Decentralized Autonomous Organizations – Overview

This is the concluding chapter of this book and is where we will learn about decentralized autonomous organizations (DAOs), digital organizations that operate autonomously through smart contracts on a blockchain network. This is only an introductory chapter to DAOs, so we will only touch upon some of the very basics. We will learn about DAOs, how they function, and what impact they may have in the future.

DAOs represent a new paradigm in organizational structure, where digital entities operate autonomously via smart contracts on a blockchain network.

While scratching the surface of DAOs, we’ll offer a glimpse into their fundamental concepts and functionalities. While we’ll cover only the basics, you’ll gain valuable insights into how DAOs work and the potential they hold for shaping our future.

As we explore this topic, consider it not as an endpoint but as a beginning – an invitation to dive...

Understanding DAOs

A DAO is a digital entity that operates autonomously, governed by a set of rules encoded on a blockchain. It eliminates the need for centralized control, allowing decision-making and operations to be transparent and community-driven. DAOs enable participants to engage in a wide range of activities, such as voting, proposal submission, and funding allocation, all through smart contracts. With their decentralized nature, DAOs provide a framework for collective decision-making, promoting transparency, inclusivity, and trust. By leveraging blockchain technology, DAOs have the potential to revolutionize governance structures across industries, fostering innovation, collaboration, and community empowerment.

There are countless DAOs in the world now; all popular cities have a DAO named after them.

Let’s consider a real-life scenario where a DAO could be applicable for a a community group: a neighborhood or community association.

In a traditional neighborhood...

Popular DAOs

There are so many popular DAOs that highlight the diversity of applications and opportunities that arise from decentralized governance and community-driven decision-making in the blockchain space. As mentioned earlier, we have many DAOs in popular cities around the world.

Here is a list of popular DAOs, with details about their founding date, location, purpose, and their current level of success:

• The DAO: Founded in April 2016, in Zug, Switzerland. It aimed to operate as a decentralized venture capital fund, allowing members to vote on investment proposals. However, due to a security vulnerability, it suffered a major hack and funds were eventually recovered through a hard fork. The DAO was dissolved, but it served as an influential precursor to other DAO projects.
• MakerDAO: Founded in December 2017, in Santa Cruz, California, USA. MakerDAO is one of the pioneering DeFi DAOs. It operates on the Ethereum blockchain and its primary purpose is to provide a...

The future of DAOs

Let’s start with the current state of DAOs. DAOs have gained significant traction and momentum in the blockchain and DeFi space. They have evolved from conceptual experiments to practical implementations with real-world applications. Here is the state of DAOs as of now:

• Growing number of DAOs: The number of DAOs has been steadily increasing, spanning various industries and sectors. From DeFi protocols to art collectives and community governance, DAOs are being established to tackle diverse use cases.
• DeFi dominance: Many prominent DAOs operate in the DeFi sector, driving innovation and transforming traditional financial systems. These DAOs enable lending, borrowing, DEXs, liquidity provision, and more, creating a vibrant and rapidly evolving DeFi ecosystem.
• Governance experimentation: DAOs continue to experiment with governance models to enhance transparency, inclusivity, and decision-making processes. Various voting mechanisms, tokenomics...

Summary

In this chapter, we explored the concept of DAOs and their potential impact on industries, governance, and community collaboration. We began by introducing DAOs, highlighting their decentralized nature, community-driven decision-making, and transparency.

We discussed the various functions and purposes of DAOs, including their role in DeFi, governance, crowdfunding, community management, and supply chain management. We examined real-life examples of popular DAOs such as MakerDAO, Aragon, and MetaCartel, highlighting their founding dates, functions, and current levels of success.

The future of DAOs was a focal point in this chapter. We explored the potential democratization of decision-making, new economic models, collaborative ownership, and the disintermediation and trustlessness that DAOs offer. Through diverse examples, such as neighborhood associations transformed into DAOs, we demonstrated how DAOs can impact everyday people, providing a voice in decision-making,...