Organizations are typically made up of hierarchical stacks of written agreements between people. A company is just a collection of contracts: shareholder agreements, deeds, leases, service provider agreements, employment contracts, customer terms & services, etc. These are bound by a senior set of shared contracts called laws, which are governed by another set of contracts that form the State. The “economy” as a whole is made of networks of stacks contracts. And all of these contracts are enforced by hard jurisdictional courts.

Organizations are made of contracts; The economy is a network of contracts.
Organizations are made of contracts; The economy is a network of contracts.

Smart contracts are digital agreements written in code and enforced by blockchain networks instead of courts. They’re better than paper contracts for the same reasons email beat letters: they’re much faster, cheaper, and scalable. They collapse the cost of coordinating and enforcing agreements much like the Internet cut the marginal cost of communication to near-zero. And just as we can use paper contracts to create organizations, from businesses to governments, we can use smart contracts to create digital organizations called DAOs.

DAOs inherit the properties of their underlying infrastructure, meaning they are open, cheap, fast, and globally scalable like blockchain and internet networks. They are also more efficient than paper-contract organizations because they automate expensive management functions with autonomous software, collapsing management costs by automating key functions with self-enforced software agreements. This is especially powerful when combined with programmable digital assets like cryptocurrencies.

Aragon provides a suite of tools and services for creating and managing digital organizations on the Ethereum blockchain. The Aragon Client abstracts the complexity of DAO smart contracts under a friendly interface. Anyone in the world with an Ethereum wallet can click their way to “incorporating” an Aragon DAO in minutes for less than $10 in ETH.

Leave a Reply