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What are Decentralised Autonomous Organizations (DAOs)?

A Decentralised Autonomous Organisation or a DAO, is a unique take on democracy on the blockchain. It is a set of rules encoded into a self-executing contract (also known as a smart contract) that operates autonomously on a blockchain system. A DAO imitates a traditional company, although, in its more literal sense, it is a contractually created entity. In theory, DAOs have no centralised authority in making decisions for the system; it is a communally run system whereby all decisions (be it for internal governance or for the development of the blockchain system) are voted upon by the community members. DAOs are primarily characterised by a decentralised form of operation, where there is no one entity, group or individual running the system. They are self-sustaining entities, having their own currency, economy and even governance, that do not depend on a group of individuals to operate. Blockchain systems, especially DAOs are characterised by pure autonomy created to evade external coercion or manipulation from sovereign powers. DAOs follow a mutually created, agreed set of rules created by the community, that dictates all actions, activities, and participation in the system’s governance. There may also be provisions that regulate the decision-making power of the community.

Ethereum’s DAO’s White Paper described DAO as “The first implementation of a [DAO Entity] code to automate organisational governance and decision making.” Can be used by individuals working together collaboratively outside of a traditional corporate form.  It can also be used by a registered corporate entity to automate formal governance rules contained in corporate bylaws or imposed by law.”  The referred white paper proposes an entity that would use smart contracts to solve governance issues inherent in traditional corporations.  DAOs attempt to redesign corporate governance with blockchain such that contractual terms are “formalised, automated and enforced using software.”

Cybersecurity threats under DAOs

While DAOs offer increased transparency and efficiency, they are not immune to cybersecurity threats. Cybersecurity risks in DAO, primarily in governance, stem from vulnerabilities in the underlying blockchain technology and the DAO's smart contracts. Smart contract exploits, code vulnerabilities, and weaknesses in the underlying blockchain protocol can be exploited by malicious actors, leading to unauthorised access, fund manipulations, or disruptions in the governance process. Additionally, DAOs may face challenges related to phishing attacks, where individuals are tricked into revealing sensitive information, such as private keys, compromising the integrity of the governance structure. As DAOs continue to evolve, addressing and mitigating cybersecurity threats is crucial to ensuring the trust and reliability of decentralised governance mechanisms.

Centralisation/Concentration of Power

DAOs today actively try to leverage on-chain governance, where any governance votes or transactions are directly taken on the blockchain. But such governance is often plutocratic in nature, where the wealthy hold influences, rather than democracies, since those who possess the requisite number of tokens are only allowed to vote and each token staked implies that many numbers of votes emerge from the same individual. This concentration of power in the hands of “whales” often creates disadvantages for the newer entrants into the system who may have an in-depth background but lack the funds to cast a vote. Voting, presently in the blockchain sphere, lacks the requisite concept of “one man, one vote” which is critical in democratic societies.

Smart contract vulnerabilities and external threats

Smart contracts, self-executing pieces of code on a blockchain, are integral to decentralised applications and platforms. Despite their potential, smart contracts are susceptible to various vulnerabilities such as coding errors, where mistakes in the code can lead to funds being locked or released erroneously. Some of them have been mentioned as follows;

Smart Contracts are most prone to re-entrance attacks whereby an untrusted external code is allowed to be executed in a smart contract. This scenario occurs when a smart contract invokes an external contract, and the external contract subsequently re-invokes the initial contract. This sequence of events can lead to an infinite loop, and a reentrancy attack is a tactic exploiting this vulnerability in a smart contract. It enables an attacker to repeatedly invoke a function within the contract, potentially creating an endless loop and gaining unauthorised access to funds.

Additionally, smart contracts are also prone to oracle problems. Oracles refer to third-party services or mechanisms that provide smart contracts with real-world data. Since smart contracts on blockchain networks operate in a decentralised, isolated environment, they do not have direct access to external information, such as market prices, weather conditions, or sports scores. Oracles bridge this gap by acting as intermediaries, fetching and delivering off-chain data to smart contracts, enabling them to execute based on real-world conditions. The oracle problem within blockchain pertains to the difficulty of securely incorporating external data into smart contracts. The reliability of external data poses a potential vulnerability, as oracles may be manipulated or provide inaccurate information. This challenge jeopardises the credibility of blockchain applications that rely on precise and timely external data.

Sybil Attack: A Sybil attack involves a single node managing multiple active fake identities, known as Sybil identities, concurrently within a peer-to-peer network. The objective of such an attack is to weaken the authority or influence within a trustworthy system by acquiring the majority of control in the network. The fake identities are utilised to establish and exert this influence. A successful Sybil attack allows threat actors to perform unauthorised actions in the system.

