Insider Insight with Bernhard Koch, Founder and CEO Cryptix
As a venture builder in the fintech sector, we build bridges between innovation and effective everyday usability. Thus, it is a given that we closely follow the developments in the DeFi space and the increased use of DAOs. What we recognize, however, is that DAOs intentionally lack substance when it comes to financial regulation:
DAOs are unregulated and legally unaccountable – not the right approach we deem suitable to serve the masses. The widely used “dot-org-constructions” based on non-profit-foundations are mainly used to avoid taxes.
At Cryptix, we have chosen to go the extra mile with a long-term regulated approach. While the main character of a DAO meets our requirements for decentralization and community engagement, it lacks the legal safety and conformity for the masses. Consequently, we have tried to think out of the box, and have successfully created a superior solution: We call it DGO – decentrally governed organization.
Unlike a DAO, a DGO makes use of a legal body: The Societas Cooperativa Europaea (SCE). While an SCE is not a new concept, we’ve discovered that very few are aware of this cooperative form, despite its great number of benefits:
- Legal clarity and compliance by using a real legal entity.
- Responsibility and commitment as the SCE is legally liable.
- DGOs can have a for-profit motive, thereby creating more sustainable and engaging incentive structures for its members, which are ultimately more supportive and loyal to a project.
- An SCE can change residence within EU countries with low hurdles to operate from a jurisdiction where the environment favors innovative approaches of such DGO and its members.
- Voting on governance and strategic decisions can be made accessible and incentivized in a user-friendly mobile app, with absolute transparency and no manipulation due to real on-chain voting. While members, due to its simplicity, won’t even notice they’ve just voted on-chain.
These benefits come with a more complex, time-intensive, pioneering and expensive path. Nevertheless, we are committed to going down this path and thereby creating a never-before-seen and promising concept, born from the connection between SCE and blockchain technology. In our opinion, this is the next logical step towards enabling a non-crypto community to experience the benefits of decentralized finance, and include them in a powerful, transparent and direct way of decision-making in important projects.
Cryptix is already employing the described DGO model and legal construction within one of its projects, a layer-1-blockchain with its own native cryptocurrency, products and complementary services in layer-2. These Layer 2 services will be run by a DGO and involve their users at the enterprise level in a very simple and highly transparent way as never before.
We are excited about this journey and are already receiving stunning feedback for this concept. We will keep a close eye on user participation and learnings to grow and adapt together for the benefit of the community, its members and our society.
Ethereum helped crypto to get to where it is today. Without NFTs, without DeFi, and without the ability to launch tokens in less than 30 minutes, many projects simply would not exist, and the world would be poorer for it.
Ethereum is here to stay. Massive network effects, a large pool of development talent, and a mature tech stack mean it is easier and more sensible to launch on Ethereum than any other blockchain.
The onus is now on Ethereum’s developers to manage a timely upgrade to a more scalable and renewable future without compromising security and uptime — a genuinely colossal feat. The last upgrades to the mainnet have gone off without a hitch and have inspired well-earned confidence in the skills and thoroughness of the contributors.
2022 will be a make-or-break year for Ethereum. Its open, self-reflective culture and the surprisingly far-sighted thought leadership of Vitalik Buterin inspire confidence that it will be its best year yet.
This article is an extract from the 80+ page Scaling Report: Does the Future of Decentralized Finance Still Belong to Ethereum? co-published by the Crypto Research Report and Cointelegraph Consulting, written by ten authors and supported by Arcana, Brave, ANote Music, Radix, Fuse, Cryptix, Casper Labs, Coinfinity, Ambire, BitPanda and CakeDEFI.