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Transformative Autonomous Organizations

Fluid, anonymous, antifragile organizations
By Stellar Magnet

A decentralized autonomous organization (DAO) is a group organized around a common mission that coordinates through a shared set of rules enforced via blockchain technology and social consensus. Over 4,800 DAOs have been created to date, managing over $7B in assets (based on current market value).

DAOs allow humans to experiment with organization design and economics with greater ease than is the case with traditional fiat-based organizations since code is typically at the core of a DAO. DAOs also have the potential to scale organizations in a way that enables more worker-autonomy and squad wealth.

Nowadays, a DAO in most cases is an organization whose assets are held in a smart contract. This can potentially mean a multisignature wallet with a handful of signers or even a token plutocracy with an Executive Director, the latter of which not being very inspiring for decentralization purists.

Gabriel Shapiro, DAO aficionado and legal hacker, recently published the article Defining Real and Fake DAOs where he states:

“The term ‘DAO’ is applied to so many different organizations that it has become close to meaningless. I aim to correct this.”

Shapiro then goes on to emphasize why DAOs should be decentralized, autonomous, organizations and defines the terms. I definitely appreciate his efforts of trying to nudge the crypto community towards a more ideological definition of what a real DAO is. However, I believe that this ship has unfortunately sailed, and since the term has been appropriated by varying organization forms, I’m comfortable with giving up implanting my vision of what the ideal DAO should look like. The term DAO can be sacrificed to the god of coordination failure: Moloch.

Instead of trying to redirect the DAO classification to be more meaningful, we should invent and propose alternative organizational systems with strong principles that are more specific, ideological, and challenge the status quo - to create schelling points around them.

Introducing TAOs

The Transformative Autonomous Organization, or TAO, can be considered a subclass of a DAO. TAOs don’t yet exist today in practice, but are a newly proposed model of crypto-charged organizing to nudge humanity closer to a world where we minimize dystopia and maximize harmony within the cosmos.

TAOs are transformative. As software-based organizations, their governance is easily transformable and they intend to also transform organizations to become more collaborative as a whole.

TAOs are autonomous. Members of a TAO have the freedom to govern and control its affairs. TAOs intend to use artificial intelligence as a side kick, as opposed to an overlord, to reduce the work week and eventually end labor.

TAOs are organizations. A TAO is an organized body with a meaningful purpose, especially a group, association, or coalition that intends to make the exploitive and restrictive aspects of business and professionalism obsolete.

TAOs are smart contract based organizations that embrace software’s more nimble nature and reject the rigidity of corporate code, tradition, or efficiency. They tap into earlier crypto-anarchist ideals that saw the importance of privacy and encryption in relation to freedom. TAOs enable two communities working together on the same tool, who are seeking the same goal with that tool, to emergently cooperate instead of compete. TAOs take the slower and longer path towards sustainability as opposed to mimicking a shareholder corporation whose north star is maximizing profit. In a TAO, an organization’s power dynamics can better adapt to conflict or adversarial scenarios, changes in the world, and large-scale organizational growth - as they more natively support de facto leadership bodies, mergers, coalitions, and fractalized governance. TAOs aim to be antifragile.

This vision of what a TAO can potentially enable will be a challenging one to materialize into reality. Smart contracts to support a TAO would look much different than the traditional DAO of today. It will be important to define a set of clear foundational elements, which include boundaries and conditions that can be supportive for materializing this vision.

The Six Elements of TAO (τ)


TAOs include six foundational elements, represented by a greek character. These elements are: autonomous adaptivity (α), anonymous functioning (φ), labor dissolution (δ), synergetic coexistence (χ), cosmic stewardship (σ), and autarkic experimentation (ε). The intention is to combine these elements to transform humanity's relationship with work, money, and resources. When an organization exhibits all six of these elements, they would be considered a TAO (τ).

An organization does not need to self-proclaim and call itself a TAO, nor use a singular smart contract framework to create a TAO. A new TAO is born once all six elements exist for an organization. They can be classified as a TAO by a third-party observer, similar to discovering a new celestial object by an astronomer. If an organization only exhibits 5 out of 6 of the elements, then they will not be a TAO (yet). Instead, these organizations may be on a progressive path toward becoming a TAO.

