What’s a DAO? It’s a little bit cryptocurrency, a little message board, a little bit pyramid scheme.

To the true believers, DAOs are the institutional building blocks of “Web 3,” the blockchain-grounded decentralized utopia promoted as the future of the internet by a group of savvy investors, artists, futurists, and developers. Web 3 is “owned by the builders and users, orchestrated with tokens,” and combines “the decentralized, community-governed ethos of Web 1 with the advanced, modern functionality of Web 2,” as a widely circulated Twitter thread by Chris Dixon, the Andreessen Horowitz partner who led the investment in Friends With Benefits, put it.

In this vision, a corporate-controlled, data-siphoning social network like Facebook could be replaced by a quasi-democratic DAO, in which new features and products would be debated and voted on by user-owners, with decisions and regulations transparently enforced by contracts encoded on the blockchain. And unlike with Facebook, user-owners who wanted to quit could easily sell their stake in the DAO on the blockchain, pocketing any profit. (That’s one story, at least. To detractors, Web 3 is at best a colossal waste of energy — literally — and at worst a pyramid scheme, a vast, distributed, utterly transparent scam bent on suckering the greedy and naive with promises of wealth and transformation.)

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