Agile governance is an exciting and potentially powerful concept, especially when examined through the lens of smart contracts and distributed ledger systems.

Governance in the earliest times was simple. Rules came from a single leader, you had to obey them, or consequences would be very severe. But if you and your fellow lords could gather sufficient power to challenge the ruler, the laws could be changed to your favour. However, what the peasants wanted usually did not matter.

Eventually, power to change laws was removed from single rulers, until in the modern era the practice of democracy places the power to effect laws in the hands of each individual. This is perhaps the ‘least worst’ governance we can hope for (to paraphrase Winston Churchill). Certain nations enshrine the design of their democracy and its balancing powers in text (Constitutions), ostensibly to prevent any centralisation of control and a return to the autocratic days of old.

This is mirrored to a lesser degree within most companies, where shareholding represents the votes to change management and the way the company is run.

Traditional governance structures that emerged from centuries of human struggle now have to face companies that are far more powerful and adaptable than themselves. Changing laws and regulations to regulate the worst behaviours of companies (pollution, modern slavery, ethical behaviours with personal data, etc.) often takes years of debate and the processes of democratic law-making. Companies can adapt within a board meeting. This is agility.

But there is now a new entrant into the field of governance – the distributed autonomous organisation, or DAO, created from technologies that enable trustless coordination of human effort.

Now what exactly does that taxi application on your phone do, the one that’s next to the other two taxi applications that you sometimes need because the first one doesn’t have any taxis? It’s the interface between you and a marketplace for people who want to sell you a taxi service. But, it’s a marketplace that’s controlled by a small group of executives who control the rules into and out of the market. They take profit to keep running the marketplace, but also to benefit themselves and shareholders. Taxi sharing services, and other digital marketplaces for goods and services such as holiday home rentals, appear to be peer-to-peer interactions, but they are not. Each interaction has the company as an intermediary.

When you examine what is happening, how much of that taxi company’s functionality could be reinvented as a collection of computer algorithms? “If driver has license, allow them to register car into marketplace. If car has insurance, allow car to be offered for hire. If person has arrived, take payment.” Etc. etc. How much of the functioning of these closed marketplaces could be automatically run as shared digital infrastructure for the common good?

What if those 4 taxi apps were coordinated by the same software infrastructure, and the companies behind the apps had to compete in different ways instead? After all, the taxi app companies don’t provide the vehicles, the roads, the phone networks, or the refuelling infrastructure. What if they couldn’t profit through marketplace lock-in either?

So where and how would we run this type of software system? In the pre-blockchain world the answer was simply ‘on a central server’. But who then controls the server, who ensures transparency and trustworthiness of the algorithms, and who ensures the operation is fair even if there is a dispute between very powerful participants?

This is where DAOs change the picture. A DAO is a collection of so-called ‘smart contracts’ deployed on a shared ledger (blockchain). A smart contract is just a software program that is stored on the shared ledger, that executes on the same computer as the shared ledger, and usually writes its outputs back to the shared ledger. It’s the shared ledger that make them so powerful because the software is now ‘under consensus’, as are its inputs and outputs. Consensus means that every computer that is taking part in the network has an identical copy of all of records, and can re-examine all the evidence if a dispute arises.

Computational consensus is an exceptionally powerful concept. It keeps all parties honest, because all copies are identical. It ensures the software can execute faithfully and predictably even under adversarial conditions (e.g. competing taxi drivers each run a computer in the network, but neither can change the execution of the software). The software can be updated, but again only with consensus (human consensus this time).

So we now have a setup where shared taxis services, holiday rentals, municipal waste collection, road maintenance, delivery driving, and many other services could be turned over to be run as fundamental societal infrastructure, organised as DAOs. Their smart contracts could be executed autonomously on a shared ledger infrastructure in a legally compliant manner, to connect buyers to sellers for specific services.

The governance of these DAOs would be turned over to their users and major stakeholders through electronic voting. Imagine local residents being able to vote for their preferred waste collection provider and it happening automatically, or road users passing through an area feeding back to the maintenance team more directly. Payments could even flow to service providers immediately when the DAO’s smart contracts receive verified data.

This would be truly agile governance, built using advanced digital technologies to enable societal interactions and functionalities for the betterment of every stakeholder. Services that can adapt rapidly in response to the public will. There are of course a lot of questions that remain to complete this picture, but the core concepts are not far from the realms of possibility even today.

Much of the infrastructure to underpin this vision of shared digital infrastructure already exists, although in different forms and locations. We have art trading marketplaces based upon smart contracts (digital art in the form of NFTs^[1] ), and legally-compliant smart contracts have been trialled by construction companies in the UK to adjudicate on weather-related disputes with some success^[2] . Some law firms are even envisaging a world where large capital equipment items could be operated through a shared marketplace as a non-profit public good for construction projects^[3] .

The hope is that these types of experiment will continue to take place at greater pace, to understand the concepts that are most publicly acceptable. In particular we must ask the question – are people even ready for DAOs or truly agile governance?