PIVX: A Case Study in Working with DAOs (Decentralized Autonomous Organizations)

Mar 22

Work in progress…

One of the first groups I connected with in the blockchain / crypto space was PIVX (Private Instantly Verified Transactions) which focuses on the development of a privacy coin called PIV. What immediately stood out to me (coming from a corporate background) was the social / governing structure around this project. See, the PIVX team isn’t a company or business, it’s a DAO (Decentralized Autonomous Organization).

In order to operate without a corporate hierarchy, DAOs leverage a system of voting to push all facets of the project (i.e. development, marketing, branding, design, etc.) forward. Here, the project’s underlying cryptocurrency (PIV) is what fuels both the voting and the labor. This is how it works…

Like with all blockchain systems, when a new block is formed / added to the chain, the system generates more cryptocurrency as a reward. For PIVX, this happens every minute (for reference, with Bitcoin, it’s every 10 minutes). With PIVX, some of this newly minted PIV is given to the node responsible for compiling all the transactional information that went into that new block. However, the rest of it is reserved to serve as funding for all the human-related work needed to move the project forward. If you do work for the PIVX project, you get paid in PIV.

In order to do work for the PIVX project, you must submit a proposal of the work to the larger DAO. Proposals are voted on by anyone involved in the project. Note, the actual mechanics of who can vote depends on the DAO itself. For example, in some cases, it might just be those running a master node or with the most skin in the game. Anyways, to vote on a proposal, you must spend some of the PIV in your respective wallet. Note, it’s one vote per wallet / person. You can’t essentially buy more votes. If the proposal meets a threshold, then the funds are released to the person who will be carrying out the work.

For me, the proposal I submitted was to create tutorial videos for the PIVX wallet.