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Late last week I stumbled across an article that suggested that OpenAI would best be served to move from a company to a DAO. Naturally, this idea caught my attention since it would result in a monumental shift in corporate America that I am not sure has ever been seen before. Companies previously have done crazy things like moving to non-profits or going private/public. Still, transitioning to a decentralized autonomic organization would be the wildest thing a company would have done by leaps and bounds. This doesn't even touch on the mountain of issues that couple occur if this were to take place and there is an easy reason underlying the issues.
DAOs have a lot of growing up to do.
To be clear I honestly do think that DAOs are a fantastic thing on paper and really could be a disruptive force in the future. However, with some of what we have seen in DAOs running now, there are a ton of landmines that something like OpenAI would run into and a true counterbalance or way to fight back/prevent these issues has yet to emerge. Since I do not believe that it would be constructive to just list off all of the issues that this hypothetical DAO would/could run into I want to highlight/hit on the ones I would argue is the biggest and most important.
Reason One
Right now with AI being such a hot topic, it might sound like a great thing if they were to pivot to a DAO system of governance. It would drive a lot of attention to the DAO structure and could finally get the structure idea widespread credibility. After all, there are a lot of people who believe in the whole idea of these founders/startup execs being "the smartest people in the room" even though that is often far from the case. Instead of attracting positive comments and acceptance though I truly think it would do the exact opposite.
Regulators and the government have already begun doing what they love to do and that is launch investigation and inquires into not only OpenAI but really AI in general. This honestly is following the footsteps of what crypto has been and continues to go through and as we can see it is not something that is wrapped up quickly or doesn't cost an arm and a leg in resources (both time and money). In part because crypto has been dealing with regulators I have seen people argue that pairing with OpenAI would only help pool resources especially in a DAO but they are missing something from this idea.
For the most part DAOs have dodged the investigations and inquires. Only recently have we seen certain decentralized products even get investigated with SushiSwap being the biggest name I can think of. In the DAO space the textbook case right now would arguably fall to the DAO that took the idea mainstream and that is ConstitutionDAO. They were the group that was trying to buy one of the original physical copies of the US Consitution. That was the whole purpose of the DAO and they even championed that users would be able to get their money back. When this failed the DAO fell into chaos/disarray since it only had one goal, failed that goal, and due to the changes in crypto prices getting your money back was a whole issue still getting hashed out.
While eventually, I would expect this to sort itself out right now it is not. DAOs mature and become more established and show the ability to withstand the test of time then I could definitely see this being an option for various companies and organizations but we are not there yet.
Reason Two
Plain and simple the SEC would get involved because OpenAI has acted like a company and so they would treat its tokens as securities which would only trigger a cascading effect in the crypto space as Gary Gensler does his bull in a China cabinet routine smashing up everything.
Reason Three
Let's say that the first two issues are addressed and there is no longer anything holding back OpenAI from transitioning to a DAO there is still something that could rapidly become a problem. That would be even with the perfect airdrop/token distribution that OpenAI would once again become centralized and a few groups would more or less take over the governance of the DAO. Whales don't automatically have to be a bad thing but sometimes whales can whale to far and accumulate way to much. This can happen in DeFi as well with Convex Finanace controlling an extremely large amount of the Curve Finance governance tokens CRV. The result is Convex having a huge say in Curve's votes and the same thing could easily happen in an exciting product like OpenAI.
People who receive the tokens could easily be swayed to cash out driving down the price and allowing wealthy individuals to swoop in and rapidly accumulate large positions. As far as I know DAOs have not really come up with a solid solution to this issue as most have not dealt with it. Those that have have not dealt with it very well which shows how the need to address this is still unmet. The last thing I think anyone wants is this to turn into DAO in name only because the majority of voting power is concentrated in just a few hands.
Final Thoughts
I am sure that in due time these issues will be addressed and companies could start to decide that this is a solid and good approach. Right now though DAOs are just not mature enough and still have many questions to answer before they do. As the saying goes it will all happen in due time the time is just not now.
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