Beyond the Ledger: Why Blockchain and DAOs Fall Short for Complex Economic Organizations, and How OVNs Point the Way Forward

Synthesized with AI from documents developed by Tiberius Brastaviceanu, with the help of Sacha Pignot

---

Introduction: The Global Economic Transition

We are witnessing a profound transformation in the architecture of global economic activity. The traditional capitalist system, rooted in firm hierarchies, proprietary assets, and market-based transactions, is giving way to a networked economy. This emergent configuration is typified by commons-based peer production (CBPP), open source collaboration, distributed knowledge networks, and peer-to-peer (p2p) collaboration. Examples abound: permissionless blockchains, distributed scientific research initiatives, decentralized media platforms, and open educational resources.

In parallel, the digital infrastructures enabling these formations are evolving. Initially celebrated as a breakthrough in decentralized coordination, blockchain technologies and Decentralized Autonomous Organizations (DAOs) are revealing inherent limitations when tasked with modeling complex economic processes and sustaining full-fledged economic organizations. In contrast, newer agent-centric approaches—such as the Open Value Network (OVN) model built on Resource-Event-Agent (REA) accounting, the Valueflows vocabulary, hREA logic, and Holochain as a distributed substrate—are showing greater promise.

This blog post draws from the experience of real-world p2p production networks such as Sensorica, and analyzes the foundational limitations of blockchain/DAO-based systems while advocating for a hybrid architecture of economic coordination.

---

The Limitations of Blockchain and DAOs for Complex Economic Processes

1. Smart Contracts: Deterministic, Rigid, and Passive

Smart contracts are finite state machines. While they enable conditional logic and self-enforcing agreements, they suffer from key constraints:

• Lack of agency: Smart contracts cannot initiate actions; they passively await external transactions.
• No adaptivity: They cannot learn or evolve in response to new contexts.
• Low expressiveness: They model narrow rule-based interactions but cannot handle rich workflows, commitments, or evolving plans.
• High operational cost: Every interaction incurs gas fees, limiting granularity and frequency of updates.

Thus, smart contracts are excellent for certain trustless operations (e.g., escrows, auctions) but fail to capture the dynamics of real-world production, collaboration, and adaptive planning.

2. DAOs: Governance Without Production

DAOs were designed to manage funds and collective decisions. While conceptually intriguing, most DAOs reduce governance to token-weighted voting and budget allocation. They lack:

• A production grammar: DAOs manage treasuries, but not the economic processes that generate and transform valuables.
• Contextual roles and coordination: All agents are flattened to token holders; there is no representation of task-specific expertise or social embeddedness.
• Traceability of contributions: There is no natively supported way to account for who contributed what, how, and with what impact.

In essence, DAOs are governance shells with limited economic depth. They serve as digital cooperatives but do not embody operational infrastructures for economic activity.

3. Blockchain Architecture: Consensus Bottleneck and Global State

Blockchain relies on a globally shared ledger, secured by consensus. This introduces:

• Scalability issues: All agents must agree on the same state, which limits throughput.
• Privacy limits: All state changes are visible to all participants.
• Poor fit for diverse local contexts: Global rules enforced via consensus do not adapt well to context-sensitive collaboration.

This model is inherently brittle for complex organizations with multi-scale, asynchronous, and context-specific workflows. Moreover, blockchain-based architectures are grounded in a low-level computational model (deterministic, transactional, state-machine driven) that is ill-suited for expressing complex, adaptive, multi-agent economic systems. In formal terms, blockchains are positioned near the low end of a spectrum of computational expressivity. At best, they enable finite state automation with strict constraints on complexity, timing, and semantic nuance.

---

The OVN Alternative: A Better Model for Complex Economic Organizations

The OVN model, in contrast to DAOs, emerges from a different epistemology. It begins with a high-level computational model—inspired by relational, agent-based, and process-centric modeling paradigms. According to the computational model taxonomy, blockchain-based systems score low in agency, adaptivity, composability, and reflexivity, while the Valueflows + hREA + Holochain stack achieves high scores across all of these dimensions.

1. Economic Grammar Based on REA (Resources, Events, Agents)

Rather than model transactions, the REA ontology models the economic processes involved in the generation and transformation of valuables:

• Resources: Tangible and intangible inputs/outputs.
• Events: Actions that change the state or availability of resources.
• Agents: Participants that perform or are affected by events.

