Decentralized Autonomous Organizations (DAOs) appear to be the next big thing in terms of business and organisational structure, according to the experts.
The best way to describe a decentralised autonomous organisation is to contrast it with the traditional organisational structure of businesses and organisations.
It is implied by the name that DAO’s organisational structure is not hierarchical, which means that it is not governed by a single individual or entity. While a traditional hierarchically structured company has a formal board of directors, executives, or upper management who govern every aspect of the business, the governance of a decentralised autonomous organisation (DAO) is based on community consensus. Any changes to a DAO must be approved by a vote taken by all of its members. The rules and governance of each DAO are codified in smart contracts on the blockchain, and they cannot be changed unless approved by the DAO’s members in a vote. Anything attempted that is not covered by the rules and logic contained in the code will be rejected by the programme. The smart contract also defines the treasury, which means that no one is allowed to spend the money without the approval of the group . Their operations are kept confidential within the company, and in some cases, they are only known to the people in charge. The operations of the DAO, on the other hand, are completely transparent and extend throughout the world. Every decision made by the DAO is presented, discussed, and voted on in front of a large public audience. In contrast to traditionally structured companies, decentralised autonomous organisations (DAOs) are funded primarily through token sales through crowdfunding platforms.
DAOs have progressed over time.
The DAO, as it was dubbed at the time, was the first of these organisations to be established in April 2016. Running on the Ethereum blockchain network, it functioned as a decentralised application. New members could join by sending any amount of Ether to the DAO’s smart contract, which could be any amount of Ether. In exchange, they would receive a proportional number of tokens, which would allow them to vote on any and all of the DAO’s matters.
The DAO was on the verge of achieving success. It quickly amassed an incredible $150 million in funding, resulting in one of the most successful and exciting periods in the history of blockchain technology. Only two months later, a hacker discovered a flaw in the code and immediately began transferring millions of dollars in Ether to a blockchain address they had created for themselves. This hack resulted in the theft of approximately $70 million worth of Ether in a matter of hours, a total of 3.6 million Ether. The value of DAO tokens has plummeted by a large margin. After the attack, it was clear that The DAO was on its way out.
The story of the first Decentralized Autonomous Organization (DAO) has served as an important cautionary tale about the dos and don’ts of creating Decentralized Autonomous Organizations ever since.
DAOs are entering a new era.
Since the demise of their predecessor, decentralised autonomous organisations (DAOs) have advanced significantly. As Decentralized Finances gained popularity in 2020, the general public’s interest in them began to resurface. From managing some of the largest cryptocurrency protocols to applications in investment, social communities, media, and philanthropy, the applications of blockchain technology are becoming more and more diverse. There are already over 180 decentralised autonomous organisations (DAOs) with more than $10 billion in assets under management and more than 2 million members.
Generally speaking, they are regarded as the most cost-effective and ethical business model ever devised. Its sole concern is with the operation of the business. Moreover, because they do not require any executive managers or employees, DAOs are able to provide a service without having to worry about paying salaries to intermediaries or making a profit.
Many businesses are making the switch to DAO platforms in order to categorise and automate certain segments of their operations, which will allow them to achieve rapid scalability and streamline their operations, all while maintaining their high level of service quality and customer satisfaction. The complexity of businesses is increasing, which means that a properly self-governing DAO must take into account a greater number of factors in order to operate efficiently. Companies must still consider the lack of legal or regulatory clarity in the DAO, as well as the lack of efficient coordination mechanisms and a lack of developed infrastructure, to name a few considerations. While DAOs are still several years away from achieving complete autonomy, forward-thinking businesses can already identify areas where DAO-component technology could improve efficiency.
The continued relevance of blockchain technology in 2022 is unquestionable. In the future, blockchain applications will be integrated into all aspects of human life due to the transparency, dependability, and efficiency they provide. It is already clear that Web3 will have a profound impact on how we perceive our environment in the years to come. Because it is described as an internet that is collectively owned by its users, decentralised autonomous organisations (DAOs) will undoubtedly be integrated into its core structure and will determine how ownership of the internet is distributed. The year 2021 has served as a jumping off point for new DAO experiments and models to be developed. Furthermore, the landscape of projects and companies working on the tools that will allow DAOs to realise their full potential is among the most diverse and abundant in the entire industry.