Thursday 14 April 2016

A DAO Split

The question of a DAO split will no doubt be a recurring theme as priorities change and DAOs evolve. This article is written in the context / operational confines of the DAO as gifted to the global community by* as the code exists as of today's date - 14.Apr.2016.
The term 'Split' could simply be a single individual extracting their own investment.. aka 'LeaveDAO', 'ExitDAO', of course it could also be a group of investors opposed to a proposal but nonetheless in simple terms it is a mechanism to extract ones own investment...
  • there is no quorum requirement, so that every token holder has the ability to split into their own DAO.
  • the new DAO has the same code as the original DAO
  • the framework allows both public sale and private sale
As per the White Paper 6.3 the split data structure is used to split the DAO. It contains:
  • splitBalance: The balance of the current DAO minus the proposal deposit at the time of split.
  • totalSupply: The total amount of DAO tokens in existence at the time of the split.
  • rewardToken: The amount of reward tokens owned by the original DAO at the time of split.
  • newDAO: The address of the new DAO contract(0 if not created yet).
These are pretty vanilla and just do what is being ask = 'Split'
Scenario A
you are absent, ill, on holiday, without connectivity, upon return you see a proposal has passed, you do not like it for whatever reason. This could be to do with a new Contractor, a new Curator, the product direction, the cost, the people - whatever factor in the proposal or change in the landscape that concerns you - so you just Split (leave the scene) aka 'ExitDAO', LeaveDAO'
In this Scenario A if you 'Split' aka 'Leave' you are still entitled to receive rewards.

As per section 4. Majority robs minority attack - in the White Paper;-
"..a single token holder is able to both retrieve their remaining portion of ether and maintain their right to any future rewards associated to their previous contribution, as these will be sent to the new DAO automatically. Rewards are defined as any ether received by the DAO generated from products the DAO funded so far.."

As per section 7. Reward Tokens - in the White Paper;-
"..the DAO will send the accumulated rewards to the rewardAccount which is held in the ManagedAccount contract. Then and only then will the token holders of the DAOs that hold reward tokens be able to call the getMyReward function and receive their ether.."

"..this process guarantees that any DAO token holder whose ether was spent building a product will receive the rewards promised to them from that product even if they decide to split from the DAO.."

Points to Note:

Proposals voted on after the split will only pay out rewards to their respective DAO.
a DAO is a living business, failure to monitor proposals could have an adverse impact

Scenario B

Alternatively you could choose to sell your tokens / your share of reward, you may well make a profit.
As per section 2. Concept - in the White Paper;-
"..The ownership of these tokens can be transferred to other accounts using transactions on the Ethereum blockchain, as soon as the funding period is over."

There is an excellent decription of how to split (from a technical viewpoint) available at:

Points to Note:

When you sell your Tokens you are also selling the right to rewards.
* UG are a Blockchain + IoT solutions company registered in Germany
For the definitive version of any code and the implications thereof reference should always be made to

..for the purposes of clarity these are my own personal opinions based upon my own analysis of publicly available documents at this time.

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