Home Reviews Fractally The Next Generation of DAOs, Everything you Need to Know

Fractally The Next Generation of DAOs, Everything you Need to Know

By combining the majority of useful concepts from the decentralized world into a single project, Fractally jump-starts the original vision presented for EOS in 2017. Using fractal democracy, it unifies a blockchain-powered decentralized exchange, social networking system, and high-performance smart contract platform.

As part of this vision, various lessons have been learned from two blockchain technologies: BitShares and Hive (originally Steem). As a result of the community’s testing in 2021, the founders can now incorporate lessons learned from decentralized governance in the Eden and EOS blockchains.

What is a DAO?

The decentralized nature of cryptocurrencies is one of their major features. In other words, they are not under the control of a single institution, like a government or a central bank, but instead are spread throughout a variety of computers, networks, and nodes. Using this decentralized status, virtual currencies are often able to achieve levels of privacy and security that aren’t available with traditional currencies.

There is no central government control over decentralized autonomous organizations (DAOs), also known as decentralized autonomous corporations (DACs). These organizations are governed by a computer program encoding rules, are often transparent, and are controlled by their members and not affected by the government. To put it another way, they are member-owned communities without a centralized authority. Blockchains are used to record financial transactions and program rules for DAOs.

History of the first DAO

The DAO, intended to raise venture capital, amassed almost US$70 million in Ether (ETH) back in May 2016 and lost US$50 million in cryptocurrency weeks later after it was hacked.

Through a hard fork of the Ethereum blockchain, the hack was reversed, and the money was restored. The original Ethereum chain became Ethereum Classicand was largely ignored by miners and clients.

Several members of the Ethereum community announced at the beginning of May 2016 the creation of The DAO, also known as Genesis DAO. It was built as a smart contract on the Ethereum blockchain. Slock developed the coding framework. Members of the Ethereum community deployed it under “The DAO” name.

During its creation period, anyone could send Ether to a unique wallet address and get DAO tokens on a scale of 1–100. Anyone with a project could pitch it to the community and receive funding from The DAO. All DAO token holders could vote on plans, and those who voted for them would benefit from their success.

There was, however, a loophole in the coding that allowed a hacker to drain funds from The DAO on June 17, 2016. In the first few hours of the attack, 3.6 million ETH (the equivalent of $70m at the time) were taken.

An attacker could request multiple times from the DAO that it give Ether back before it updated its balance in this exploit.

The bug had nothing to do with Ethereum itself but with this one application that was built on Ethereum. There were several flaws in the code of The DAO, and the recursive call exploit was one of them.

What is Fractally?

Fractally provides the essential tools for creating autonomous communities and facilitating their growth. By utilizing these tools, communities are able to create and distribute value that was previously inaccessible.

Music, art, science, independent journalism, charity, and open-source software are all examples of goods that markets do not sufficiently recognize. It is often more profitable to treat illness than cure it, for example. By tapping into the wisdom of the crowd, Fractally develops a consensus on the best way to acknowledge everyone’s contribution.

As a result, an advanced decentralized fractal governance process and a decentralized exchange are fused on a high-performance smart contract platform.

Fractally enables people to reach consensus, build trust, and come together. Their currency, Respect, acts as a currency of trust. As trust grows, a community’s Respect becomes more valuable.

As a native currency, Respect is the Fractally DAO’s collective opinion. It is distributed according to the community’s opinion. Respect isn’t a right for anyone, and the community is free to change its opinion as it pleases (by following a respectable process). Nobody, not even government officials, can alter collective opinion against a community’s will. In HODLing, Respect is not the property of the holder; it is an expression of the community’s opinion, according to the whitepaper.

Joining a Team

The opportunity exists for everyone to be a part of a team of 4 to 12 people and double their Respect. Every team member earns Respect during the weekly consensus meetings, and the distribution of Respect is matched by the team. The teams must also reach a consensus on how they will divide up the budgets among themselves. The team can vote you off if they decide you are not carrying your weight.

With teams, you can build relationships and be recognized for contributions that are difficult to observe by the wider community.

Creating Content

In terms of public goods, sharing information is probably the best example. A database that makes it easy to access the most valuable information benefits us all. Community members vote on the content they like the most, whether it is science, entertainment, investigative journalism, blogging, or cat videos. Your content earns you Respect when it is liked by the community.

With more people liking the content, Respect grows quadratically. As an example, if two people like it, you can earn four respect points, but if three people like it, you can earn nine. You are less likely to earn Respect for content that lacks clear support from the community.

In weekly consensus meetings, your ranking determines the weight of your likes. The voting power of highly respected members of large communities can be 30 times that of the least respected members. Likes are calculated after 48 hours in relation to other content, and the contributor is rewarded accordingly.

Fractal Governance

The team leader must be agreed upon by all team members and can be changed at any time with the approval of two-thirds of the team members.

In a council of 12 team leaders, those who earned the most Respect over the last three months are recognized for their accomplishments. It has full power to change community policies and blockchain-based smart contracts that mediate community interaction.

But first, the teams have a 3-day waiting period before the council of 12 can take any action, during which time they can change their leaders and withdraw their votes.

By leveraging the power of blockchain technology, Fractally gives communities a framework for motivating people to work towards their goals. Building trust and accountability by design is the only way to achieve this.

About Daniel Larimer

Through projects he’s created, Daniel has made significant shifts in the blockchain industry. Dan Larimer has worked on many projects as a developer. He continues to work on the projects he has worked on previously. He enjoys an unmatched level of influence and power in the blockchain industry for this reason.

In addition to his influence, he has reaped massive returns through his contribution to the crypto-verse. Steemit, BitShares, EOS tokens, and EOS blockchain were founded by him in 2014, 2016, and 2017, respectively. Furthermore, Dan serves as the chief technology officer of block.one, which owns EOS. The company that he founded with his father, Cryptonomex, Inc., is also headed by Dan. In the blockchain industry, Dan Larimer is extremely active as well as immense. Dan also contributes to blockchain conferences in addition to being a developer. He now contributes mainly to the Fractally DAO.


With fractal governance, decentralized autonomous organizations revert the power pyramid and return value to producers. These organizations are an ideal way for people to join together to produce goods and services that benefit the community that would otherwise be hard or impossible for private, autocratic businesses to provide.

Fractally decentralizes power and taps the wisdom of the crowds using a revolutionary process. A consensus is reached on the relative value of everyone’s contributions through this process. This allows a community to direct its currency toward the most productive members.

Mehdi Zare
I am a young father who always loves to learn. Security and privacy topics are my main interests, and so, blockchain as one of the most strong security and privacy solutions of the modern industry excites me too.
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