The Revolutionary Ethereum#
The journey of Vitalik Buterin, the founder of Ethereum, is a typical story of a genius youth: entering a gifted class in the third grade of elementary school, becoming a research assistant to a renowned cryptography professor in college, and winning the International Olympiad in Informatics. He dropped out of college to create Ethereum, which has become the most successful smart contract platform after Bitcoin, with a market value second only to Bitcoin. Can you find a more fitting portrayal and experience for a genius youth than this?
In 2011, Buterin began writing articles for Bitcoin-related publications, and in 2012, he co-founded Bitcoin Magazine with Mihai Alisie. He was interested in the application of Bitcoin 2.0 and hoped that Bitcoin developers could make modifications to better adapt to the development of decentralized applications (Dapps). However, Bitcoin developers had no intention of doing so. At the end of 2013, as a result of his contemplation, he proposed the concept of Ethereum. The slogan at that time had already become "Cryptocurrency 2.0," to distinguish it from the concept of "Bitcoin 2.0." The Ethereum whitepaper was also written at that time, describing a blockchain that combines consensus protocols and Dapp development platforms. In 2014, he met another key figure, Gavin Wood, who is also the founder of the multi-chain protocol Polkadot. Gavin Wood wrote the Ethereum Yellow Paper, which describes the technical details of Ethereum's implementation.
Ethereum was officially launched in July 2015. After its launch, people in the cryptocurrency community began various experimental developments on Ethereum.
However, Ethereum's success was not as obvious as it seems now. At that time, there were various ideas for blockchain, including not only the now-called DeFi applications but also areas such as supply chain management, medical record management, academic credential verification, social networks, and property ownership management for some countries. There were other projects competing in these fields as well. If Ethereum is considered the "killer app" in the field of blockchain infrastructure, what would be the "killer app" for Dapps? The answer was not clear at that time.
DAO - Decentralized Autonomous Organization#
With the launch of Ethereum, the concept of "smart contracts" gradually emerged. At the same time, the concepts of DAC/DAO (Decentralized Autonomous Cooperation / Decentralized Autonomous Organization) also gained popularity. Due to the negligible difference between these two concepts, DAO will be used to refer to this concept.
DAO (Decentralized Autonomous Organization) means deploying a certain system in the form of code, specifically in the form of smart contracts, on the blockchain. By implementing incentive mechanisms in the form of unquestionable code, people will participate in maintaining the operation of this system due to the existence of these incentive mechanisms. Bitcoin is usually considered the first application of DAO: due to the existence of Bitcoin block rewards and open-source client code, anyone can participate in Bitcoin mining. Once someone quits mining, causing the difficulty to decrease, some miners with profits higher than costs will join in mining. Therefore, the operation of the Bitcoin network becomes a DAO: without any entity - individual or organization - to implement management, thousands of scattered miners maintain the operation of the Bitcoin network through the incentive mechanism of decentralization.
DAO is in contrast to traditional organizations: even in a flat organization, there must be one or several people responsible for the organization, but DAO does not have the concept of a person in charge, and participants come and go freely. This makes DAO a legal challenge because traditional laws and judicial practices do not apply to organizations without a person in charge.
Apart from legal considerations, the characteristics of DAO compared to traditional organizations include no hierarchical structure, all decisions requiring voting and immediate effect, and transparency in all decisions.
Although some of the above characteristics of DAO are still questionable in practice, they illustrate an attempt to achieve autonomous organizations on the blockchain. Although Buterin had already discussed DAO to a considerable extent in 2013, the time when it was truly adopted by a large number of decentralized applications as a governance method still had to wait for the rise of DeFi several years later.