Insightful Takeaways to Keep Your Tabs on DAO
The advent of Decentralized Application Development introduced the concept of DAO. According to a 2022 survey, the total market capitalization of DAO accounted for $21 Billion as of January 2022.
Let’s explore more about DAO.
A Deep Dive into DAO!
A Decentralized Autonomous Organization or DAO is defined as a collectively owned organization that is governed over by Blockchain. It is termed to be an emerging form of legal structure with no central body governing the process and where members share a common mission. In other words, the organization doesn’t have a CEO or CFO who can manipulate or force the decision. Pre-defined rules in the Blockchain code define the organization process.
Popularized through Decentralized Application Development, DAOs are integrated to formulate smarter decision-making in a bottom-up management approach. DAOs have in-built treasuries which can’t be accessed until the group has permitted to do so. Here, the decisions are governed through voting ensuring transparency and participation from all.
Top 4 Reasons You Should have a Decentralized Autonomous Organization!
Democratic Decision Making:
Decisions in DAOs are collectively governed by a group of members instead of relying on a single entity. The decision-making process involves a voting system where all the members participate to make a smarter decision ensuring transparency.
DAO enables people from across the world to come together and construct a single vision. The token owners can interact with other investors through just an internet connection irrespective of their location.
No authority can access or modify confidential documents without the permission of a majority of the members of the organization. Also, alterations made will be reflected to all the members across the system.
DAOs are based on self-executing contracts which contain immutable code. Smart Contracts ensure quick and convenient decision-making through the voting system eliminating the need for the physical presence of individuals. Rules and regulations, guidelines, functionalities, and contract addresses are a few details coded in the smart contract.
Here’s the Working Process of DAO, You Might be Curious to Know!
DAOs are based on smart contracts, which are logically coded self-executable agreements ensuring smarter decision-making. The decisions are powered by the underlying activities on the blockchain. These contracts are highly verifiable, visible, and auditable publicly making it easier for any potential member fully understand the functioning of protocols at every step.
Once the rules & regulations are formally integrated into the blockchain, it's time to look out for a way to receive funds and the path to bestow governance. The funds are normally raised through token issuance where the protocols sell the tokens and raise funds thus filling the DAO treasury.
The token holders in return for their fiats are offered certain voting rights which are generally proportional to their assets. Once the DAO treasury is filled, the DAO is ready for deployment.
Once the code is published, it can’t be altered. No special authority can change the rules of DAO, it’s purely the token holder community having the right to decide it.
Dapp Vs DAO- Similar or Different?
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