Well, to put it simply, DAOs are basically the organizations without any owner. Isn’t that interesting? The idea goes back to 2009 when the first cryptocurrency was launched without anyone to govern it. So, a couple of years after that, the tech geeks and entrepreneurs realized the potential of blockchain technology and started introducing the examples of Decentralized Autonomous Organizations.
|Pros of DAO||Cons of DAO|
|Decentralized decision making||Ignorant decision making|
|All members can participate; a win-win situation||Legal restrictions in some countries|
|Highly efficient||Communities are still divided – whether to give control of financial dealings to the public or not|
|Transparent||Generally, not very scalable|
What’s a Decentralized Autonomous Organization? A Brief Explanation
Firstly, it is important to understand that whether a startup/organization is DAO or not, commercially speaking, it remains a company. However, there are major differences to consider when we talk about ‘how things are done’ and ‘how they operate’.
So, in regular corporate organizations, there is a complete hierarchy and the CEO holds the absolute authority over all the decisions made within the company. Unfortunately, this culture promotes centralization and could be disastrous in many cases. Therefore, we now have DAO-model, which literally thwarts this hierarchy.
As a result, every stakeholder has the right to express his views and take part in a decision making process. Thus, ensuring that the power remains decentralized and a voting process is implied to make all the decisions.
Examples of Decentralized Autonomous Organizations
Let us now have a look at some of the well-implemented examples of DAOs.
Well, this venture is particularly aimed at businesses and allows them to offer crypto-economic incentives for various processes. Moreover, they also enable the organizations to define the scope of each process, thus making it even more reliable from the very beginning.
Just to clue you in about the underlying tech, please note that a smart contract is generated for each individual process and all of its related functions. Therefore, it successfully takes out the emotional bias and if a particular task was set for execution at a particular time, it will execute without considering the influence or personal relations between stakeholders.
So, this is where DAOStack takes a clear lead from most of the competitors. It comes with a full stack package that the developers can utilize to roll out their personalized DApps. Once built, the customers can avail DApps from a dashboard.
Therefore, if you look at it, DAOStack is more like a Wordpress for Decentralized Autonomous Organizations.
Initially, this project was launched as Nxt blockchain. However, with the passage of time, they transformed to Ardor, which happens to be a venture for the creation of custom blockchains.
Going deep, this Java-based platform nests some decent functionalities, including tokenization, voting system, a marketplace for linking up different blockchain services and plenty of other features typically used in a self-governing environment.
However, despite the factor that they follow a blockchain-based model, Nxt has made some changes to bring more efficiency, security, and transparency onboard. For instance, they keep the transactional tokens and forging coins completely separate from each other. Thus, ensuring that the two departments (i.e. governance and transactions) can never be interlinked. As a result, Nxt is able to provide a much more scalable solution.
So, this is purely a scheme for providing incentives and can also be considered a decentralized credit system for the Dai stablecoin. Primarily, it allows you to lend and borrow the coin, secured against the USD.
However, considering long-term incentives, please note that if you hold the MKR tokens, then you also get a chance to vote on various issues. Apart from that, members are also given rewards as the platform grows and the token matures.
If you have ever come across a crowdfunding platform, you would understand the concept behind MolochDAO more easily.
So, think of it as a huge organization with a wealth of capital. However, there is not a centralized authority for deciding whether to invest in different ventures. In fact, the members must vote and decide which project should be financed.
Please note that they are entirely focused on the Ethereum ecosystem and are mainly popular for the very reason as well since they offer funds to the developers who are creating DApps on top of Ethereum.
Moreover, their worth and reliability could also be evaluated from the fact that Ethereum founders poured in 2000 Ethers to support the MolochDAO.
So, now that we have explored some examples of Decentralized Autonomous Organizations, it is quite evident that even though they are rolling out decent use cases and are progressing steadily, there is still a lot to be done. Moreover, since there is a divide between the community, we need to take into account the concerns of all industries (finance in particular) and address them in the solutions to make DAOs popular and widely acceptable.