Today, I have a short note on what a DAO is. Gotta get with the kids on all this new technology :/
Daily quote:
“Faced with what is right, to leave it undone shows a lack of courage.”
— Confucius
What is a DAO?
DAOs began in crypto, but has not had the chance to shine yet. The need for it rose from Bitcoin and the difficulty of agreeing on decisions due to its decentralised nature. Thus, Vitalik Buterin came up with a DAO to serve as a governing body.
A DAO is a virtual entity with a group of members or shareholders. With a 67% majority, they have the right to spend the entity’s funds and modify its code. Funds could be used from things like bounties, salaries or internal currency to reward work.
That was the initial definition coined by Vitalik.
However, since its invention, DAOs have progressed in many ways. DApps leverage DAOs to make governance decisions. And governance tokens are spread between early adopters and investors.
A more updated version of its definition states that a DAO is a group organised around a mission coordinate through a shared set of rules enforced on a blockchain. It is a novel way to fund projects, govern communities, and share value. It uses Web3 and modern governance and incentive systems to distribute decision-making authority and financial rewards. The main way to do this is through issuance of tokens dependant on participation, contribution, and investment. Token holders can submit proposals, vote, and share in gains.
A DAO has a loose structure compared to the tight one of a traditional company. The distribution of power is grassroots rather than hierarchical. Its decision making process is transparent rather than opaque. It is open access to the public, instead of being closed through a selection process. And it is international in nature instead of being localised. These factors all contribute to the DAO being dubbed a modernised version of a company.
DAOs are considered significant in changing the future of work.
With love,
Angeline
Resources:
Agha, Uneeb & Gupta, Nakul. “Are DAOs future of organizations?” Cryptotechie, Substack, June 1, 2022.
Thomas, Zoe & Cyrus, Justin. “Space Rules: Who’s in Charge in Space?” Tech News Briefing, WSJ Podcasts, The Wall Street Journal, June 2, 2022.