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A Bitcoin developer has developed the “first fully anonymous” on-chain decentralized autonomous organization (DAO). Amir Taaki, a well-known figure in the Bitcoin community, revealed the project in a recent post on X.
Taaki described the DAO as completely invisible on the blockchain, asserting that it operates under the radar in every aspect. The DAO’s structure, treasury, transactions, membership and even voting mechanisms are all designed to be completely untraceable.
“Everything about the DAO is anonymous. DAOs are meant to be political and subversive,” he wrote. “The DAO cannot be seen on-chain. It looks like random data.”
According to Taaki, any smart contract can interact with the DAO, including making payments from its treasury. However, these transactions are designed to reveal nothing about the DAO’s financial status, ensuring that recipients remain anonymous.
DAOs “Must be Anonymous”
Taaki said his vision for anonymous DAOs aligns with his long-standing belief in their potential to reshape the future. He pointed out that DAOs were originally conceived as a revolutionary online model for community mobilization and wealth creation.
We created the world's first and only fully anonymous on-chain DAO with token-weighted voting.
Everything about the DAO is anonymous. DAOs are meant to be political and subversive.
• The DAO cannot be seen on-chain. It's looks like random data.
• The treasury is dark.… pic.twitter.com/9ENLsSCksy— Amir Taaki (@Narodism) August 12, 2024
However, he lamented that this vision has largely stalled, in part due to the centralized and surveillance-heavy nature of today’s internet and tech industries.
To combat these issues, Taaki and his team at DarkFi are focusing on developing anonymous tools for online organizations. DarkFi claims to be the only group working on such tools, which are intended to harness what they see as the true power of cryptocurrency — enabling free, uncensored, and sovereign digital communities.
The announcement has sparked excitement within the crypto community. Nick Almond, CEO of Factory Labs and founder of Factory DAO, praised the concept on X, calling it “cypherpunk AF.”
He noted that the anonymous DAO represents a fundamental privacy building block, which could significantly alter the dynamics of DAO game theory — a framework that seeks to balance decentralization with effective decision-making within DAOs.
AnonDAOs. This is cypherpunk AF.
When @lunar_mining first told me about this design, the phrase that came to mind was “Most Basic DAO”.
It’s a primitive. A privacy building block. My mind is bending with how this changes DAO game theory. Gonna be interesting. https://t.co/9gyNIPgQJF
— drnick (@DrNickA) August 12, 2024
However, DAO governance remains a challenging issue, particularly in the crypto and decentralized finance (DeFi) sectors. The lack of traditional hierarchies can lead to unclear leadership and responsibility, while unequal token distribution may centralize power among a few individuals, undermining the very principles of decentralization.
DAOs Face Legal Challenges Despite Decentralized Nature
While DAOs have emerged as community-driven and largely decentralized entities, they have still faced legal challenges. There have been a number of cases involving DAOs, highlighting the vulnerabilities and potential liabilities that these entities and their members face under existing legal frameworks.
For one, the Ooki DAO case marks one of the earliest examples of legal action against a decentralized entity. In this case, the Commodity Futures Trading Commission (CFTC) brought a lawsuit against Ooki DAO, alleging violations of U.S. commodities laws.
The court ruled that Ooki DAO could be treated as an “unincorporated association” under California law, making it capable of being sued. This decision was groundbreaking as it set a precedent that DAOs could be held liable as legal entities, despite their decentralized structure.
The court also found that the CFTC’s method of serving notice to the DAO through online communication channels was sufficient, further solidifying the DAO’s legal accountability.
The case involving bZx DAO is another example of a critical legal challenge faced by DAOs. After a phishing attack led to the loss of user funds, a class-action lawsuit was filed against the DAO.
The court’s ruling suggested that individual DAO members could be held liable for negligence, particularly if the DAO fails to secure its platform adequately.
The case underscored the risks associated with operating a DAO, especially when not structured as a legal entity such as an LLC, which would typically provide liability protection to its members.
Similarly, in the Sarcuni v. bZerox case, the court expanded on the potential liabilities of DAOs by holding that they could face negligence claims if there is a “special relationship” between the DAO and its users.
The ruling was based on the argument that the DAO had a duty to exercise reasonable care in managing its protocol, particularly given previous security breaches. The court found that the plaintiffs had sufficiently alleged that the DAO’s failure to implement necessary security measures could make it liable for the damages suffered by users.
The Bottom Line
If Bitcoin developer Amir Taaki gets his way with what he claims to be the “first fully anonymous” on-chain DAO, designed to be completely invisible on the blockchain, then it brings political freedom back into the space.
The DAO’s structure prioritizes privacy and anonymity, ensuring that all transactions are untraceable, from its treasury operations to voting mechanisms.
The development comes as DAOs continue to grapple with significant governance challenges, including unclear leadership and the potential centralization of power due to unequal token distribution.
Moreover, recent legal precedents, such as those involving Ooki DAO and bZx DAO, underscore the legal risks DAOs face.
Critics will point out that culpability may well be a necessity in a society, but where the pendulum swings between the two arguments is very much up for debate at this stage.
