DAO is an acronym for “decentralized autonomous organization,” an internet-native business run by open-source blockchain technology. They can totally transform corporate governance.
Decentralized Autonomous Organizations have built-in treasuries where they can access with their members’ permission. Decisions are made by suggestions that the group votes on over a set period. Thus, proposals and voting govern decisions to guarantee that everyone in the organization has a voice.
Understanding Decentralization Autonomous Organization
To simplify this concept, let’s take an example of a vending machine that acts as a middleman between you and a variety of food choices. The process is automated, wherein the wending machine dispenses your choice of food in exchange for a payment. However, this advanced automated machine still needs human intervention to operate smoothly, such as paying the electric bill, checking if it is low on stock, if it is low on stock, then more product needs to be ordered, and so on.
Now, if this vending machine were a DAO, then every part of the process where human intervention is required would be replaced with codes or a code version of humans (robots). This will ensure that the machine can check its stock and order new stock by sending information to its server. Thus, DAO is an organization with no intermediaries (such as a CEO) where the organization members make the decisions, and the changes take effect immediately. In addition, it is a code-driven organization that automates many of its essential functions, such as hiring, voting on salary, etc.
Top 5 DAO platforms
DAO is an acronym for “decentralized autonomous organization,” an internet-native business run by open-source blockchain technology. Moreover, the technology is regulated by rules written by its elected members that automatically perform certain acts without an intermediary.
Uniswap is a decentralized exchange (DEX) that allows users to fund liquidity pools and profit from them. It is built on Ethereum. Therefore it has the same security as the Ethereum blockchain. Uniswap is powered by two smart contracts: “Factory” and “Exchange.” These are computer programs that are programmed to conduct specific tasks when certain criteria are satisfied.
MakerDAO is an organization developing loan and savings technology and the DAI Stablecoin crypto-asset on the Ethereum blockchain. The main goal of MKR is to maintain DAI pegged to the US dollar. This dual crypto method removes ambiguity and boosts user trust in the project’s long-term stability.
Aragon is a DAO (decentralized autonomous organization) that allows other entities to create their DAOs on the platform by using smart contract templates. The Aragon Court, a decentralized digital jurisdiction used for the governance of the Aragon Network and to arbitrate issues between DAOs and individuals on the network, is the most vital aspect of the Aragon protocol.
Dash is another decentralized autonomous organization whose native spending money currently outperforms Bitcoin regarding privacy and speed. Dash is a quick, safe, and economical cryptocurrency with a network that supports instantaneously settled and presentable transactions, optionally private transactions, 51% attack immunity, and the first decentralized blockchain governance and self-funding model.
Compound is a mechanical money market protocol that allows users to deposit cryptocurrencies, earn interest, and borrow other cryptocurrencies against them. Users can lend and borrow 9 Ethereum-based assets through the Compound protocol, including 0x (ZRX), Basic Attention Token (BAT), and Wrapped BTC (wBTC). Users can also borrow cryptocurrency from Compound by putting up collateral that exceeds a certain threshold.
The main advantage of DAO is the lack of trust required between two parties and only trusting the transparent and verifiable code. Even though this concept is not perfect and concerns remain regarding its security, legality, and structure, it is still gaining momentum. Decentralized Autonomous Organizations can totally transform corporate governance. While the concept grows and the legal grey area in which they operate is addressed, an increasing number of organizations may adopt a DAO model to help manage some of their activities.