Decentralized Autonomous Organizations (DAOs)

In the early stages of the internet, publishing became democratized, and anyone could code a simple website and start sharing their content with the world. With the advent of Web2, these activities were scaled worldwide through giant platforms like Google, Facebook, and Squarespace. The next wave of the internet, Web3, is set to replace service providers with open-source software and globally distributed individuals working together on common goals.

Web3 started with Bitcoin's credibly neutral monetary policy, aimed at fiat currency and central banks. Out of this movement and, in particular, Ethereum, have emerged Decentralized Autonomous Organizations (DAOs). These open-source software enables shared control of a crypto wallet to achieve collective objectives.

What is a DAO?

At its core, a DAO is an organization. Still, unlike traditional organizations, it operates in a decentralized manner, meaning that it is not limited by geography and operates beyond the control of any government. Instead, it is an autonomous organization, meaning it has the freedom to govern itself and control its affairs. The infrastructure of a DAO is software that can be run on any computer anywhere in the world, and the members of the DAO are determined by ownership of some of the DAO's token, which is issued on a blockchain such as Ethereum and acts much like a digital membership card.

Organization

To get things done, humans have always organized themselves into groups such as tribes, crews, teams, companies, and other forms of collective action. DAOs are no different. They can be a group of developers, investors, pressure groups, companies, charities, or local initiatives, and almost any existing organizational form can be reimagined as a DAO.

Autonomous

In contrast to traditional organizations, which derive their legitimacy from government agencies, the infrastructure of a DAO is self-sufficient, with no need for the blessing of a government department. DAOs may be unregulated, but they are not lawless. They can set rules regarding purpose, membership, voting, and other aspects. It is good practice for a DAO to have a written constitution or founding document so that in case of a dispute, it can be resolved by a Web3 dispute resolution service such as Aragon Court.

Decentralized

DAOs are decentralized in several ways, which gives them unique advantages over traditional organizations.

Infrastructure: DAO software can be accessed via a web browser, but its backend infrastructure is cryptocurrency and payment networks like Ethereum. The Ethereum network is hosted by thousands of computers worldwide, which all check each other's integrity. If one computer tries to process a rogue payment, it will be rejected by all the others. The decentralized nature of DAOs makes them the most robust and censorship-resistant organizations ever invented.

Payments: Because the Ethereum network is virtually unstoppable, so are payments in its native currency, Ether ($ETH). DAOs are free to contract and trade permissionless with any person or organization also on that network, as well as other decentralized cryptocurrencies that support DAO creation, such as Cardano ($ADA), Solana ($SOL), or Polkadot ($DOT).

Workforce: Being unconstrained by regulation, DAOs can access labor from anywhere in the world. Some DAOs actively recruit, but most rely on volunteers motivated to contribute to the DAO's objectives.

In summary

DAOs represent a new era of organizational structure that offers unprecedented freedom and flexibility while being robust and resistant to censorship. With the continued growth and adoption of cryptocurrency and blockchain technology, it has become clear that digital currencies offer a new level of financial freedom and security while being robust and resistant to censorship. With the continued growth and adoption of these technologies, they will likely play an increasingly important role in the global financial system, providing users with a decentralized, secure, and trustworthy way to store and transfer value.