Decentralized Autonomous Organizations (DAOs) have become a novel model for structuring and operating business in the decentralized blockchain world. DAOs still face some risks despite their enormous potential, such as the possibility of being taken over by nefarious actors.
Preparing for “hard forks” is one of the fundamental defensive tactics in such situations. This article aims to instruct DAOs on how to successfully prepare for and handle conceivable hard forks.
A “hard fork” in the context of blockchain technology is a significant deviation from the current protocol that results in the creation of a new blockchain version with a different set of rules. Hard forks are a DAO-specific tool for enabling community self-preservation in the face of an existential threat.
Creating a Hard Fork plan
Hard forks should be included in the DAO’s initial strategic planning rather than being an afterthought. The creation of a procedural framework outlining the requirements and steps involved in starting a hard fork is essential. A significant threat to the DAO should be defined in this framework, along with the steps that must be taken to create a new DAO in response.
Developing consensus and involving the community
A hard fork effectively creates a new DAO while handing the original chain over to the bad guys. Gaining support from the community and ensuring participation in the new chain are crucial for the new DAO’s success. Therefore, it is critical to involve and inform the community throughout the entire process. Before starting a hard fork, it is important to establish an open voting system to get the community’s approval.
Ability to use technology
In order to handle the difficulties of starting a hard fork, the team must have the necessary technical knowledge. This could entail getting the new code ready and testing it, organizing the switch to the new blockchain, and making sure that all essential features are seamlessly transferred to the new DAO.
Regulatory and Legal Considerations
Hard forks may also have regulatory and legal repercussions, depending on the area. It is advisable to have legal representation so that the DAO can navigate any potential legal complexities and make sure the hard fork doesn’t break any rules or laws.
The Strategy After Hard Fork
Equally crucial is having a strategic plan for what will happen after the hard fork. This might entail developing tactics to draw new users to the new DAO, rekindle previous alliances and partnerships, and restore the DAO’s standing.
Keep in mind that a hard fork is not a universally applicable solution. It can be a disruptive process and ought to only be used as a last resort after all other precautions have failed.
However, DAOs can guarantee their continuity, safeguard the interests of their community, and uphold the integrity of their operations in the face of potential threats by being well-prepared for such a scenario.
Author: Pooyan Ghamari, Swiss Economist and Specialist in Blockchain Technology
