From the beginning of human history, we have disagreed on many things, but we all agree on one, evolution. Each one of us evolves with time, and so do technology, business models, and other things around us. The start of Bitcoin and other crypto assets was to replace the traditional fiat system with digital assets. DAO is the result of the evolution of blockchain technology which aims to replace traditional organizations.
We will explore the imagined future of Decentralized Autonomous Organizations (DAOs). But, first, let’s look into the concept of DAO.
What is DAO?
A DAO is a digital entity that operates on a decentralized architecture with no central authority. A DAO is autonomous because no central authority controls it, and it is decentralized in that its members are distributed worldwide. The usage of blockchain technology is the most significant element of a DAO.
The DAO is seeing significant traction of users because it is secure, reliable, and decentralized. People are taking assistance from the firms offering DAO development services to develop their own DAOs for several purposes. Blockchain technology is the core component in creating DAOs because it provides the decentralized architecture to run these DAOs.
What is the Role of Blockchain in DAO?
Smart contracts run a DAO on the Ethereum blockchain. This indicates it doesn’t have centralized management and an administrative structure. Instead, decision-making authority is spread among the members of the organization. The DAO’s rules are written in its smart contracts, and they can be changed or overruled by a vote of the members.
Blockchain technology is also responsible for smart contracts’ decentralized and trustless execution. The self-executing nature of smart contracts creates a trustless ecosystem. So, users don’t need to know or trust each other to run this organization because the rules will be followed without interruption.
Advantages of DAO
Following are the benefits of using DAOs:
- DAOs run on decentralized nodes, which means they are not dependent on any person or group of people. That’s why they are less vulnerable to corruption and political meddling.
- It is autonomous, which means it can function without constant human input. This enables these organizations to keep operating even if crucial personnel is lost or unavailable.
- DAOs are transparent, meaning all decisions and actions are made public. This increases accountability and lowers the possibility of fraudulent activity.
- They are tamper-proof, which means that once made, a decision cannot be reversed once made.
- DAOs keep running even if a portion of the organization shuts down for any reason.
Blockchain experts are considering to replace traditional firms’ structures with this one to automate the whole process. Imagine what it can bring to the organizations! Autonomous organizations where interactions will be as minimum as possible. Once you understand the DAO basics and working, you will quickly identify the difference between the two.
Why Should You Care About the Future of DAOs?
DAOs are web3’s natural economic entities. Decentralized finance (or ‘DeFi’) protocols are usually always administered by some DAO. Hundreds of builders from all over the world are eager to develop DAOs on Poko. These individuals include micro-fund managers, inventors, and entrepreneurs establishing businesses to capitalize on the expanding web3 ecosystems.
Entrepreneurs are using DAOs to fundraise globally to transfer ownership to their communities. Axie Infinity, based in Vietnam, launched a blockchain-based game that attracted communities worldwide, resulting in a multi-billion currency cap. World Economic Forum is also collaborating with Kazakhstan’s Astana International Financial Center, which has a national crypto strategy, to create the world’s first investment DAO incorporation structure.
What’s Next for this Technology?
The technology is not mature enough to implement in the organization, but this idea has something revolutionary which is here to stay. Traditional organizations have some factors that should be automated. Many people are researching what part should be included in the DAOs and what part of the organization should be left for humans to decide.
The DAO movement’s contentious claim is that the organization should become, at its core, independent of the humans who work to achieve its goals. This is similar to the concept of the United States Constitution, which remains sovereign over human agents, including the President, and can only be changed if the entire country comes together.
Concluding
In this area, technology has outpaced regulation. The current approach is to incorporate DAOs into a company registration framework designed for the pen-and-paper era. It is critical to creating a regulatory framework for this technology. This necessitates collaboration between technologists, regulators, and entrepreneurs from the private and public sectors. Digital entrepreneurship’s future is at stake.
