What is DAO (Decentralized Autonomous Organization) In Blockchain Technology?

Blockchain can be called a growing list of records used in cryptography. Each of these blocks contains information such as the cryptographic hash of the former block, transaction data and more. Blockchain technology is growing fast and is used by many people in many sectors such as the Internet Of Things, financial services, educational system, healthcare and more. The protection and scalability of the field are sometimes at stake due to many factors. Here is where the role of blockchain technology for DAO comes in. In this blog, what is DAO in blockchain and the best examples of DAOs. This is one of the main blockchain events dubai loves to host.

What is DAO in blockchain?

What is DAO in blockchain? People work together for various causes; it has been a custom for centuries. In blockchain technology, DAO ultimately stands for a governance system that is community-driven that is autonomous and lucid in all its activities. It is a new normal and coordinates resources as well as people based on algorithms and rules of computer programs. DAOs are part of the crypto ecosystem and they control lots of assets and people here have shared goals.

Algorithms, updates and smart contracts are used in decentralized autonomous organizations. To have a successful DAO is a meticulous job and you need a veteran blockchain developer as an expert to take care of all requirements and automation. 

A brief origin of DAO

We have seen what is decentralised autonomous organisation but what about its origin?

First of all, technology was a reason. Due to the rapid pace of information technology, all sorts of organisations invented which are lucid, simple and autonomous in nature. Secondly, the concept originated from Bitcoin where the rules are predetermined by auditable open-source software run on DLT, free from outside influence and centralised authority. 

Ideal goals of DAOs

Before contemplating how DAO works, let us learn about the envisioned goals of any DAO. Many of these goals remain on paper, not in practice. 

• A community driven by common interests and aspirations
• These interests can be commercial or non-commercial 
• The deployment of self-executing computer programs
• Only use open-source software that has a thriving community
• No real-world assets but on-chain operations
• Voting and governance right is given to parties or people through computer programs
• Owners and decision-makers are the same people without any distinction
• Censorship resistance
• Lucidness at the operational level

Why does it matter what a DAO is?

“What is a decentralized autonomous organization” question matters because there is a pressing need for DAOs. Building trust and credibility is not required in decentralized autonomous organizations unlike other organizations because it works on using smart contracts and 100% computer code which in turn is transparent and straightforward. 

Best Examples of DAOs 

What is a decentralized autonomous organization mean in reality? The following are examples of DAOs. Each DAO is successful and has a high reputation. 

1. UniSwap

2. AAVE

3. The DAO

4. Compound

5. maker  DAO

6. Lido finance

7. Dash 

Must-have features of a DAO

1. Smart contracts – Smart contracts are computer codes that upon the occurrence of specified conditions execute on a DLT system automatically and deterministically according to prespecified functions. They do not need any human intervention and are programmed to run anyway.

2. Funding – Funding is executed online and on-chain to foster lucidness in all actions. Sometimes, tokens are given to receive funds as these tokens provide voting rights. 

3. Deployment – Deployment of DAO is the last component and developers that deal with smart contracts have no role in the deployment of DAOs.

Participants of DAO

1. Software developers – Software developers’ expertise is quite required to develop code for blockchain as well as smart contracts.

2. Token Holders –  These are people who have the right to vote in smart contracts and have a say in how to run these decentralised autonomous organisations. 

3. Investors or shareholders – These are people who invest in DAOs. For instance, equity shareholders.

4. Customers –  If the DAO has an external service or product to offer. 

How does DAO work?

The whole decision-making process is managed and controlled by computer programs and codes and the DAO members have no say in it. Actually, the final say is with the stakeholders. The ultimate aim of a DAO is to manage and control blockchain management. Strong DAO has a consistent and transparent working mechanism that in turn attracts many people and earns your organisation an excellent reputation. 

How to get into a DAO 

Getting a DAO membership can be availed in many ways as follows but the thing is you need to be well acquainted with the question ‘what is a decentralized autonomous organization’. 

1. Token-based membership – The token of membership is available on decentralised trading and anyone can participate in it. For instance, MakerDAO. 

2. Share-based Membership – Here to get into a DAO organisation, you need to be an eminent personality or capable of providing valuable contributions in any manner. A good example of this is MolochDAO. 

Merits and demerits of a decentralized autonomous organization

Merits of a DAO

1. Decentralization – It is based on collective not individual based. 

2. Community-driven –  Different people but ideologies and interests are the same in DAO.

Merits of disadvantages

1. Security – Top-notch security cannot be guaranteed and it remains a vulnerable issue. 

2. Delay in decision-making – Updates from investors and stakeholders take time and thus result in delayed decision-making. 

3. No legitimate structure for DAO – Bringing a legitimate structure is not always attainable because of different locales and time zones. 

In a nutshell, having a DAO is overall an excellent idea and one must understand the concept fully to benefit from it. This type of organization has a lot of merits as well as demerits. Choosing the best DAo requires quite a bit of research and even then the chances of success depend on various factors. 

After reading this blog, you have got the answer to the question “what is a decentralized autonomous organization and its benefits. DOAs are becoming popular as they are helpful in many respects and act as a governing body in the blockchain sphere. Using the expertise of blockchain events in Dubai, you too can understand blockchain terms and own a decentralized autonomous organization.