Bitcoin community member Dillon Healy has introduced a new feature called ‘Bitpacs‘ that aims to emulate decentralized autonomous organizations (DAOs) functionality on the Bitcoin blockchain. Bitpacs utilize Bitcoin’s native multisig capabilities combined with specifically crafted transactions to enable on-chain governance similar to Ethereum-based DAOs.
The goal of Bitpacs is to bring the transparent and verifiable governance of DAOs to Bitcoin without requiring any changes to Bitcoin’s protocol. As of February 2024, Ethereum DAOs hold over $35 billion in treasury funds, showing clear demand for on-chain governance.
Bitpacs work by utilizing Bitcoin multisig wallets with publicly auditable participants. Signing thresholds for transactions mandate approval percentages, mimicking a DAO’s voting thresholds. Time constraints can also be applied to voting rounds. Platforms on top of Bitpacs can gate membership based on transparent, on-chain criteria.
This structure allows Bitpacs to enable community-driven funding, decentralized governance, increased trust and collaboration for any organization leveraging them. Specific examples include funding for open-source developers, managing community treasuries and crowdfunding campaigns.
A key benefit of Bitpacs over other DAO implementations is settlement occurs directly on Bitcoin’s base layer. There is no additional protocol or layers that members need to trust. As Bitcoin block space becomes more scarce, Bitpacs could be one of the few DAO structures that warrant base layer settlement.
Overall, Bitpacs showcase Bitcoin’s ability to enable new innovations without changes to Bitcoin’s consensus protocol. Tens of thousands of niche communities are expected to leverage Bitpacs over the coming years as interest in Bitcoin governance solutions continues rising.
Allowing Bitcoin holders to have direct on-chain voting rights for large community treasuries could significantly grow Bitcoin’s governance capabilities. The scalability concerns around fitting all of this voting activity on Bitcoin’s base layer still gives me some pause though.
I think Bitpacs have incredible promise for smaller communities to test out this model of decentralized and transparent governance. Managing billions in treasury funds via Bitpacs anytime soon seems impractical given Bitcoin’s block size limits and average transaction fees. Nonetheless, the concept does showcase that we’re still early in Bitcoin’s overall growth trajectory – there remains so much latent potential to keep unlocking. Even if Bitpacs only gain niche adoption for now, they exemplify the permissionless innovation inherent in Bitcoin that will ultimately help drive mainstream adoption.
These are just my personal thoughts as an enthusiast following Bitcoin governance proposals. I’m very curious to see how quickly niche communities are able to start practically leveraging Bitpacs and whether any modifications or scaling solutions will be necessary if demand ramps up considerably. But at minimum, Bitpacs offer a promising path towards bringing advanced decentralized governance to the original cryptocurrency network.
This new functionality poses some interesting questions – I’m curious to hear perspectives from the broader Bitcoin community. What types of organizations do you think would benefit most from adopting Bitpacs? Should Bitpacs aim for wider adoption or focus on niche use cases? How many transactions could realistically fit on-chain if Bitpacs reach global scale – is base layer settlement sustainable? What other DAO-like capabilities could be emulated with Bitcoin script and smart transaction structuring? Which aspects of governance can’t be replicated without blockchain modifications? What potential impacts – both positive and negative – could widespread Bitpac adoption have on the Bitcoin ecosystem?
