For the People, By the People
Decentralised Autonomous Organisations, otherwise known as DAOs, are online collectives of like-minded people who gather together with a common goal they work towards. The aggregation forms an entity that manages and allocates organisational resources necessary for the progress of their eventual goal.
Such DAOs are built upon blockchain technology, and function through the means of a smart contract. This integration of the blockchain is intended to facilitate coordination. The organisation’s smart contract then defines the rules and the workings of the built-in treasury - which acts as the bank of the organisation.
The essence of a DAO’s operation is their decentralisation. This stands in stark contrast to centralised organisations, where a central authority determines all decisions that are made. Tech giant Apple is one example - the CEO, Tim Cook, is the main decision-maker within the organisation.
In comparison, DAOs have flat hierarchies. The organisation and its resources are collectively owned and managed.
A Common Outcome
Members of any DAO have a common goal that they are looking to achieve. Reasons for their assemblage may vary - from pooling funds to buy NFTs, to creating a crypto social club.
How the resources pooled together by the organisation’s members are used is democratically approved. No singular entity or group has veto power in DAOs. Power is distributed through all the members. All approved changes in the organisation can be publicly tracked on the blockchain.
Everything is pre-programmed in the DAO’s smart contract, so usage of resources is transparent and implemented impartially. Since no 3rd parties are needed in the execution of approved decisions, it renders the organisation free of human interference. Consequently, human error is reduced.
This system is highly efficient, given that there is no red tape and paperwork in implementing confirmed decisions. Some DAOs that have made waves in recent months include TIME Wonderland, IreneDAO, and OlympusDAO.