Author: Port

DAO this, DAO that, DAO what?

What is a DAO?

A DAO is a Decentralized Autonomous Organization.

DAOs are member-owned communities that do not have a central leader. They are owned and managed by their members. Everything that happens in a DAO happens through voting and approval of the majority. This ensures that everyone has the right to participate in a decision-making process.

Why do we need a DAO?

Normally, starting an organization is a lot of work and that work does not end with just starting the organization. You need funds, you need people to work with, etc. Imagine starting an organization with a group of random strangers from the internet. That organization will not survive. But with the DAO model, you do not have to trust anyone in a group. Trust the code which is almost always open source. Moreover, DAO’s are flat, transparent, and fully public, which means that whatever done inside is shared with the whole world.

Exploring DAO membership

The most common membership for DAOs is token-based membership which means that holding a token gives you voting rights in a DAO. MakerDAO is a great example of this. You can buy its token MKR from any exchange and thus have voting power in MakerDAO.

How does a DAO work?

DAOs are essentially organizations backed by a smart contract. The smart contract holds the money for the DAO, and it also keeps the rules intact. After the contract goes live on Ethereum network, it can only be changed by a vote held in the DAO. This also applies to the money spent. No money gets out of the contract without the approval of the majority. Since everything is done by a vote, the DAO does not need a central authority. All this is possible through a smart contract.