Embedding DAOs and Smart Contracts for e-Government 3.0

Can governments operate as DAOs in an effort to reduce red-tapism and inefficiency?

According to Milton Friedman, the 1976 Nobel Laureate for economics, the three primary functions of a government are law and order, defence, and contract enforcement.

In the age of instant gratification and lightning-fast processes, we want our governments to also exhibit the features we have come to expect from our gadgets - lightning fast-response, agility and transparency. GenZ and the Web3 brigade is particularly enamoured with the concept of a truly democratic form of participation when it comes to operating large corporations and structures because of DAOs.

Decentralized Autonomous Organizations (DAOs) is a virtual structure that is based on blockchain technology and eradicates centralized control. The DAO is a creation of early May 2016, when a few members of the Ethereum community announced the Genesis DAO, composed of smart contracts on the Ethereum blockchain.

A smart contract is a small program based on blockchain that is used to establish certain conditions or agreements between participants. When the pre-programmed parameters are fulfilled, blockchain contracts execute themselves automatically and the agreement is considered fulfilled.

Smart contracts solve the Principal-Agent conundrum, also known as which occurs in physical organisations where the agent's interests aren't aligned with the principal or primary stakeholders. In DAOs, every members has a stake to decide on a Plan of Action, major decisions and build together for innovation and growth. The rules governing a DAO are encoded into smart contracts by the ideators. And from there, changes can be proposed by any DAO member. How much of a voting power any particular member holds depends on the number of governance tokens that they possess.

I came across this DAO called YIMBY which stands for Yes In My Back Yard. It is a DAO response to a movement that emanated from California called NIMBY – Not in My Back Yard.

YIMBY believes that more construction is the answer to the spike in rising real estate prices and homelessness in California. The NIMBY crowd is fiercely opposing this saying that more construction leads to more traffic and gentrification. In the last five or so years, Yimbys have advocated for and facilitated California laws that expedite housing approvals in cities that fail to meet state-mandated housing goals. They have forced local governments to follow their own zoning laws, and legalized the building of accessory dwelling units—sometimes known as granny flats—for single-family homes statewide.

And now they are experimenting with a DAO in place.

In most use-cases, DAOs have quickly solved the scalability issue. As the community grows they can take progressively more sophisticated actions. For example, YIMBY DAO can fundraise in a fully transparent fashion while retaining anonymity of donors. Members can audit the treasury at anytime to know the status of its funds.

YIMBY DAO has shown us the crucial elements needed to operate a movement via a DAO:

· Consensus: Tools that allow YIMBYs to "agree to disagree"

· Scalability: DAOs can scale to thousands of active members

· Momentum: Harness energies from YIMBY, web3 movements

· Action: Build software tools like the Grow SF Supervisor Map

· Voice: Vote anonymously on non-binding resolution

However, how can DAOs make the jump from movements to e-government structures?

The services we avail from the government online today are still plagued heavily by centralized control and human interference to monitor the process embedded. This adds elements of vulnerability to such a centralized IT infrastructure. Data integrity is compromised due to the system being open to the actions of rogue outsiders as well as insiders. Bureaucratic redtapism and corruption also flourish.

Government DAOs will bring the following benefits:

1. Every government transaction (e.g., transfer of money, property, data, access rights) would be recorded on a public blockchain in order to facilitate transparency and accountability. Smart contracts may be structured to offer varying degrees of access according to hierarchy, interest and competence.

2. A wide range of government procedures would thus be automated, thanks to smart contracts, effectively eliminating errors and the burgeoning paperwork that is associated with traditional human run offices.

3. Improved resource management, efficient auditing, reduced litigation between parties and speeding up contract allocation and execution.

4. Both public and commercial services have been hacked several times in the past through ransomware and denial-of-service attacks. The e-Gov DAO will overcome these security concerns while lowering IT infrastructure costs.

The ultimate goal of Government DAOs is to save governments money, increase efficiency, and reduce risk by establishing a transparent and secure e-government system with minimum cost.

At a time when public trust in government has waned, DAOs and smart contracts might be the way to renew people's confidence in their governments.