Slock.it and The DAO

Slock.it's "The DAO" which is in the process of creation through a token stake presale for investors , can launch a new trustless sharing economy powered by digital locks operated through smart contracts on the blockchain. Image Source: Wikimedia Commons, Willh26 (Own Work), CC-BY SA4.0

Introduction

We recently covered the Digix DAO and pre-sale. In this month, another highly anticipated DAO creation via token sale is in progress. “The DAO” launched by Blockchain+IoT start-up Slock.it, has gone live on the Ethereum blockchain on April 30, 2016. 

Slated to run for 28 days with no cap on token, the sale has raised over 1 million ether or $10 million. “The DAO” which is getting created is a yet to be branded Decentralized Autonomous Organization that can be thought of as a decentralized VC to fund blockchain+IoT applications on the (Ethereum) blockchain.

Slock.it

Slock.it is a German “Blockchain+IoT” solutions start-up firm formed in Germany in 2015 by some of Ethereum project team members and IoT technology evangelists, Simon Jentzsch, Christoph Jentzsch and Stephan Tual.  

Slock stands for Smart,Safe and Secure lock, a physical object with digital identity which can be operated via a smart contract on an Ethereum blockchain. Slock.it has a potentially hugely disruptive smart contracts innovation on their hands. The concept of "slocks" can revolutionize the peer to peer sharing economy that has created intermediary tech unicorns such as Uber and AirBnB. 

At the London Ethereum DevCon in November 2015, the Slock.it team demonstrated a proof of concept of a “slock”. 

The solution illustrated a disintermediated rental contract use case by wirelessly opening a digital smart lock upon executing a payment transaction on Ethereum blockchain. The solution works by assigning a digital identity to the lock, a Decentralized app or dapp on mobile that opens the lock and checks for payment on the Ethereum blockchain. We will cover the details of Slock.it’s smart lock solution and their proposed Ethereum Computer offering in another post. 

By successfully combining IoT and Ethereum blockchain stack, Slock.it proved that a decentralized and trustless sharing economy can be made possible in the digital world, applicable to everything from Uber, AirBnB to renting wi-fi routers, unused spaces all through a secure digital covenant. 

DAO Re-visited

One of Ethereum’s early successes are using the concept of DAO as a crowdfunding channel. As we saw in the Digix DAO posts, a Decentralized Autonomous Organization can be created as a smart contract on the blockchain. 

A DAO creates a virtual decentralized business entity that is governed by its owners. DAO’s are not legal entity at present, as there is no legal or regulatory framework on treatment of DAO in the physical world. Ownership in a DAO is represented through DAO specific digital tokens which are like owner equity on the blockchain. 

Tokens represent voting rights which are in proportion to the owner’s stake (in tokens).  Tokens are purchased in exchange for ether. DAO’s are formed through presale of tokens to raise ether funds which are deployed similar to capital investments and operating expenses for the DAO projects. 

Owners use the token rights to vote on project ideas, investment proposals and participate in governance decisions such as hiring or firing management and execution teams. 

Token holders can earn return on investment in two ways. They can trade their tokens in exchange for ether or other cryptocurrencies or fiat or, earn agreed returns from the DAO earnings. 

Slock.it's DAO Framework

The Digix DAO was centered around development of the Digix gold backed asset exchange platform on Ethereum. 

Slock.it’s DAO  is a framework that has taken a completely disintermediated approach. In the words of Stephen Tual, co-founder of Slock.it, a DAO is a disruptive application to crowdfunding channels such as Kickstarter. The Slock.it team donated a complete DAO framework with source code and all, that anyone can use to build a DAO model for their business. From this framework, the Slock.it team has deployed “The DAO” . 

“The DAO” Construct

“The DAO” funds and token owners will form contractual relationships with any third party service provider that have proposals and smart contract applications for blockchain+IoT use cases. Thus ,“The DAO”, in context to the current pre-sale will work as a blockchain+IoT start-up incubator for the benefit of its members. 

Slock.it have submitted their proposal to be hired as contractor to build their blockchain+IoT offering which includes the Ethereum Computer.Another proposal is coming from a firm, Mobotiq for a solution that will enable fully autonomous self renting electric vehicles. 

In DigixDAO, the owners retained 15% ownership and the right to create their proposals. Special badge holders had the right to vet proposals. 

In “The DAO”, Slock.it has added an oversight layer to prevent a 51% malicious attack through curator roles – these are experts in their field (cryptocurrency, Ethereum, IoT technologies) who will perform the role of reviewing proposals and code and curating the contractor list for the benefit of the DAO. Curators can prevent any one actor from gaining control over all or majority of the DAO funds in interest of their proposal. Curators can also be hired or changed based on voting.

“The DAO” Creation

The Slock.it DAO is currently running from April to May 30, 2016. Under “The DAO” tokens for the DAO are available for public purchase on the Ethereum blockchain for a month’s time. 

Unlike Digix DAO, there is no cap on investment. Instead token presale costs will increase in tiered fashion. Investors in the first two weeks will receive 100 DAO tokens for 1 ether. This amount will go up linearly and eventually rise to 1.5 ether for 100 tokens in the last four days. 

Slock.it The DAO token sale progress on the website daohub.org

At the time of writing the DAO has raised, over 1.4 million ether or $13 million USD within 3 days of opening. Given the explosive potential if the technology takes off, many investors have taken an active interest in the DAO.