This triad allows us to describe flows of contributions, transformations, dependencies, and engagement in economic processes in a way that is semantically rich and computation-friendly.

2. Valueflows: A Shared Vocabulary for Distributed Economic Activity

Valueflows is an open vocabulary that extends REA for networked, post-market economies. It enables:

• Semantic interoperability: Different agents and systems can coordinate using a shared language.
• Contribution accounting: Track who did what, how, and in what context.
• Workflow modeling: Represent plans, intents, offers, and actual events.

Importantly, Sensorica works with a triadic model of value, inspired by Peirce's semiotic triangle. In this view, value is not a property or substance but a relation among:

• A valuable (a material or immaterial reality),
• A token (which can be money or any symbol representing the valuable),
• A valuation, which is partly subjective and partly inter-subjective, mediated by social and cultural processes.

This model supports non-monetary forms of exchange, such as barter, mutual credit, or symbolic recognition, and can also extend to non-human living systems.

3. hREA: Economic Logic Engine

hREA is a modular implementation of Valueflows. It handles:

• Economic event validation
• Consistency of process flows
• Resource tracking and provenance

It enables agents to run autonomous, interoperable, and accountable economic logic locally—without requiring consensus from a global ledger.

4. Holochain: Agent-Centric, Contextual, and Scalable

Unlike blockchain, Holochain:

• Is agent-centric: Each participant maintains their own source chain.
• Supports local validation: Data is validated within shared contexts.
• Avoids global consensus: There's no single state to agree upon.
• Enables fine-grained privacy and contextual governance.

This makes it ideal for heterarchical, fluid, and evolving networks of contributors, such as those found in CBPP or global p2p design networks.

In computational terms, Holochain systems are closer to distributed multi-agent systems with reflexivity, learning, and local memory, akin to high-level adaptive stigmergic environments. This makes them inherently more suited to modeling real-world economic ecosystems.

---

Sensorica: A Case in Point

Sensorica is a pioneer OVN experimenting with open hardware, contribution accounting, and stigmergic coordination. It:

• Tracks contributions across roles (engineering, documentation, outreach)
• Attributes valuations to contributions through social processes
• Allocates shares of generated income based on these valuations
• Coordinates distributed contributors asynchronously

This kind of accounting and coordination cannot be achieved only using smart contracts or DAOs without major workarounds or reliance on centralized, off-chain infrastructure. But blockchains with smart contract capabilities (ex. Ethereum and Cardano) offer stable and secure transactional functionality. Sensorica is currently transitioning from a Web2 REA-based infrastructure to a native p2p economic network, which uses Valueflows, hREA, and Holochain to build the stigmergic digital economic environment, and smart contract capable blockchain technologies (ex. Ethereum and Cardano) to build the a secure transaction layer (for currency, credencials, certification, etc.). This shift is intended to enable greater scale, autonomy, and context-awareness. See PEP Master venture for example.

---

Conclusion: Toward a Post-Market, Networked Economy

Blockchain and DAOs were necessary steps in the decentralization of economic infrastructure. But their computational models are too limited to support the full complexity of economic life. As we transition from a market-based economy to a networked, peer-driven economy, we need:

• Richer representations of production
• Fluid, role-based coordination
• Context-aware decision-making
• Interoperable semantic infrastructures

Open Value Networks, built on REA + Valueflows + hREA + Holochain and using Blockchain for transactions offer a realistic and field-tested path forward. They model economic processes, not just transactions or governance. They reflect the network logic of contemporary collaboration and can sustain resilient, open, and adaptive institutions.

For economists interested in designing the next generation of economic infrastructure, it's time to look beyond the ledger.

---

References

• Computational Model
• DAO vs OVN
• Sensorica's Next Gen. Infrastructure development efforts
• Value
• Sensorica

---

You can contribute to Sensorica's efforts to build p2p economic infrastructure. 