Distributed Denial of Service Attacks: A Distributed Denial of Service (DDoS) attack is a malicious attempt to disrupt the regular functioning of a network, service, or website by overwhelming it with a flood of traffic. In a typical DDoS attack, multiple compromised computers or devices, often part of a botnet (a network of infected machines controlled by a single entity), are used to generate a massive volume of requests or data traffic. The targeted system becomes unable to respond to legitimate user requests due to the excessive traffic, leading to a denial of service.

Conclusion

Decentralised Autonomous Organisations (DAOs) represent a pioneering approach to governance on the blockchain, relying on smart contracts and community-driven decision-making. Despite their potential for increased transparency and efficiency, DAOs are not immune to cybersecurity threats. Vulnerabilities in smart contracts, such as reentrancy attacks and oracle problems, pose significant risks, and the concentration of voting power among wealthy token holders raises concerns about democratic principles. As DAOs continue to evolve, addressing these challenges is essential to ensuring the resilience and trustworthiness of decentralised governance mechanisms. Efforts to enhance security measures, promote inclusivity, and refine governance models will be crucial in establishing DAOs as robust and reliable entities in the broader landscape of blockchain technology.

References:

‍https://www.imperva.com/learn/application-security/sybil-attack/

‍https://www.tripwire.com/state-of-security/blockchain-security-understanding-vulnerabilities-and-mitigating-risks

‍https://medium.com/@RedStone_Finance/the-oracle-problem-and-its-implications-for-blockchains-c0c0ad9cf5a7

‍https://www.linkedin.com/posts/satish-kulkarni-bb96193_what-are-cybersecurity-risk-to-dao-and-how-activity-7048286955645677568-B3pV/ https://www.geeksforgeeks.org/what-is-ddosdistributed-denial-of-service/ Report of Investigation Pursuant to Section 21 (a) of the Securities Exchange Act of 1934: The DAO, Securities and Exchange Board, Release No. 81207/ July 25, 2017

‍https://www.sec.gov/litigation/investreport/34-81207.pdf https://www.legalserviceindia.com/legal/article-10921-blockchain-based-decentralized-autonomous-organizations-daos-.html

Introduction

India's broadcasting sector has undergone significant changes in recent years with technological advancements such as the introduction of new platforms like Direct-to-Home (DTH), Internet Protocol television (IPTV), Over-The-Top (OTT), and integrated models. Platform changes, emerging technologies and advancements in the advertising space have all necessitated the need for new governing laws that take these developments into account. 

The Union Government and concerned ministry have realised there is a pressing need to develop a robust regulatory framework for the Indian broadcasting sector in the country and consequently, a draft Broadcasting Services (Regulation) Bill, 2023, was released in November 2023 and the Union Ministry of Information and Broadcasting (MIB) had invited feedback and comments from different stakeholders. The draft Bill aims to establish a unified framework for regulating broadcasting services in the country, replacing the current Cable Television Networks (Regulation) Act, 1995 and other policy guidelines governing broadcasting.

Recently a new draft of an updated ‘Broadcasting Services (Regulation) Bill, 2024,’ was shared with selected broadcasters, associations, streaming services, and tech firms, each marked with their identifier to prevent leaks. 

Key Highlights of the Updated Broadcasting Bill 

As per the recent draft of the Broadcasting Services (Regulation) Bill, 2024, social media accounts could be identified as ‘Digital News Broadcasters’ and can be classified within the ambit of the regulation. Some of the major aspects of the new bill were first reported by Hindustan Times. 

The new draft of the Broadcasting Services (Regulation) Bill, 2024, proposes that individuals who regularly upload videos to social media, make podcasts, or write about current affairs online could be classified as Digital News Broadcasters. This entails that YouTubers and Instagrammers who receive a share of advertising revenue or monetize their social media presence through affiliate activities will be regulated as Digital News Broadcasters. This includes channels, podcasts, and blogs that cover news and utilise Google AdSense. They must comply with a Programme Code and Advertising Code.

Online content creators who do not provide news or current affairs but provide programming and curated programs beyond a certain threshold will be treated as OTT broadcasters in case they provide content licensed or live through a website or social media platform.

The new version also introduces new obligations for intermediaries and social media intermediaries related to streaming services and digital news broadcasters, and, in contrast to the last version circulated in 2023, the latest also carries provisions targeting online advertising. In the context of streaming services, OTT broadcasting services are no longer a part of the definition of "internet broadcasting services." The definition of OTT broadcasting service has also been revised, allowing content creators who regularly upload their content to social media to be considered as OTT broadcasting services.

The new definition of an 'intermediary' includes social media intermediaries, advertisement intermediaries, internet service providers, online search engines, and online marketplaces. 

The new Bill allows the government to prescribe different due diligence guidelines for social media platforms and online advertisement intermediaries and requires all intermediaries to provide appropriate information, including information pertaining to the OTT broadcasters and Digital News Broadcasters on their platform, to the central government to ensure compliance with the act. This entails the liability provisions for social media intermediaries which do not provide information “pertaining to OTT Broadcasters and Digital News Broadcasters” on its platforms for compliance. This suggests that when information is sought about a YouTube, Instagram or X/Twitter user, the platform will need to provide this information to the Indian government.

