The Next Big Thing Is Decentralized Autonomous Organizations (DAOs). The Next Big Thing Is Decentralized Autonomous Organizations (DAOs).

Crypto advances at breakneck speed, bringing with it a host of acronyms and shorthand terminology that can confuse even a seasoned veteran, let alone a crypto newbie.
CEX, DEX, AMM, TradFi, CeFi, CeDeFi, NFTs, ERC20, PoW, PoS And that's before we get into technical jargon like nonce, gas limit, SHA-256...

The most recent term to get widespread notice, NFTs (non-fungible tokens), has utterly exploded, with over $1.1 billion in cumulative sales volume.

Messari Research is the source.

I'm here to teach you about another three-letter acronym to be on the lookout for: DAOs.

The DAO's Method

So, what exactly are DAOs?

A Decentralized Autonomous Organization (DAO) is a type of decentralised autonomous organisation. A simple, layperson-friendly analogy is that DAOs are essentially corporations whose bylaws are written in code rather than on a piece of paper that exists in some municipality's file cabinets.

DAOs are programmable organisations of people, similar to how DeFi is programmable money and NFTs are programmable media.

DAOs ensure that their objectives and goals are immutable — chosen by a community of DAO members — by having their governance and operations codified in smart contracts.

They are not as opaque as traditional corporate governance, nor can Board procedures be thrown to the wind, as in the notorious Board scene from the HBO drama Succession (spoilers for the show in the video linked below).

DAO governance structures, on the other hand, are totally visible and auditable to anybody with an internet connection, and its procedures are absolute law — until the DAO decides to modify them.

The Origins of DAOism

DAOs rose to prominence with the creation of the first DAO, dubbed "the DAO," in order to venture finance up-and-coming crypto projects in a decentralised manner.

Unfortunately, in June 2016, the DAO was hacked, resulting in the loss of 3.6 million ETH (almost $9 billion USD in today's rates).

This occurrence compelled the Ethereum community to hard fork the blockchain in order to refund DAO community members, resulting in a split between the current Ethereum blockchain, which respected the refund, and the Ethereum Classic ($ETC) blockchain, which still contains the record of the DAO hack.

After that, DAOs went into hibernation for a while, until Maker appeared on the scene.

MakerDAO is an open source community that controls Dai, the most popular crypto-collateralized stablecoin and lending system in DeFi, which has almost $10 billion locked in.

They reintroduced the DAO structure in order to pass executive votes and align on the protocol's roadmap. These votes range from lowering the DSR interest rate to modifying the protocol's Stability Fee.

The best DeFi protocols. DeFi Pulse is the source.

DAOs have now evolved as a valid form of governance for open source projects and protocols, and are swiftly becoming the preferred method of coordinating between crypto project community members.

PieDAO is primarily interested in developing index products that combine numerous coins into risk-adjusted ETFs.

Aragon is a DAO that creates tools for other DAOs to use in order to organise and collaborate amongst members.

Why are DAOs Important?

DAOs are effective because they provide incentives and a solid foundation for thousands of people to organise themselves without the need for official jobs or hierarchy.

As a result, open source projects such as cryptocurrencies can scale their operations considerably faster than a typically managed entity such as a foundation/non-profit or a corporation.

Uniswap, for example, can perform roughly the same transaction volume as Coinbase despite having orders of magnitude less employees.

This is possible because Uniswap is run by a DAO, which allows the core development team and any $UNI holder to collectively decide how to progress the protocol.

Because UNI holders have a financial stake in the future of Uniswap, they are more motivated to engage in project governance.

This alignment enables UNI holders to be an investor, operator, and user of the protocol all at the same time.

Aside from human resource efficiency, DAOs are the inherently internet-native approach to administer projects, having been developed from the ground up on Web3 principles like open, permissionless, and decentralised.

academic master is a us based writing company that provides thousands of free essays the students all over the world we have hundreds of highly skilled writes all over the world working 24/7 to provide quallity essay writing services  to students all over the world

As a result, DAOs are more democratic than typical private companies because everybody can have a say in the roadmap of a protocol, whereas in a private firm, only the Board has such power.

DAOs enable holders to be an investor, operator, and protocol user all at the same time.

For the first time in history, complete strangers can coordinate hundreds of millions of dollars and create a product that serves millions of consumers without ever meeting in person, signing a legal document, or even knowing one other's names (many DAO members have pseudonyms like their Twitter handle or just their ETH address).

And the DAO keeps bad actors at bay. There is no mechanism for a member to steal money from the DAO – at least not to the extent that we have seen in traditional startup setups.

Because the code is binding.

What Comes Next?

Crypto DAOs have recently received a lot of interest due to the substantial balance sheets (called treasuries) that they command, which are earned through holding a percentage of the project's native tokens.

Some of these DAOs have billions of dollars in idle cash ready to be spent in order to create the highest possible income.

DeFi Weekly is the source.

The beauty of DAOs is that members of the community — not just the core dev team — have the ability to invest its funds in whatever way they see fit.

DAOs utilise the treasury to recruit more engineers and expand their product offerings, to invest in a robust liquidity mining programme to recruit more users, or to hedge by exchanging tokens for stablecoins or other protocol tokens.

It is entirely up to the community.

And, while DAOs are most commonly employed to control crypto projects, they can — in theory — be employed in any group of people that wants to incentivize and harness community engagement.

An intriguing DAO use case that has resurfaced is using it to deploy venture capital (yep, we've come full circle from The Dao days).

The LAO has invested roughly $40 million USD in Ethereum to improve the Ethereum ecosystem.

MolochDAO, like a government grant system, gives grants to Ethereum developers who seek for financing.

MetaCartel is a DAO that focuses on expediting dApp development, particularly around hackathon initiatives.

In contrast to traditional venture, a community of DAO members democratically decides which initiatives to fund.

For more amazing articles you can visit  My Articles