Integrating Holochain, Mattereum and OVN: A Framework for Peer Production

From Happenings Community: 

Sacha Pignot has kindly shared the latest blog from his own Alternef Digital Garden with us at hAppenings.community this week! Sacha introduces one of his visionary projects: a revolutionary convergence of decentralizing technologies; Holochain, hREA, and Mattereum. He walks us through the key elements of his integration, exploring how these complementary tools empower resilient, sustainable economic models that prioritise cooperation and equitable value distribution. Sacha is a full-stack developer with a deep knowledge of decentralizing tech, peer-to-peer networks and a passion for education and travel. Amongst the projects he’s contributing his talents to is hAppenings.community’s Requests & Offers HC/MVP. We’ll be sharing more about our progress in the coming months.

Read more here... 

How Sensorica OVN handles material resources

 

Dive into Sensorica's OVN model

 

Next generation food machines and how Sensorica approaches food crisis

 This is still a draft (third version). Come back for the final version, you'll probably be surprised.

 --------------------------------

The irony is that when the proverbial S&!# hits the fan, supply chains are disrupted and some people die of starvation, while being surrounded by an abundance of local food sources. Our current economy is very well organized to maximize wealth generation, which means a balance between fulfilling desires and needs of the population, while making money. But at the same time, our economy is unsustainable and fragile. It relies on a web of centralized systems, designed during the industrial era, which are themselves fragile. If one of them fails, the others follow. For example, during the 2008 financial crisis people still needed to eat and farmers still possessed the land and the machines to produce food, but the global food market was greatly disrupted. In capitalism, the market is supposed to readjust to fulfill a new need, but that cannot happen fast enough when the economic infrastructure is affected by a crisis. In socialism, or planned economies, the Government is not well suited to deal with complex situations. Food supply chains can be disrupted because of a regional armed conflict, oil price fluctuations, financial system collapse, bad weather conditions, pandemic, to name just a few, without digressing into nuclear and asteroid collisions. The best way to deal with these situations is a mix of button-up and top-down approaches within a commons-based peer production framework.

Store in Venezuela, country with the largest oil reserves.

In normal times, entire populations depended on staples produced by the industrial agriculture. These products are designed to concentrate a lot of nutrients and, in normal times, it makes economic sense to consume them. The paradox is that when access to these products is disrupted, people can starve while being surrounded by an abundance of food. Many indigenous eatable plants grow around us but we have forgotten how to prepare them. I live in Canada and the great majority of food products that are available in groceries are not indigenous. In times of crisis we eat what we find. Are we prepared to process local food sources?

Delicious Romanian nettle soup

Modern technology allows us to more efficiently extract and concentrate nutrients from indigenous plants that are not part of our diet in normal times, as they compete with modern agriculture products.

If one day nettles are the only remaining thing that we can eat we'll need time to learn how to prepare them. To get the equivalent in protein of a steak, one needs to eat a 25Kg stack of nettles. Obviously no one can have that in a single serving. In times of crisis, knowing how to make nettle soup is not enough. We need to learn how to extract and concentrate the protein, and how to cook a delicious meal much like a filly tofu dish. That requires learning time and specialized tools. If it is not in our culture to eat nettles, in normal times it is hard to convince people to learn how to prepare them or to invest in equipment to process them.

How to tap into the latent food capacity and be always prepared for rough times? The solution proposed by Greens for Good, an open venture nurtures within the Sensorica OVN, is a versatile food processor that in normal times can mill corn, extract oil from seeds, make tofu, make noodles and all sorts of other tings, while also being able to process eatable indigenous plants. On top of guaranteeing food security, this technology also makes food more sustainable by expanding our food sources, and by encouraging consumption of plant-based proteins instead of animal protein. This seams like a very ambitious plan, but we are not in uncharted territory.

In recent years, 3D printing has revolutionized fabrication. A 3D printer is a versatile technology that can come in the form of a desktop machine able to make toys, and can be easily scaled to a larger rig that can build an entire house in a single day. Almost anything that we can imagine, of any shape and practically of any type of material can be 3D printed. Sensoricans' plan for food processing is similar to what what 3D printing has done to fabrication.

3D printing was invented in the 80'. The Fused Deposit Modeling (FDM) patent expired in 2009, and marked the beginning of the 3D revolution, with the open source hardware community swarming this technology. Sensorica's economic model builds on the open source mode of innovation, inheriting the same properties of rapid development and viral dissemination. But it adds an economic layer on top of the innovation model to ensure proper dissemination, cultural appropriation and adoption of the new technology, this increasing its impact.