Autonomous Adaptivity (α)

TAOs are highly adaptive organizations, composed of an autonomous membership class that are able to transform their organization's governance to become more hierarchical or more distributed as needed, easily flipping between modes. Organizations may be best off starting with blank slates and allowing new ways of governing to emerge, as opposed to immediately relying on centralized leadership models out of convenience. Establishing and dismantling hierarchies is easy and acceptable, yet always a member decision.

TAOs favor incorruptible democratic, representative, or experimental blended decision-making models over pure token-weighted plutocracies. Voting models that are closer, yet not necessarily equal to, one person, one vote and provide voter anonymity are favored over transparent models weighted based on capital contribution.

"Once the movement no longer clings tenaciously to the ideology of "structurelessness," it is free to develop those forms of organization best suited to its healthy functioning. This does not mean that we should go to the other extreme and blindly imitate the traditional forms of organization. But neither should we blindly reject them all."

-- Jo Freeman

Anonymous Functioning (φ)

TAOs are lunarpunk and have an anonymous core, where by default, a TAO's treasury, spending, participants, and voting activity is anonymous. Anonymity is important for so many reasons, but one can look at past labor movements as an indication. The Industrial Workers of the World (IWW) formed in June 1905 and aimed to improve the working conditions in industrial corporations in the United States. They had anarchist and anarcho-syndicalist roots and were heavily persecuted in many unjustifiable ways, from 1906-1920, with over 300 occasions where members were subjected to arrests, trials, and assaults. The Espionage Act was created in this era, and was used to arrest many IWW members for their anti-war stance. It is now this same law that is being applied to persecute freedom of information fighters like Edward Snowden and Julian Assange.

It's unclear at what point regulators will start passing new laws, where activity one may deem lawful or important for society is something that will be censored or persecuted. Additionally, what is considered legal in the United States or a European country may not be considered legal in China or Egypt. Encryption provides armor, to be cautiously prepared for the worst case scenario.

That is not to say a TAO has to be a fully closed organization that operates like a secret society. A TAO can decide to selectively disclose different aspects of their operations dependending on the use case. Expansive privacy, secrecy, and anonymity may be necessary for some types of TAOs, while others will benefit from revealing leadership groups and treasuries or having open chat channels and forums as the entry point to the community.

"Lunarpunk is more like a forest. A dense cover of encryption protects tribes and offers sanctuary for the persecuted. Wooded groves provide a crucial line of defense. Lunar landscapes are dark. They are also teeming with life."

-- Rachel-Rose O'Leary

Labor Dissolution (δ)

TAOs are interested in building towards a free society where labor has ended. When productivity gains are enabled by advancements in technology, then ideally lives should improve, as opposed to the current dystopia where for example, artificial intelligence is being utilized to impose a new surveillance order as a baseline required to maximize shareholder profits.

This labor dissolution element aims to catalyze a culture where we continuously imagine how a world without labor functions and attempt experiments that will propel societies towards a direction where one’s basic needs are met from birth and one is fully capable of contributing to society.

One of the solution spaces worth exploring in the path towards labor dissolution can be tying the advancement of artificial intelligence within a TAO to an incentivize system that reduces the work week, such as a stateless version of Robert Anton Wilson's RICH Economy. Alternatively, we can reshape property relationships to move away from the status quo of hard-earned income being diverted to extractive landlords and instead imagine what affordable rent-to-own housing networks can look like and subsequently contribute to labor dissolution as well. With the latter approach, the vision is that if one can afford housing more easily, there may be less pressure to participate in the Bullshit Job economy.

"Let us regard wage-work -- as most people do, in fact, regard it -- as a curse, a drag, a nuisance, a barrier that stands between us and what we really want to do. In that case, your job is the disease, and unemployment is the cure."

-- Robert Anton Wilson

Cosmic Stewardship (σ)

TAOs are conscious of their relationship with the resources they extract from the cosmos (Earth and off-Earth), in addition to the labor conditions of their supply chain and also seek to maximize harmony over profits. In the beginning stages of TAO development (such as years 1 - 5), it will be difficult for an individual TAO to do the best they can to maximize harmony, as the legacy systems are both pervasive and entrenched in pollution and slavery and harmonious models are more costly and potentially nonexistant.

Ideally, as more TAOs are created maximizing harmony will become easier and more affordable over time while legacy systems wither into the distance. Nowadays, with virtually all businesses and organizations taking performative steps to signal “sustainability” or “ecological awareness”, guidelines to distinguish sincere methods from greenwashing will be important to determine whether this cosmic stewardship element is active within an organization.

