Blockchain Startup Harmony has Proven that Successful DAOs are Possible
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Oct. 29, 2019
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Harmony (ONE), a blockchain built to solve the riddle of delivering both scalability and decentralization at no expense of one another, has become one of the most prominent projects of 2019, and they've just created a new value for their token by using a program called Social Mining, in partnership with DAO Maker.

What is DAO Maker

DAO Maker is the creator of Social Mining, which is a plug-and-use software any tokenized project can apply to create a DAO powered by its own token. DAO is a decentralized autonomous organization and the embodiment of value creation without the controls of central power. To maximize output, Harmony is integrating DAO Maker’s Social Mining to launch a user-centric DAO powered by the ONE token.

The concept of the DAO originated with an Ethereum project that was meant to operate as a community-managed fund. However, the DAO’s smart contract was hacked, leading to the theft of a major portion of all circulating Ethereum. Subsequently, the concept of a DAO became a utopian goal that projects sought but never really executed. DAO Maker is making it possible for projects to launch DAOs within moments, and enabling the community to instantly take control of a project’s future.

Introduction to Social Mining

Social Mining is undoubtedly becoming popular among the industry’s leading projects. Prior to Harmony, Social Mining has been a part of LTO Network and Elrond Network, two of the best performing ICO projects of 2019.

Social Mining lets projects create an autonomous society, comprised of community members, that grows a project without the involvement of a team. This is the materialization of true decentralization. Social Mining makes this possible by allowing projects to enable a fixed payment distribution to the entire DAO, on a periodic basis. The most valuable yet underleveraged assets, the community, will be rewarded on the value-add to their ecosystem. However, the project’s founding team only has to initiate a payment distribution, and then Social Mining comes into effect to let the community handle everything else.

Project token holders do whatever they can to help the project, be it through exposure, technical development, or even business networking. The community becomes a decentralized workforce taking the project forward. Then, token holders validate each others’ work to ensure the system is not being abused and that the most effective work is being rewarded. Token ownership achieves a new utility and that is power to validate and direct the growth of the project.

Harmony is the newest project to work with DAO Maker’s team to launch a DAO.

How Social Mining Solves the Problem of "Free Riders"

Free riders are those who get benefited, by doing nothing or very little. In the early days of blockchain technology, the space was home to highly talented developers and entrepreneurs. Whenever these individuals joined a community, they sought to grow the underlying project. They were motivated to reach certain goals to ensure their ownership in the project would become more valuable.

Today, however, most projects are home to bounty hunters and flip traders, who seek nothing but instant returns to subsequently dump the tokens. These Free Riders have little-to-no focus on the longevity of a project.

How Social Mining Fixes the Problem

First, Social Mining is only open to stakeholders and therefore immediately removes those who seek nothing but handouts.

Social Mining allows stakeholders to validate other stakeholders’ work. This opt-in feature ensures only people genuinely interested in the success of the project are rewarded. Typically, when a person contributed to a system, everyone benefited equally. Now, Social Mining aims to encourage stakeholders to go from a passive investors to active ones by creating a double reward for contributing to the ecosystem.

Now only do contributions lead to growth of token’s demand, but they also lead to a payment from the DAO. If someone contributes to the system, he will get rewarded but so will all other stakeholders as the contribution will lead to a growth in use of their token holding. On the other hand, if a stakeholder does not want to add any value to the system, they are subsequently a Free Rider. While Free Riding stakeholders will benefit from others’ contributions from the growth in token demand, they will not receive payments from the DAO.

In Harmony’s case, Harmony allocates ONE tokens to pay for and stimulate community efforts. Every month at least $10,000 worth of ONE token will be paid to community members who add value to the Harmony Ecosystem.

However, Harmony’s team does not dictate how these tokens are distributed in the form of one-time rewards, the community itself decides how those tokens will be distributed based on the value of other’s contributions and do so on a continuous basis. This leads to a powerful new utility to the ONE token that makes large stakeholders opt-in with even more focus on the long-term.

The Harmony DAO involves validation power driven by many features, one of which is token holding. Large token holders, having the greatest interest in the success of the project, get a higher skew of work validation power. Additionally, high-skilled users who have dedicated considerable time and effort to the project also get a high skew of validation power. In both cases, token holders are given a greater incentive, more than just money, to hold on to tokens. Large token holders are given a unique power which they seek to retain, and high skilled workers dedicate time and effort to the qualification for high validation power, and thus are not willing to move away from it so easily.

Giving the Power to ONE Holders and Social Miners

Harmony DAO participants will have immediate power. They will be paid for creating improving Harmony blockchain’s marketing, business, and development, and they will also have the power to either approve payment or deny payment to others for their contributions. In other words, Social Mining creates a system where the participating community members recognize the value of the work done by other token holders, and then pay them based on the value they provide to Harmony. These payments are sourced from Harmony itself.

While stakeholders do not give up their own tokens, it’s in their best interest to approve payments for only those that bring more value to the entire Harmony ecosystem than they receive back as an individual. This way, the token dilution is more than made up for by allowing dilution to only reward the work that matters.

“Social Mining turns the typical community of passive investors into a decentralized engine of systematic value addition, commanded by the community itself. Beyond that, it instantly delivers a 100% increase to a token’s utility by letting it fuel a DAO. Large token holders are given a high opportunity cost for exits, as not only do they lose the chance at potential future successes of the project, but also the power over a large mass of individuals. This is an incredible form of gamification.

Simultaneously, the smaller holders of a project, who used to not see much value in adding to the project’s growth as their efforts used to have an extreme disproportionate benefit to large holders than themselves, can now recognize that they are directly paid by the DAO for the growth they create. Social Mining offers something to every segment of a project’s community.” — Hatu, CMO of DAO Maker

Developers, marketers, business professionals, and virtually any other highly skilled members of a project can now deliver decentralized growth to blockchain developments and then be remunerated for it once the community validates the work—if the project uses Social Mining.

The Harmony DAO is live and gives talented individuals a unique opportunity to grow a leading blockchain project while also being paid for it, without having to make official commitments to any team.

Harmony's ONE tokens can be traded on Binance, the world's largest cryptocurrency exchange.

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