The food processing equivalent of the 3D printer is an extruder. The most familiar representation is the meat grinder. The same design pattern is also used to mince meat, extract juice, extract oil, pattern (make pasta), grinde, and more recently to produce textured vegetableprotein for plant-based meat analogous.

The project was proposed by Joshua Pearce from Michigan Tech University. It is now composed of a diverse group of individuals and organizations (such as academic labs, NGOs, food processing equipment manufacturers, food producers and innovation intermediaries), spanning 5 continents. You can join them on Discord.

 

The idea of the extruder came from the work of Bruce Merlo, who made the connection between a green leaves protein extractor and the equipment used in textured vegetable protein (TVP). Unai Gaztelu from SMART Center Tanzania became very instrumental in guiding the development process close to the need of local communities in developing countries. Alexis Alonso helps conceptualizing the project. Sebastian Klemm from Proofing Future is wordsmithing the project and leads our outreach efforts. Make sure you talk to Mayssam Daaboul if you desire to join us and formalize a partnership.  

In the middle of May 2002, the project entered the design phase of the extruder, where open source hardware was remixed with scaled-down industrial solutions to build a device capable of executing two or three labor-intensive and repetitive food processing activities (grinding, oil extraction, etc.), and at the same time be capable of extracting and concentrating proteins from indigenous leafy biomass.  

Sketch of a generic extruder

 

In September 2022 the network focuses on the prototyping and testing of an open source decanter centrifuge, a critical component of the extruder, responsible for separating fluids and solids according to their density differentiation. 

Have an idea about how to improve this post? Please leave comments blow.

eco2FEST – Week 2: Building Society from the Ground Up

It was an ambitious second week of eco2FEST with workshops and conferences revolving around four different themes: Public Policies, Governance, Habitation, and Urban Agriculture. A lot of important questions were raised as citizens, entrepreneurs, and government officials worked through them all to find collaborative solutions.

Even when no concrete solutions were proposed though, the discussions set the stage for a more focused framing of these themes in the future.

Public Policies

At their most basic, public policies are the intersection between what citizens ask for and what governments can provide. It is this constant flux from one side to the other that creates the common ground of how society is run. Finding a common ground that’s truly for the benefit of the greater good, however, is a different story. This has been the root cause for countless of political struggles since the dawn of civilization.

For any equilibrium to be achieved, there has to be a balance of energy or power on all sides. And that starts with trust and a willingness to collaborate. Governments need to make a greater effort to seek input from citizens impacted by proposed policies while citizens need to take initiative to engage in constructive dialogue with government officials. Only then can innovative public policies take shape.

During the Public Policies segment of eco2FEST, Guillaume Lavoie – professor at ENAP and former city councillor of Montreal – observed that citizens have been asking their elected officials the wrong question about innovation. Instead of just seeking their support for innovation, elected officials should be asked, “What is your level of tolerance for disruption?”

Historically, governments often favour stability while businesses mostly thrive on disruption. But for overall progress to happen in society, it depends on government’s ability to stomach change.

Businesses have always been a step ahead of governments not only because they embrace change, but also because they actively seek out public opinion. If governments want to keep up, they have to do the same and go a step further by establishing units or processes that provide future projections based on current socio-economic trends.

This will allow governments to at least proactively prepare for future growth rather than reacting too late to realities on the ground. It will result in more opportunities for governments to engage in timely discussions with the public.

Besides examining the role of government, eco2FEST participants also considered the other side of the equation: how can we empower citizens with the notion that they have the right to express their opinions on how society is run?

Participatory democracy was brought up several times as a potential way for people to get in the habit of working together with the government. Of course, it means that the government has to transition to that concept and introduce how it works early in the education system.

Once citizens start to participate more and governments have a better pulse on what the needs are, what’s the best way to use crowdsourced data effectively to implement public policies? This was another sticky point in the workshop discussions last week.

For example, there’s a massive amount of urban traffic data out there compiled by both public and private sectors. But it’s been difficult to design mobility models and transportation systems based on that data because every source wants to protect its data for different purposes. On top of all that, there are privacy issues that people are rightfully concerned about.

