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Celebrate the Success Stories of Knowledge Management - 2022 KMWorld Awards

DAOs, NFTs, Web 3.0, and the metaverse: What does it all mean?

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We’ve barely had a chance to fully absorb Web 2.0 and its implications, such as technology-driven social amplification, which we’ve discussed in this column in the past. More recently, we’ve looked at distributed autonomous organizations (DAOs) non-fungible tokens (NFTs), and the like and what they mean as we continue on our path toward the enterprise of the future. Now we have the metaverse to contend with. Welcome to the wild, wonderful world of Web 3.0.

We can look at Web 3.0 as the next decentralization/virtualization stage of the internet. Here, blockchain-linked tokens, including NFTs, are integral to DAOs, which are frequently promoted as a gateway to the metaverse. All of this is not only transforming business and finance but also the arts and entertainment, manufacturing, medicine, education, and just about every other aspect of our society. Even centuries-old JP Morgan Chase, the largest bank in the U.S., has purchased virtual space in Decentraland for its new Onyx Lounge, along with the launch of its new digital coin, JPM Coin.

While this may sound enticing, there are serious implications to consider before hopping on board. The good news is there will be no shortage of opportunities for us as KMers to play an important role. Here are four, just for starters.

1. Investigate successfully launched DAOs by analyzing the governance process, especially for “smart contract” code. Interest in crypto and related asset platforms has boomed. Unfortunately, there hasn’t been enough publicly available scrutiny about new or hidden risks associated with interoperability, cross-platform usefulness, governance, smart contract code, etc., and how to mitigate those risks. For example, despite decentralized aspirations, those who are paying attention to code risks and governance (such as through code audits), and DAO governance in general, rarely disclose the results, or even the basis, of their analysis. That’s because, at least for the moment, there is little incentive for disclosure. As a result, risks, errors, and flaws are often revealed only after significant financial loss has occurred.

KM, with systems engineering at its foundation, could prove invaluable. Code-driven systems and their governance in the crypto environment depend on transparency and useful guidance. As such, we KMers can offer valuable insight derived from decades of experience, including numerous case studies. In addition, not only will there be more bots, there will likely be many more anonymous participants. The challenge will be identifying those who are ultimately responsible for how a DAO operates. Adapting knowledge audit practices to an almost entirely virtual experience will go a long way toward building greater trust and acceptance of DAOs.

2. Investigate how voting is conducted. While DAOs have similar characteristics, they do not all operate or function in the same way. This especially applies to voting rights. Most DAOs are decentralized in name only. Careful analysis will help ensure that the voting and the organization’s goals are in alignment with what participants expect. In the very near future, there should be enough data available from which to derive useful insight into emerging trends and challenges.

For example, people who have purchased NFTs have been invited to participate in artist-related DAOs without fully understanding the implications. For this reason, we might consider helping them set up low-risk DAO projects, or even simulations, in order to develop a better understanding of how it all works. Finance.vote is a DAO that’s building a suite of tools specifically for the purpose of improving DAO governance, voting, decision making, and other functions.

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