The DAO: The Future of Value-Driven Demand

Many tech companies in the Web 2.0 ecosystem have achieved significant business success by using private data as a tool for analysis and as a marketable product. The collection of user data has become a pillar of the Web 2.0 ecosystem, but it has increasingly become an issue for companies. As consumers have become more aware of the use of their private data, this has started to affect the way that they interact with tech companies and their products.

As data breaches have plagued companies like Alibaba, Equifax, and Robinhood, these tech companies have come up against an obstacle in their data-driven strategy: the importance of corporate social responsibility. Consumers pay attention to whether companies act with a sense of responsibility to the public, and it often affects their purchasing decisions. In fact,  71% of consumers state that they prefer to purchase from brands that align with their values. This makes it essential for companies in the tech industry to explore innovative business models that can make money while giving users agency over their personal information.

The development of Web 3.0 technology is still in its early stages, but it may offer the solution to this problem. Decentralized Autonomous Organizations (DAOs), made possible by blockchain and other Web 3.0 technologies, are one possible answer. Each DAO is different, but this organizational structure can give consumers agency over their data while offering better data security and new economic opportunities. In addition, this organizational model is flexible, allowing companies to innovate and meet customers’ changing expectations constantly.

The Issues of Data-Driven Technology

As the internet has evolved from static pages to content generation personalized to each user, companies like Amazon, Google, and most others in the tech industry have come to base their business models around the use of personal data. This has expanded from basic data like name, age, and date of birth to complex data following users' every action and analyzing it to predict their preferences and behavior.

As these data collection and analysis programs have become more widely known, consumers have begun to feel a loss of privacy. In 2018, New York Times columnist Brian X. Chen published an article detailing the disturbing amount of information that Facebook had on him and the myriad ways Facebook and other companies used it.  A 2019 study from Pew Research found that six in ten U.S. adults do not think it is possible to go through daily life without having data collected about them. Furthermore, 70% of Americans say that they are concerned about how companies are using their personal data.

While consumers may find targeted ads unsettling, these are not the most concerning the use of private data. In 2018, it was found that Cambridge Analytica had acquired the personal data of tens of millions of Facebook users, ultimately using that data to build voter profiles for the Trump campaign. In the wake of the scandal, 44% of users aged 18 - 29 deleted their Facebook app in 2017 and 2018, with over a third of those citing the Cambridge Analytica scandal as their reason for doing so.

These scandals and consumer responses have led companies to make changes in their practices. Apple, for one, has heavily advertised its new feature allowing users to deny apps permission to track their data. But just modifying current business models may not be sufficient. In the case of Apple’s new privacy feature, a study by Lockdown Privacy determined that many apps still track users' data without their permission.

The Future of Consumer Decision Making

Given how integral data collection and analysis is to the Web 2.0 ecosystem, it will be difficult for companies to take meaningful privacy measures while still keeping their current business models. This is where Web 3.0 offers a solution. Web 3.0 covers a variety of technologies for decentralization, blockchain, and token-based economics, promising an entirely new iteration of the internet.

One solution to the lack of consumer agency lies in blockchain technology, specifically DAOs. In a DAO, anyone can gain membership by buying the organization’s tokens. Tokens can give users governance rights, membership, and other benefits. Each member has a vote and can be active in determining the organization’s actions, policies, and structures.

Unlike current decision-making structures, which rely on legal contracts and power hierarchies, the smart contracts essential to DAOs ensure each member’s rights and uphold decisions made by the group. They also ensure transparency and data security throughout the organization.

In this Web 3.0 ecosystem, large platforms like Facebook and Airbnb no longer control the landscape. This decentralized structure gives control back to the users, allowing them to participate and control their data. Consumers’ newfound decision-making power can also help them create communities and businesses that align with their values.

Xeni: DAO in the Travel Industry

The benefits of the DAO can be seen in the travel industry, a space where buyers frequently relinquish large amounts of personal data to several vendors. In booking just one trip, travelers may have to share their information with travel selling platforms, airlines, hotels, rental car companies, and tour agencies. This often includes sensitive data like passport numbers and other identifying information.

Xeni, one of the travel platforms providing software infrastructure to travel inventory and professionals, is pioneering the DAO to address the lack of consumer agency in the travel industry. Although the company does not sell directly to consumers, travellers will have the opportunity to be members of the DAO and thus have a say in the company’s governing decisions. This is essential since consumers will use Xeni’s service, entering their private data into the software. With the Xeni DAO's transparency, sellers and consumers alike can ensure they buy from a platform that shares their values.

One of the major advantages that Xeni has over platforms like Expedia or Google is that its DAO allows users full control over their data. User data is stored on a decentralized ledger, making it practically impervious to data breaches. In addition, DAO membership will allow users to monetize their data rather than having it taken by a third party. The DAO will also allow travel sellers to influence the costs, profits, and structures of the organization.

In addition to providing greater consumer agency, Xeni’s DAO is working to create an industry where all participants have agency and drive demand together. This can significantly increase the industry’s efficiency as vendors, distributors, travel sellers, and customers work together to create companies that work for all of them.

While today’s internet users have their activity directed by large corporations, the users of the future will be participants in shaping the world around them. With more transparent DAOs, users will have full control over their data and how it is monetized. They will also be able to buy from companies that share their values and participate in shaping the future of those companies.