The question then turned to regulation, which is sometimes a waypoint of implementation. For that, Guillaume Lavoie recommended not to jump straight to regulations before the subject is fully understood – that would be worse than not regulating at all. “The goal is to have the least possible, to access as much as possible,” he said.

Governance

Public Policies naturally lead to Governance. How do you build the consensus and the principles everyone has agreed on during the development of public policies into a long-term governance system? In short, as Agathe Lehel – Projects Promoter of OuiShare Québec – so succinctly put it, “How do you make sure that [governance] culture persists over time?”

Technology was consistently proposed as a possible solution. Technology can facilitate the processing of governance processes because of its dynamic ability to provide real-time information and instantaneous feedback.

One of the most promising technological applications in governance comes in the form of smart contracts in blockchain. The potential of blockchain as a governance tool is so strong that it has been adopted by businesses and even governments such as Estonia’s digital republic.

Blockchain platforms are designed to evenly distribute the power of governance and direction that decisions take. In that sense, members of the platform are simultaneously users, investors, and stakeholders. All these members are brought together from different cultures and values. The issue is how we make it work and achieve consensus.

Another concern raised in the discussion was maintaining decentralization. What we want to avoid is the consolidation of power in any extreme and not knowing who actually holds the power.

In response to the governance concerns of blockchain, Pascal Ngo Chu – co-founder of EOS/Steem Québec – pointed to EOSIO as an example. It is a blockchain platform that introduces a governance model. A constitution can be created first, which all other application systems must follow. From there, a democratic system can be established with voting tools for people to make decisions.

At the end of the day though, it’s the individuals who form the hub of a blockchain network. Yes, government needs to be involved in supporting the system, but the grassroots level needs to first demonstrate that it works even in a rapidly evolving society. However the platform is designed, governance has to be ingrained yet remain flexible enough for new directions.

We also have to remember that the platform is not the solution – it is a tool for governance and transparency that works so long as the human connection is stable.

Habitation

For all the talk about progress in society, it can’t go very far if the basic needs of the people aren’t met. That brings us to the theme of Habitation.

We’ve seen the steady rise of housing costs for years and it’s time we come up with creative solutions to combat that issue.

Many ideas were pitched at the eco2FEST workshops, including transitional use of vacant spaces. So rather than leaving undeveloped lots sitting empty, is there a way we can make use of them? The same goes for unoccupied buildings or infrastructure. What would a system that temporarily repurposes vacant spaces look like?

Housing cooperatives were also mentioned as proven working models, although everyone acknowledged that they do have some hurdles to overcome. These include setting up reliable conflict resolution systems as well as systems properly recognizing everyone’s specialties and contributions.

The most significant hurdle has to do with the public image of housing cooperatives. They are neither social housing nor places where everyone is expected to scrub the common floors together. Housing cooperatives are all about lowering the housing costs for their members. If that is what everyone ultimately wants, why is participation still so low?

It seems that housing cooperatives could do with more support from governments and more rebranding campaigns from the private sector.

Urban Agriculture and Food Sovereignty

Food is another basic need that needs to be addressed. And in an urban environment, it’s even more important that sustainable approaches are used.

It was fitting that communal food was served throughout eco2FEST, but especially so during the urban agriculture workshops. It ties in with the fact that it really does not require massive infrastructure to feed people.

What emerged from the discussions was the need for us to completely change our way of thinking when it comes to urban agriculture and food sovereignty. In a sense, we need to think big in small systems.

For instance, we can first change our concept of food consumption. Instead of consuming what we want, we can start by consuming what we want among what’s locally available. That would cut down on infrastructure being used to produce food for distant locations, along with all the transportation costs that come with it.

Douglas Jack, a sustainable community development expert, gave a presentation advocating people to take a 3D approach to agriculture. That involves considering the collaborative effect of plants occupying all height levels – from trees to fungi – that contribute to a healthier ecosystem. He also talked about various indigenous techniques for sustainable livelihood, the details of which he catalogued online for open-source sharing.

From his example as well as that of Jack SoRelle – who created the Plenty4All organization from scratch – there was a consensus that open-source sharing of agricultural techniques is an economically feasible way to establish grassroots-oriented solutions for communities all over the world.

