What are DAOs and how do they fit into the Gear network?

A decentralized autonomous organization (DAO for short) is a new way of managing an organization or institution, enabling individuals to work together for a specific cause in a transparent, fair and honest manner.

DAOs are a great way to collaborate with peers (who you may or may not have met) around the world to contribute to a specific cause. In addition to working together, DAOs are also safe places to invest money in specific areas.

In simple terms, DAOs can be viewed as online organizations of like-minded individuals that are owned and managed fairly by group members.

As mentioned above, DAOs provide a safe alternative to pooling funds for specific causes. This is because DAOs have built-in treasuries, and no one has access to funds without the approval of a majority of members. But DAO organization members manage more than just money. Instead, decision-making is governed by proposals and voting, ensuring everyone within a DAO has a voice. This is important because it means that there is no central entity that can manipulate anything for personal gain or based on personal beliefs. Instead, DAO makes everything transparent, and anyone can view the DAO's rules.

So, how do DAOs work if there is no single entity that can control how they work? The most important feature of a DAO is its smart contract. Essentially, it's just lines of code that define the rules for an organization and its vault. The advantage of using smart contracts to define the rules and govern the DAO is that once the contract is launched, no one can change any rules unless a majority of members votes. This also means that funds cannot be spent without the approval of a majority of members.

Another important aspect of DAOs is their membership principles. These principles determine how voting is done, as well as several other important parts of the organization, including how ownership is measured.

The rights governance of DAOs is mainly realized through encrypted token governance. Usually, users need to pledge tokens to actually gain the right to enter the group. Staking a token essentially means locking it up for a period of time to show commitment to the organization and ensure its security.

DAOs make a lot of sense. Because they offer a unique way of collaborating on projects different from the past. Starting a project, group or organization has traditionally been a very difficult and complex process. This is especially true when it comes to other people, money and legal documents. However, with a DAO, you don't need any trust cost due to its principle of transparency.

Instead, as long as you look at the code and agree to follow the rules, then you can verify that everyone in the organization will agree.

The concept and its intricacies may seem novel now, but rest assured that the concept of DAOs will have significant implications for how institutions and organizations will be run in the future.

Since DAOs do not require central institutions to function successfully, decentralization of some of the world's leading institutions may soon be achieved. Groups of individuals as well as important decisions made by stakeholders can be monitored.

The mass introduction of DAOs is something very exciting, especially for those who use blockchain technology every day. DAOs not only solve many problems of how modern organizations operate, but also provide an opportunity for future institutions to achieve transparency.

Currently, DAOs are operating in various ways in various industries. For example, a group could set up a DAO to manage a charity, accept donations and distribute aid. By far the largest use case for DAOs is decentralized investment funds. Investors pool capital, create a venture fund, and vote publicly on how the money will be distributed.

Creating a DAO is as easy as creating a smart contract. Of course, due to the multi-faceted nature of DAO, the complexity of the contract may increase accordingly. Fundamentally, however, when it comes to creating the DNA of a DAO, there isn't much a participant needs to do other than create a contract.