What are DAOs and What Makes Them a Large Online Community?
We are now approaching a landscape of unlimited possibilities when developing new assets. When cryptocurrency was introduced in 2009 and Ethereum was launched in 2015, the open-source code of the blockchain allowed anyone to build on top of it, resulting in numerous applications. Now, we have the DAO, a blockchain-powered solution, and a large online community that has recently gained much traction.
What are DAOs used for?
A decentralized autonomous organization (DAO) is a community formed around a particular set of rules enforced on a blockchain that makes bottom-up decisions.
Members of DAOs collectively control and operate the organization. Those treasuries are only accessible with the consent of the organization's members. Proposals are put forth by the group, which votes on them during a designated period.
A DAO can serve many goals without relying on a top-down administration structure. All kinds of groups are feasible with these organizations, from freelancer networks whose contracts combine their earnings to pay for software subscriptions to charitable organizations where members approve donations.
What is the difference between traditional organizations and DAOs?
Smart contracts, which are collections of code running on the blockchain, are the most common technology used by DAOs. It is like a set of "rules" for these groups, which cannot be changed in secrecy and are available for public examination. However, the DAO's rules can be updated democratically by the DAO's predefined procedures.
The significant difference between DAOs and typical organizations is this: When managing a business, traditional governance relies heavily on the board of directors and other stakeholders, who are generally unreachable and opaque to most employees. On the other hand, DAO operations are entirely decentralized and use tools like governance tokens to allow system improvements to be made by anyone who wants to.
How do DAOs work?
A decentralized autonomous organization (DAO) is one in which the organization's decisions are made by its members collectively, as previously stated. In a DAO, various methods exist, the most common of which is to possess a token.
Automated decision-making systems (DAOs) use smart contracts and pieces of code that automatically run when certain conditions are satisfied. Although Ethereum was the first to implement smart contracts, they are now used on various blockchains.
Smart contracts establish the DAO's rules. After that, those with a stake in a DAO can vote on or create new governance proposals, allowing them to influence how the organization functions.
In this arrangement, initiatives can only advance if most stakeholders approve of them. How the majority is chosen differs from DAO to DAO and is described in the smart contracts.
Autonomous DAOs are entirely transparent. Open-source blockchains allow anybody to see the code that goes into these projects. Because all financial transactions are recorded on a blockchain, you can audit your treasury anytime.
What makes a DAO an online community?
According to Cooper Turley, an investor and the founder of several successful DAOs, "a DAO is an internet (online) community with a shared bank account."
According to Turley, "basically, a small number of people gather together to form a chat group, and then they decide to pull capital together, [often] using an Ethereum wallet" According to him, the DAO's objective is funded jointly by this point forth.
Many DAOs fit into two main categories: those who jointly administer open-source, blockchain-based projects or invest in the projects. Limited liability corporations (LLCs), venture capital firms (VCs), and investment firms (like PleasrDAO) are all examples of this type of company.
The organization and its objectives determine the details of a DAO's structure, rules, and governance.
According to Amanda Cassatt, CEO and co-founder of web3-based marketing agency Serotonin, another benefit of a DAO and web3 is the capacity to develop an online community. One of the critical benefits of DAOs is their ability to bring together various stakeholder groups around a particular product or service to form a more cohesive community around it. "And they are all doing it together.”
What is an example of a DAO?
Here is the list of existing DAOs in the market today:
It is a community-owned and -operated business. If you are looking to establish your own DAO or just want to take a look around, you have come to the right place.
You can participate in the Maker protocol's governance by voting on improvements to the system that introduced the world's first unbiased stable coin, DAI.
UBI tokens will be distributed on-chain to confirmed humans via social verification and the Kleros' courts, which are Sybil-resistant. Start here if you want to participate in the justice revolution.
Do you want to spread the word about Web3 and educate the people through the power of content? You might be interested in this DAO focused on the media.
The recent wave of institutional investment in DAOs reflects an expansion in the area. It highlights the possibility for more broad adoption, leading to possible competition with established corporations and organizations.
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