As the second week of eco2FEST came to a close, it was apparent that there is a common thread that ran through these four themes: it all comes down to education.

It’s about learning how to let your voice be heard; it’s about teaching how to run an equitable society. It’s about learning how to live affordably together; it’s about teaching how to feed the world sustainably.

What inspired you the most from the conversations you’ve had last week at eco2FEST? What would you like to accomplish by the final week?

Winluck Wong is a freelance writer helping companies grow their businesses through blogging, web content writing, copywriting, and social media management. He gets excited about an eclectic mix of topics from business strategies and sustainable development to personal finance and life hacks. Follow his cheeky musings on Twitter and imagine how he can fit in your story on his website.

eco2FEST - week 1: Collaboration in Motion

Last week marked the beginning of eco2FEST, a three-week journey to explore new forms of economy, sustainable open-source design, and more. Organized around nine themes, eco2FEST highlighted Mobility and Collaborative Economy as the first themes of the week.

Mobility

eco2FEST was aptly jumpstarted with the first theme, Mobility. Progress has always traveled on the
back of our ability to transfer ideas, resources, and people over great distances in the shortest amount
of time possible. The need for this ability to be efficient has become more pronounced in the growing
urbanization of society.

As ecosystems of urban jungles continue to spread, mobility is what will preserve their delicate balance and keep them thriving. Without mobility as the primary consideration in infrastructure design, cities run the risk of a drawn-out but inevitable decay.

It’s a well-recognized issue and many cities throughout the world have ventured ahead with innovative models of mobility. Take Barcelona and the Bicing program, for instance; London and its GATEway project; or Guangzhou’s Bus Rapid Transit system.

And we can do the same here. Montreal is the ideal city for mobility innovation and it’s evident when
the city hosted the Intelligent Transport Systems (ITS) World Congress last year. The world came to us last year and this year, we’re demonstrating through eco2FEST that we’re ready to bring our ingenuity to the world.

The official launch of eco2FEST last week inspired a lot of frank discussions about the future of mobility in Montreal. Mobility entrepreneurs like Eva Coop and OuiHop’ met with local residents as well as citizen groups like Trainsparence. Together, this open forum invited everyone to give their input on major mobility issues such as the “last mile” problem, bike-integration solutions, and even specific issues such as mobility challenges in Verdun.

It is a promising start to eco2FEST. Jean-François Parenteau, the Mayor of Verdun, mentioned at the
eco2FEST press conference last Tuesday that he and his elected officials wanted the borough to shine
when it comes to a collaborative economy. It captured the intent of eco2FEST perfectly. This is our moment to take the lead by getting the private and public sectors together to collaborate on inclusive solutions that improve the day-to-day lives of everyone.


Collaborative Economy

As the conversation moved from Mobility to the second theme, Collaborative Economy, the ideas continued to flow. Although the participants in the workshops and roundtables were from different backgrounds, they all found common ground with these two statements:

1. Access to resources can be very difficult for individuals; collaborative workspaces can meet this requirement as well as create opportunities and accessibility for entrepreneurs;
2. Collaborative economy adds social and economic benefits within society.

Moreover, certain words came up again and again that showed how strongly they resonated with
everyone: inclusion, participate, equity, growth, and empowerment. All these are values that a
collaborative economy strives toward.

It means less constraints from a traditional workplace and less emphasis on profit before all else. It
means more innovation and ecological results driven for and by the community. Above all, it means
genuine collaboration that goes beyond the family unit and reaches every facet of society.

What’s striking about the first week at eco2FEST was how deeply engaged all the participants were in the discussions that took place. Everyone had something of value to contribute and it’s all these ideas in aggregate that will make a difference as we co-build the society of tomorrow.

All this came out of just the first week. Imagine what we can accomplish next. Find out what’s
happening this week at eco2FEST on our schedule and participate!

What really spoke to you during the first week of eco2FEST? What would you like to see done differently in the upcoming workshops and conferences?

Winluck Wong is a freelance writer helping companies grow their businesses through blogging, web content writing, copywriting, and social media management. He gets excited about an eclectic mix of topics from business strategies and sustainable development to personal finance and life hacks. Follow his cheeky musings on Twitter and imagine how he can fit in your story on his website.