What is DAO?
A Decentralized Autonomous Organization or DAO is a community-led organization having no centralized control, instead, it functions around a specified set of rules over a blockchain network. Smart contracts lay the foundation of this autonomous and transparent organization, where decisions are taken as proposals through which voting takes place. These proposals are all about future planning regarding how the protocol will be operated and those proposals which arrive at some consensuses are accepted to be enforced.
Like at corporate structures there are hierarchies, here too each member of the DAO looks after the protocol in some way or the other. Well, there are incentives in this framework that increase the rate of participation in the voting to secure an individual’s and protocol’s best interests. This also ensures that the protocol remains robust and healthy as a great protocol means the increased value of tokens that each member of DAO holds. A successful protocol translates into happy token holders of DAO.
How does DAO work?
Ideation
DAO works according to the rules formed by the core team consisting of community members, which are applied by Smart Contracts. The foundation on which the DAO stands to operate is the smart contracts that are verifiable and are presented to be audited. This is done so that any potential member can have a clear understanding of how the DAO operates at each level.
Funding
Now, since we have covered the initial functioning of DAO, let’s know what is the next step after these finalized rules are written into the blockchain network. To raise funds for the DAO treasury, the protocol issues tokens in exchange for fiat currencies, and token holders have conferred voting rights in certain proportional to their holdings.
Deployment
After the funding gets completed, the DAO development gets into the deployment stage, now from herein any sort of changes would require reaching of consensus through voting. In simple words, once into the deployment codes of DAO can’t be changed by any special authority.
How to get into DAO?
It is worth mentioning that, not every DAO has the same purpose and to begin with you need to know the core function of a DAO. There are certain DAO that is based on technical governance and they might have different voting rights granted to the token holders for certain proposals.
Further, DAOs are often found to be calling their community so that interesting ideas can be churned out with the help of grant-funded projects or even an individual having an entrepreneurial idea can submit a proposal. The level of participation at every DAO varies, so some of the best ways are to join the Discord of DAO or just swap the governance tokens and get your attention over snapshot votes.
Conclusion
DAOs have offered transparency, automated efficiency, and a decentralized environment as they are built over open-source blockchain platforms, which makes them much more likable to non-profit organizations. A senior blockchain developer at Rejolut opines that DAOs currently can offer far better strategic advantages, when compared to centralized venture capital funding and in long term have the potential to transform the marketing industries in future.