"Our planet is a lonely speck in the great enveloping cosmic dark. In our obscurity, in all this vastness, there is no hint that help will come from elsewhere to save us from ourselves."

-- Carl Sagan

Synergetic Coexistence (χ)

TAOs ultimately strive for synergetic coexistence, and hence, by design, have mechanisms that encourage and facilitate cooperation by joining coalitions or proposing mergers with other TAOs. TAOs will consider merging or joining a coalition with another TAO that has a similar mission rather than competing with them. Mergers are recommended for TAOs operating in similar regions with very similar cultural conditions, whereas coalitions can be composed of TAOs that have a unified mission yet operate in different regions or with different cultural conditions.

Healthy competition is encouraged among early stage TAOs, but mergers or coalitions should be considered once the strengths of each TAO become obvious. The aim is that a cooperative mentality at the network level will enable TAOs to strengthen one another.

"Democratic confederalism is based on grass-roots participation. Its decision-making processes lie with the communities. Higher levels only serve the coordination and implementation of the will of the communities that send their delegates to the general assemblies. For limited space of time they are both mouthpiece and executive institutions. However, the basic power of decision rests with the local grass-roots institutions."

-- Abdullah Öcalan

Autarkic Experimentation (ε)

Autarkic experimentation is the element that describes the relationship between a TAO and society. TAOs embrace being part of an evolving experiment in organization design and alternative economics for the purpose of ultimately contributing toward the creation of parallel societies where dystopia is minimized. Essentially, autarky in this context relates to a TAO being part of a society that is stateless and favors self-administration and self-sufficiency.

There is not yet a “10 point plan” to create a stateless society. Accomplishing this will look different based on local contexts, hence experimentation is an important factor due to the many unknowns in the path towards self-administration. Where appropriate, TAOs will share the results of their experiments in organization design and parallel societies with the broader community to help strengthen the collective knowledge base.

"There can be no separation of the revolutionary process from the revolutionary goal. A society based on self-administration must be achieved by means of self-administration."

-- Murray Bookchin

TAOs have Autonomous Adaptivity

The rest of this paper will focus on the Autonomous Adaptivity (α) element of TAOs. This is definitely not a comprehensive design, as many areas still need to be elaborated on and investigated in practice.

TAOs favor incorruptible, democratic, representative, or experimentally blended decision-making models over pure token-weighted plutocracies. Essentially, decision-making models are most effective when taking into account the needs of all stakeholder groups, while enabling voter anonymity, and are desired over transparent models based on capital contribution alone.

TAOs include two native transformation capabilities that are crucial in the design of autonomously adative TAOs. One is a Structural Transformation which relates to either the fractalization of a TAO into smaller parts or the convergence of multiple TAOs into a unified whole. The other is a Leadership Transformation which relates to making adjustments to how the TAO is governed and led.

An initial voting model for the TAO membership class as well as design ideas over how these two transformations can function are described below.

Anonymous and Democratic-ish Voting

Anonymity is an important property for TAOs and since they are smart contract based organizations, a tradeoff has to be made when it comes to enabling both a strong democracy and strong privacy. Since private and decentralized identity solutions that are resistant to sybil attacks are at a very nascent stage of technological development, TAOs can initially consider governance models based on how much one is actively contributing to the organization.

For example, as one contributes to a TAO, they can earn non-transferable tokens proportional to the value they have provided, which can be determined with planning poker-like processes or by using supplementary tools such as privacy-hardened versions of Coordinape or SourceCred. In this use case, resistance from a sybil attack is based on the limits of human contribution.

One's voting power in a TAO can then be normalized into tiers, such as:

Voting PowerDescription
1xEarned an average of at least x tokens / week over the last (z) months
2xEarned an average of [x+1 to y-1] tokens / week over the last (z) months
3xEarned an average of y or more tokens / week over the last (z) months

With such a model, the level of seniority required to govern at the highest level (3x) would be controlled by coming up with appropriate y and z values that match the appetite of the TAO.

Note: While TAOs are interested in existing within free, parallel societies, this proposed governance model is not recommended for governing a society and its application should be limited in scope towards organizations, as is implied by the "O" in TAO.