A new draft bill contains specific provisions governing ‘Online Advertising’ and to do so it creates the category of 'advertising intermediaries'. These intermediaries enable the buying or selling of advertisement space on the internet or placing advertisements on online platforms without endorsing the advertisement. 

Final Words

The Indian Ministry of Information and Broadcasting (MIB) is making efforts to propose robust regulatory changes to the country's new-age broadcast sector, which would cover the specific provisions for Digital News Broadcasters, OTT Broadcasters and Intermediaries. The proposed bill defining the scope and obligation of each. 

However, these changes will have significant implications for press and creative freedom. The changes in the new version of the updated bill from its previous draft expanded the applicability of the bill to a larger number of key actors, this move brought ‘content creators’ under the definition of OTT or digital news broadcasters, which raises concerns about overly rigid provisions and might face criticism from media representative perspectives. 

According to recent media reports, the Broadcasting Services (Regulation) Bill, 2024 version has been withdrawn by the I&B ministry facing criticism from relevant stakeholders.

The ministry must take due consideration and feedback from concerned stakeholders and place reliance on balancing individual rights while promoting a healthy regulated landscape considering the needs of the new-age broadcasting sector.

References:

1. https://www.medianama.com/2024/07/223-india-broadcast-bill-online-creators/#:~:text=Online%20content%20creators%20that%20do,or%20a%20social%20media%20platform.
2. https://www.hindustantimes.com/india-news/new-draft-of-broadcasting-bill-news-influencers-may-be-classified-as-broadcasters-101721961764666.html
3. https://www.hindustantimes.com/india-news/broadcasting-bill-still-in-drafting-stage-mib-tells-rs-101722058753083.html
4. https://www.newslaundry.com/2024/07/29/indias-new-broadcast-bill-now-has-compliance-requirements-for-youtubers-and-instagrammers
5. https://m.thewire.in/article/media/social-media-videos-text-digital-news-broadcasting-bill
6. https://mib.gov.in/sites/default/files/Public%20Notice_07.12.2023.pdf
7. https://news.abplive.com/news/india/centre-withdraws-draft-of-broadcasting-services-regulation-bill-1709770

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Introduction

According to the Finance Ministry's data, the incidence of domestic Unified Payment Interface (UPI) fraud rose by 85% in FY 2023-24 compared to FY 2022-23. Further, as of September of FY 2024-25, 6.32 lakh fraud cases had been already reported, amounting to Rs 485 crore. The data was shared on 25th November 2024, by the Finance Ministry in response to a question in Lok Sabha’s winter session about the fraud in UPI transactions during the past three fiscal years.

Statistics

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UPI Frauds and Government's Countermeasures 

On the query as to measures taken by the government for safe and secure UPI transactions and prevention of fraud in the transactions, the ministry has highlighted the measures as follows: 

• The Reserve Bank of India (RBI) has launched the Central Payment Fraud Information Registry (CPFIR), a web-based tool for reporting payment-related frauds, operational since March 2020, and it requires requiring all Regulated Entities (RE) to report payment-related frauds to the said CPFIR.

• The Government, RBI, and National Payments Corporation of India (NPCI) have implemented various measures to prevent payment-related frauds, including UPI transaction frauds. These include device binding, two-factor authentication through PIN, daily transaction limits, and limits on use cases.
• Further, NPCI offers a fraud monitoring solution for banks, enabling them to alert and decline transactions using AI/ML models. RBI and banks are also promoting awareness through SMS, radio, and publicity on 'cyber-crime prevention'.
• The Ministry of Home Affairs has launched a National Cybercrime Reporting Portal (NCRP) (www.cybercrime.gov.in) and a National Cybercrime Helpline Number 1930 to help citizens report cyber incidents, including financial fraud. Customers can also report fraud on the official websites of their bank or bank branches.
• The Department of Telecommunications has introduced the Digital Intelligence Platform (DIP) and 'Chakshu' facility on the Sanchar Saathi portal, enabling citizens to report suspected fraud messages via call, SMS, or WhatsApp.

Conclusion  

UPI is India's most popular digital payment method.  As of June 2024, there are around 350 million active users of the UPI in India. The Indian Cyber Crime Coordination Centre (I4C) report indicates that ‘Online Financial Fraud’, a cyber crime category under NCRP, is the most prevalent among others. The rise of financial fraud, particularly UPI fraud is cause for alarm, the scammers use sophisticated strategies to deceive victims. It is high time for netizens to exercise caution and care with their personal and financial information, stay aware of common tactics used by fraudsters, and adhere to best security practices for secure transactions and the safe use of UPI services.

References

• https://sansad.in/getFile/loksabhaquestions/annex/183/AU211_sk53e3.pdf?source=pqals

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