Video

ShapeShift decentralizes as a DAO, how will it work?

DeFi - August 19, 2021

Video Overview

ShapeShift, one of the oldest cryptocurrency exchanges in the US decided to turn into a DAO. How will this play out and will other companies follow suit? In this video, we break down what this transition means for the crypto space, and if this is something that other private companies will follow.

ShapeShift was one of the first platforms which allowed transfer between cryptos. The exchange is run by Erik Voorhees, one of the earliest advocates of Bitcoin and digital assets. This move to decentralize would mean ShapeShift becomes a DAO and turns their entire code into open-source material.

How will Shapeshift’s transition into a DAO work?

There are two ways this process will play out. The first part is code. This code will be made open source so anyone can build on top of it. This will be made into application programming interfaces (APIs) to make it more community-oriented. The second is on governance. This would result in ShapeShift dismantling the original hierarchy of a corporation. Every member of ShapeShift, whether customer, community or employee, will receive FOX tokens through airdrops. These tokens will be utilized for governance.

The pro with governance through a DAO is everyone participates in the governance. No decision is taken without community approval. The con with governance through a DAO is it creates rule by the majority. At times, this majority is created through a popularity contest. Large or popular token holders will dictate what the protocol does and which direction it takes. 

What this does is it takes away from the vision of an owner, a founder, or a small founding team. Think of companies led by Steve Jobs, Elon Musk, and more. These companies were driven by the vision of one man.

Next, we deal with treasury management, which is a complicated affair. This will be made more complicated when people who don’t know treasury management are involved. ShapeShift already has money, users, and a company to manage it all. For it to move in the other direction, from centralized to decentralized will test how it manages these things.

Will other companies follow suit? We’ll have to wait and see.

Enjoy the video!

Please subscribe to get more videos like this and leave a comment on what you’d like us to discuss next.

Learn about crypto investing: https://www.interaxisacademy.com/

Get Certified as a Digital Asset Advisor: https://www.certifieddigital.org/

Find us at:

Twitter – https://twitter.com/Interaxis8

Website – https://www.interaxis.io/

Email – [email protected]