Slock.it, an internet-of-things and blockchain startup that creates locks that can be opened by anyone sending some money to an address, has released its final draft of the whitepaper for public review. Slock.it, started by Simon Jentzsch, Christoph Jentzsch, and Stephan Tual, is a German startup that first presented its product and idea at Devcon in London last year. Slock.it is built on Ethereum.
Slock.it went public with its plans on structuring the idea and company as a combination of a Decentralized Autonomous Organization (DAO) and a Service Provider to the DAO. The DAO structure will be used for distributed ownership in a process similar to an ICO. The legal company itself will be the first service provider to the DAO, i.e., the DAO hires Slock.it to create locks for it. The voting is decentralized and distributed among the owners, who also share in any revenues made by the DAO. The owners could also vote to be change the service provider of the DAO, if there is competition in the marketplace.
The whitepaper has been long awaited by enthusiasts who see a lot of potential in the idea. There is no set date for when the crowdsale of Slock.it DAO tokens will take place, but it would be after the whitepaper is finalized.
The whitepaper describes the DAO structure as one in which everything happens through a particular service provider. Even though the Slock.it team would be the first service provider, token owners can vote to replace it. The design restricts the DAO to hiring a single service provider, who is then responsible for all the ‘real world interactions’ the DAO has. Token holders (owners) can also float their own proposals for the DAO, which can then be voted on by the other token holders for implementation.
The token sale price would be at a favorable rate in the first two weeks and then gradually increase until it is at a 50% premium from this price until the end of the sale.
The proposed DAO structure also implements an interesting ‘split’ functionality that any number of minority shareholders can vote on during a disagreement. This would create two different DAOs that have split after a particular decision. The idea behind this is to avoid the minority being ‘robbed’ by the majority either due to incompetence or due to malicious actions (51% attack). However, it remains to be seen how this will play out in the real world, since companies usually place a high premium on a majority stake, called a control premium. This provides a strong incentive for a small minority to get together and split from the main DAO to have the control premium in their own DAO, even if they don’t necessarily disagree with the parent DAO. This is especially true if the market for service providers is competitive as opposed to a monopoly or duopoly.
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