What is a DAO? What are its applications?
DAOs, or decentralized autonomous organizations, are one of the most innovative and exciting concepts in the crypto space. But what are they exactly, and why should you care?
What are DAOs?
A DAO is a collectively-owned, blockchain-governed organization working towards a shared mission. DAOs allow us to work with like-minded folks around the globe without trusting a benevolent leader to manage the funds or operations. There is no CEO who can spend funds on a whim or CFO who can manipulate the books. Instead, blockchain-based rules baked into the code define how the organization works and how funds are spent.
DAOs have built-in treasuries that no one has the authority to access without the approval of the group. Decisions are governed by proposals and voting to ensure everyone in the organization has a voice, and everything happens transparently on-chain.
Why do we need DAOs?
Starting an organization with someone that involves funding and money requires a lot of trust in the people you're working with. But it’s hard to trust someone you’ve only ever interacted with on the internet. With DAOs you don’t need to trust anyone else in the group, just the DAO’s code, which is 100% transparent and verifiable by anyone. This opens up so many new opportunities for global collaboration and coordination.
DAOs also offer a new way of organizing human activity that is more democratic, inclusive, and resilient than traditional structures. DAOs can empower communities to self-govern and self-fund their own initiatives without relying on intermediaries or gatekeepers. DAOs can also enable new forms of value creation and distribution that align incentives among stakeholders.
What are some examples of DAOs?
DAOs can be used for various purposes, such as:
A charity – you could accept donations from anyone in the world and vote on which causes to fund.
Collective ownership – you could purchase physical or digital assets and members can vote on how to use them.
Ventures and grants – you could create a venture fund that pools investment capital and votes on ventures to back. Repaid money could later be redistributed amongst DAO-members.
Art collectives – you could form a group of crypto artists, entrepreneurs and investors that bid on works by high-profile digital artists. The works become the property of the DAO’s members, who can manage them as they see fit.
Governance tokens – you could create a token that represents ownership and voting rights in a protocol or platform. Token holders can propose and vote on changes to improve the system.
These are just some examples of how DAOs can be used, but there are many more possibilities.
How do I join or create a DAO?
There are different platforms and tools that enable users to join or create DAOs easily. Some of them are:
Aragon – A platform for building customizable DAOs with various templates and modules.
Colony – A platform for creating decentralized organizations with reputation-based governance.
MolochDAO – A framework for creating grant-making DAOs with minimal governance overhead.
Snapshot – A tool for creating off-chain voting systems for token-based governance.
Gnosis Safe – A smart contract wallet that allows users to create multisig accounts for managing funds collaboratively.
To join an existing DAO, you usually need to acquire some tokens that represent membership or voting rights in the organization. You can buy these tokens on exchanges or earn them by contributing value to the community. To create your own DAO, you need to choose a platform or tool that suits your needs and follow their instructions.
DAOs are an emerging form of legal structure that has no central governing body and whose members share a common goal to act in the best interest of the entity. They offer a novel way of organizing human cooperation in a decentralized way using blockchain technology.
DAOs have many potential applications across various domains such as charity, collective ownership, ventures, art collectives, and governance tokens. They also have many challenges such as scalability, security, regulation, and coordination.
If you are interested in learning more about DAOs, you can check out some resources such as: