Hackernoon logoDecentralized Autonomous Organization - The Future of Management for Agriculture Sector by@sammy.exodus

Decentralized Autonomous Organization - The Future of Management for Agriculture Sector

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@sammy.exodusRomi Kumar

Socially awkward Introvert— A writer with always a story in mind.

Businesses, to stand out from each other, are coming out with different blockchain approaches targeting different sectors. Blockchain initially hit the financial market when it was introduced, followed by data management, software development and more. 
A few businesses took unconventional ways and entered unexplored arenas like fashion, health and agriculture by introducing a reasonably good but less opted system that is DAO (Decentralized Autonomous Organization).

What is DAO

DAO is a unique concept that took a hint from Bitcoin to operate businesses without a hierarchical management system. In layman’s term, its a smart contract running an intelligent algorithm that can carry out decisions based on the information and without intervention or presence of traditional management.
Since no single individual or group of individuals have control over the operations, the process remains unaffected in the wake of any structural failure, thanks to its decentralized nature.


On September 7, 2013, Daniel Larimer published an article proposing the DAO concept. It was in 2015 when Ethereum launched, the actual enabling of DAO happened since ethereum blockchain met Turing complete platform.
The concept didn’t meet the success theorists anticipated, and it had few significant drawbacks, most blockchain companies kept a distance from it. The project with high hopes met a devastating end with experts calling it more of a failing attempt.

Problem with the DAO

The biggest problem with DAO was its rigidity. Meaning the unstoppable code once deployed on ethereum blockchain network could pose a security threat because once it is let loose, no one could change the code. The drawback is subjective: In some cases, it would prevent tampering. But, other times if someone with malicious intent finds a flaw or vulnerability, he can exploit it for personal gains.
There has been a case of exploitation with The DAO where hackers found a bug, and drained all the funds slowly and those who became aware of this attack couldn’t do anything but watch.
Other small but concerning matters included taxation and liability. How will the taxes be done? Do the members account for their part based on the shares they own or the company launching DAO will take the accountability.

The Latest Use Cases of DAO

The very first implementer of DAO, Dash earlier was known as Darkcoin or Xcoin. It was run by a set of masternodes that helped achieve faster and untraceable transactions. Launched in January 2014 by Evan Duffield, Dash was initially known as Xcoin.
The altcoin witnessed lots of speculation and when the coin got renamed to Darkcoin, the press perceived the coin use in black market or dark net markets. In 2015, a new name was given to Darkcoin, it was DASH (Digital Cash). Dash picked up a little speed and become sustainable enough to fund ASU, a blockchain research lab.
By April 2018, Dash had the market capital of $4.3 billion with rankings in the top 12 cryptocurrencies. DAO was effective here but wasn’t making a significant difference.


Launched in 2016, The DAO was some sort of decentralized VC fund directed by investors. The idea here was to provide a business model to both commercial and non profit enterprises. The model was structured on ethereum blockchain network and could function without any board members or directors. 
The DAO held a token sale for crowdfunding and ended up becoming the largest crowdfunding campaign ever. Initially, everything seemed fine until one fateful day they saw one of the first attacks on DAO where attackers siphoned one third of their funds while they sat duck and watched. However, they managed to restore the funds virtually back to the original contract. At present, The DAO has over 18000 stakeholders and digital asset (Ethereum) worth $11.5 million. The idea didn’t fly much higher therefore nobody called it a successful attempt.
The most recent implementer of DAO is UnionChain. Though, they did it in the agricultural sector. The whole idea behind incorporating the blockchain based DAO business model is to streamline scattered processes and improvise. UNION is Deflationary token with its economic model having three Pillars: 
  • The economic model is abided by Metacalf’s law: meaning liquidity value + Dependency on real economy = (Network)Growth.
  • Activities by the community members get rewarded. 
  • DAO is issued an internal currency and is linked for the enterprises credibility.
Since the model is for community, by community and of community, there’s a need to reward the community organization and to do that, a completely refreshed mining model has been adopted, meaning, every node contributor receives a reward. UnionChain plans to use IDO (Initial Digital Offerings) to get funding and has put 1 million Union tokens up for grabs on ELLIPAL.
As UnionChain, too, is based on Ethereum blockchain model, the same threat that hit The DAO lurks in the shadow.

Highlighting Industry-Wide Problems in Agricultural Sector

Food quality and its nutritional value is one of the leading social concerns at the moment and to keep everything in check Internet of Things technology was introduced. Only, very few give attention to details like ‘long and complicated supply chain’ which causes lack of proper information, variable storage and inflated prices, bad overall management and even fraud.
The blockchain technology for anti-counterfeiting and traceability is useful for managing the process, but what about the origin? 
Next problem is production efficiency. Majority of farmers use outdated tech and traditional means. The industry lacks information, technology and automation in the production process, which leads to underutilization of the available resources. A lot of points like large scale plantations, make-to-Order production, localized distribution and development of the industry aren’t even being considered.
Last but not the least problem is the financial management system. The agricultural sector suffers from a lack of inclusive financial institutions. Mostly, people rely on local financial bodies to fulfil their business needs.
The grip of these local organizations is strong hence hard for new entrants to reform. Moreover, the complexity and long build presence make accessing operational data and credit level hard, meaning deprivation of proper financial support.

How DAO Is Implied in Agricultural Sector

Agriculture industry lacks a lot of things, and achieving peak efficiency and managing a sophistication free long supply chain is something it could never achieve. So how DAO will help? DAO takes over the process from Production to consumption.

Why  DAO in Agricultural Industry Might Succeed

Blockchain technology combined with IoT, AI, Cloud computing and big data can achieve better product efficiency, refine the process and introduce a more comprehensive financial support. The complete process becomes trustworthy as the digital identity, digital data and digital vouchers are uploaded on the blockchain network and once uploaded, the information can be altered with.
IoT sensors play a vital role in collecting data which is later analysed by industry experts verify the authenticity of the origin. A node witness module confirms nodes that are trusted, which helps enforce the reward and punishment system. With the help of this mechanism, the industry can fight fraudulent by raising the cost while inspiring those who do it right. All are contributing to a better ecosystem for food safety.
Furthermore, the provided financial solution by blockchain technology transforms bank credit into business trust which is utilized for purchase, production, inventory management while offering more related investments. The decentralized and standardized aspects allow assets to be divided, transferred and traded all the time maintain asset authentication and top most liquidity.
By creating a Decentralized Autonomous Organization using the futuristic technologies; Blockchain, Artificial Intelligence (AI), Cloud computing technology and Big data, a lot of existing problems can be tackled. One of the solutions is to form a DAO which is owned (shares through offerings), managed and utilised by the members. The business model here is to create a distribution mechanism and let the people from production to distribution to trade and consumers benefit from it.
Disclosure: I carry no financial interest in the aforementioned firms. Provided details and brand mention is for informational purposes and is not intended to represent financial and/or legal advice.


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