What is a DAO in 2022?
Tags: blockchain
Published: 2022-03-24 20:28:06

🔍Have you been hearing the word DAO tossed around and want to learn more?

Please, follow along with me then for a short primer.

## What's a DAO?

A DAO is an online community with a shared crypto wallet.

It's an alternative to traditional companies and hierarchies, governed by crypto-holders.

In more detail, a DAO is an organization with control spread out amongst member, vs top-down.

They are organized with smart-contracts, and members use 'governance tokens' to vote on decisions made by the DAO.

The DAO then executes these decisions, like a machine.


## How do DAOs work?

- Governance mechanism is provided by the smart-contracts
- Governance tokens are used by members to vote on actions taken by the DAO
- more contributed = stronger vote
- Outcome can also be based on participation

## Advantages of DAOs?

- 📖 Transparency - all actions viewable by anyone.
- 🔥 Global power - anyone anywhere can contribute
- 💵 Cheaper - tools can be used like Legos, so little needs to be built from scratch.
- 👨‍👩‍👦‍👦 Collaborative - giving everyone a voice pools mass knowledge

## Disadvantages of DAOs?

- 🏢 Flat structure - slower to operate as decisions take longer to make with no clear structure
- 😡 Feuds - strong disagreements could split the group into two.
- 👸🏽 No change - in some DAOs, those with the most tokens call the shots
- ⚖️ Legality


## Different types of DAOs

- 🏗️ Crypto projects - managed by decentralized governance where token holders can vote on the direction of the project. e.g. MakerDAO.
- 💸 Grant funding - can be used to award development funds automatically based on set criteria. e.g. MolochDAO.
- 💰 Investment - MolochDAO has been forked many times to create for-profit DAOs which can distribute + transfer assets between members. e.g. MetaCartel Ventures.
- 🖼️ Collecting - the non-fungible token (NFT) boom has seen collector DAOs such as PleasrDAO flourish.

Btw, MetaCartel Ventures is registered as a Limited Liability Company (LLC) in crypto-friendly Delaware.

So look into Delaware if you want to bring some traditional legitimacy to your DAO.

## Origins

The original DAO was 'The DAO'

Before it got to launch, a hacker managed to steal $3.6 million dollars worth.

Ethereum decided to do a hard fork, essentially rewriting the blockchain and undoing the hack.

In this case, the blockchain was proven to no longer be immutable.

However other projects continued working on refining DAOs behind the scenes:

- Aragon
- DAOstack
- DAOHaus
- Colony

These guys learned from the mistakes of 'The DAO' and now build and run DAOs for some of the largest DeFi protocols today.

## The future of DAOs look bright

There's been a recent revival in interest, both from the public and developers who are working hard to bring new technical innovations.

Many in creative industries are starting to use DAOs, to make fashion brands and filmmaking groups.

"Investment DAOs" are an interesting take on decentralized organizations, where the users vote on which projects to invest in.

"Collector DAOs" focus on acquiring high-value items like NFT's, with PleasrDAO being the most famous group.

## Closing

DAOs will undoubtedly get bigger as time goes on, refining current trends such as

- anonymity
- progressive decentralization
- better incentives towards participation.

We may even see DAOs become members of other DAOs!

This thread was my notes summarizing the contents of this articlehttps://decrypt.co/resources/decentralized-autonomous-organization-dao