Nimble Structural Topology

The structural topology of a TAO is nimble. A TAO can remain simple, where there is only a singular treasury, or it can become more fractalized with Structural Transformation Proposals. Such proposals are required to empower or disempower a sub-TAO or sister-TAO or to join or leave a super-TAO. These topological bodies are described in the next sections.

Members of a TAO can decide to empower sub-TAOs, which are guilds that are responsible for different focus areas/workstreams. There will be at least one smart contract per sub-TAO, enabling management of independent treasuries, yet the origination TAO has control over disbanding the sub-TAO. Sub-TAOs are tightly coupled to a “parent TAO”.

Another formation is that a TAO can decide to empower a sister-TAO which would be similar to a sub-TAO with one main difference: there isn't a revocable treasury, yet what can be revoked is the general affiliation between the two sister TAOs. Usually a sister-TAO can be formed when it is performing a function that can be beneficial to other distinct TAOs.

An individual sub-TAO or sister-TAO has autonomy over how it is governed. For example, the sub-TAO can transform from a member-led direct democracy to an organization where leadership functions are granted to a steward or a set of stewards. A TAO can also include a combination of sub-TAOs and sister-TAOs.

Similar to how easily TAOs can fractalize into smaller parts, they can also just as easily combine into larger parts. TAOs can form mergers, where two distinct and independent TAOs decide to unify their treasury and unify their membership class. TAOs can also form into super-TAOs, which is a "TAO of TAOs" topology, where two or more independent TAOs unify over a common mission or strategy, yet have independent treasuries. The primary governance activities in a super-TAO would be determining the budget allocation and responsibilities per member organization and adding or removing sister organizations.

Ideally, each TAO unit is modular and simple, technically speaking, yet can connect or disconnect with other sub-TAOs, sister-TAOs or super-TAOs in a clean and elegant manner. TAOs are viral, cooperative, and collaborative by design, yet they also allow for relationships to be seamlessly phased out as well.

Adaptable and Antifragile Leadership

TAOs are highly adaptive organizations, composed of an autonomous membership class that are able to transform their organization's leadership to become more hierarchical or more distributed as needed, easily flipping between modes by the creation of Leadership Transformation Proposals. Leadership transformations are only applied at a local level, meaning that if the TAO contains sub-TAOs their leadership will remain unchanged. At the most basic level, potential leadership bodies will include: the membership class, an electable set of multiple stewards, or an electable singular steward.

It’s possible to have more granular design over decision-making and operational processes, such as the activation of sub-TAOs being controlled by a set of multiple stewards, while deactivating sub-TAOs can be the responsibility of the membership class, and publishing official TAO announcements requiring a two-step process of member approval and approval of a singular legal steward.

Stewards within a TAO practice leadership as hospitality. Empowering stewards are to be responsible for a function of the organization and are considered temporary with revocable responsibilities. For instance, once steward(s) are empowered, their power has limits that are ultimately at the mercy of the primary membership class. When there are multiple stewards, they can either be elected based on a liquid model or there can be a more standard election with term lengths. Stewards should be compensated by the TAO.

TAOs will include a Leadership Transformation Frequency parameter, which controls how often a TAO's leadership structure can become transformed. This is a very important parameter, as allowing too frequent transformations can lead towards destabilization, although some TAOs may prefer not setting the parameter to have more optionality.

TAOs also include an Antifragile Mode boolean, which when true, organizations can enact immediate, emergency transformations to an alternative leadership paradigm. To support this, an election proposal will be perpetually open where TAO members can anonymously vote on the de facto stewards that would be empowered should the organization need to immediately transform – whether that is to replace the current steward or select steward(s) in the case the organization is currently led by the membership class. Nobody in the TAO knows who the de facto steward(s) are until the transformation is finalized. De facto steward(s) will be in power for a limited amount of time, which will be specified in the Leadership Transformation Proposal. After such transformations, TAO members reflect on the incident and may prepare proposals for fine-tuning the organization’s longer-term structure or governance, which enforces the TAO's antifragile nature.

Next Steps

These are just some initial thoughts on what a TAO ecosystem can look like. It will be important moving forward to go a bit deeper on all of the elements and to better establish ideological and functional boundaries.

Join the Black Sky Telegram if you have ideas or want to collaborate, or propose changes by editing this page.

Thank you Peter Phillips for providing feedback that helped shape TAO governance, E. Øss for copyediting, UniPuff for help clarifying the language to describe the Six Elements, and Wadada for graphical help.