclypse: ‘But nobody wants it! Everybody hates it!’ Goddess: 'Oh. Well, then stop.’

The Tragedy of the Commons, said Young, “shows that there is a misalignment in incentives—people put their own self-interest in front of that of the group.” The purpose of Moloch, then, is to “align incentives so your self interest is the group's self interest.”

To achieve this, Soleimani has hardwired—or at least attempted to hardwire—the incentive to cooperate into Moloch’s code. And this cooperation, apparently, begins with empowering those who would prefer not to cooperate, without bludgeoning them into compromising positions.

Here’s how it works: By design, shareholders need not stick around should other members put forward disagreeable motions or, say, amass an outsized sum of voting shares. Instead, they have the option to “ragequit”—much of Moloch’s nomenclature is borrowed from video games—in which they exchange their voting share for a proportional share of the Guild Bank’s funds.

The idea behind ragequitting is that all members will tend more carefully to Moloch’s fund, knowing that the larger it grows, the larger their winnings might be if they jump ship.

“This gives a strong financial incentive to members to try to maximize the value of their votes either by increasing their proportional ownership of the pool OR by increasing the value of the pool overall," the white paper explains. "Note that liquidating their votes means sacrificing decision-making capabilities over the future of the pool.”

Moreover, as Simon de la Rouviere, an informal advisor to the project, points out in his essay “Collapsing the Firm," the incentive to quit ensures that only the loyal remain on the network — and that the quitters, should they seek to return, must build something worthy with the funds obtained from quitting.

Of course, it could go awry. Rage-quitters might not be sufficiently incentivised by the prospect of greater winnings, choosing instead to abscond with the cash already in the bank. Yet there is at least one upshot to jumping ship with the funds, said Young. “They can get shunned”—the equivalent to a death-blow in Ethereum’s tight-knit community. Soleimani is more rigidly hopeful. “I don’t think people will run off with the smallest chunk possible.”

Eventually, members will be able to buy into Moloch with ERC20 tokens, tying their own tokens’ fortunes to that of the fund. It might even be that their tokens carry specific utility—a tribute in DAI stablecoins, or in Augur REP tokens, for instance.

Still, Moloch is an experiment. Young posits that there might one day be a hard fork of the code, generating a new fund with different incentives—to fund my growing libel lawsuit fund, maybe. Meanwhile Moloch-ers are incentivized to help each other out. Beyond mere money, members can draw on each other’s expertise, all for the good of the fund.

This DAO is not like the last DAO

The idea of a decentralized venture fund will be familiar to those who remember the original DAO, which in 2015 lost $70 million-worth of ETH in a hack that resulted in an acrimonious network split. How will this be any different?

We’re not worried about the historical DAO hack,” Whiteblock’s Lim said. ”Those issues were addressed long ago. Plus, Ameen, William [Bentley de Vogeleare, Moloch’s design chief] are renowned developers in the space, so it’s a good bet security is top of mind.” Even so, he adds, “a risk like this is worth it.”

For Soleimani himself, it’s a matter of simplicity. Less Byzantine, hackable code and fewer features make it less dangerously complicated, he said, adding: “Not everyone can bumrush to join—you have to get voted in by existing members.” But isn’t this itself a threat to Moloch’s vaunted “meritocracy?” Wouldn’t it create a sort of members’ club, where the funds drip down through a tight network of friends?

“The point is that if that’s what happens, everyone else can leave at any time,” says Soleimani. “So [the ability to ragequit] acts as a check on any nepotism. Participation is voluntary 100% of the time.”

Young is less optimistic. ‘If that happens I imagine others stop applying,” he says. “I’d imagine other funds”—by way of a fork—”would emerge.”

What’s in Moloch’s future? First, because members of the Guild are technically pseudonymous—but likely friends to the core members (though this isn’t set in stone)—they will need new means to communicate with one another. “We’re talking about creating a token-based chat system,” Young said. Members would log in via MetaMask or their token address, cryptographically tied to Moloch’s member roster. Only verified members can join the chat.

Or there’s the extra-extra-long shot—building up Moloch as a Runescape-style VR ecosystem, where the rules of the game are mediated through visible, digital avatars, conducting blockchain diplomacy as they stroll the corporate corridors of polygonal office blocks.

Venture capitalism, the video game.