What is a DAO?
A DAO, or decentralized autonomous organization, is a network of smart contracts operating on the Ethereum blockchain. A DAO functions as a hub through which its contributors and consumers direct and control funds raised in a token sale using voting rights granted to token holders. The code governing individual contributions to a DAO operates under set rules agreed upon at the inception of the DAO, either by human vote or smart contract code. A DAO must decide at some point how it operates and generates value for participants while being controlled by a set of rules that are decided upon by its community participants.
At present, there is no issuer of a token in a DAO since all tokens are created equal on the Ethereum blockchain. The DAO's governance model is determined by the codebase and the rules encoded therein. This allows for a high degree of trust and transparency as all actions are visible to anyone with an internet connection who wishes to audit the DAO's operations.
The DAO, the first decentralized autonomous organization, was created in May 2016. It was founded by Christoph Jentzsch, Simon Jentzsch, Stephan Tual and Fabian Vogelsteller. The DAO codebase is open source and maintained by the Slock. it is a team under the name of theDAO. Check out this video from Christoph, really good: THE COMPANY WHICH CONSISTS ONLY OF COMPUTER CODE | CHRISTOPH JENTZSCH :
The concept of a decentralized autonomous organization was first proposed in 2013 by Ethereum co-founder Vitalik Buterin in a white paper. The DAO was the first to be implemented and went live on the Ethereum blockchain in May 2016.
A DAO is an organization that runs on smart contracts, which are self-executing contracts that follow a set of rules encoded into them. These rules can be changed by the community of participants that make up the DAO, but once they are set they are automatically enforced. This allows for a high degree of trust and transparency as all actions are visible to anyone with an internet connection who wishes to audit the DAO's operations.
How you can get involved in a DAO
DAOs are still in their early days and there are not many around yet. The best way to get involved is to find one that is relevant to you and join the community. You can also follow and contribute to the development of the DAO codebase on GitHub.
DAO Categories
There are four main categories of DAOs:
- Collective Investment Funds
- Decentralized Autonomous Corporations
- Voting-Based Organizations
- Multi-Sig Wallet Management Solutions
Collective Investment Funds (CIFs) are DAOs that pool money from investors in order to invest in projects, products or companies in a smart contract-based startup fund. The largest example is the Ethereum Foundation's ether sale which raised over $18 million to develop the Ethereum blockchain in 2014.
Decentralized Autonomous Corporations (DACs) are DAOs that operate by directing funds through a series of internal transactions. In this way, they are similar to a traditional corporation in that they have employees, shareholders, and investors. The first DAC was BitSharesX, which was created in 2014.
Voting-Based Organizations (VBOs) are DAOs that give token holders voting rights on proposals submitted to the DAO. This type of DAO is designed to make decisions that are in the best interests of the community. The most well-known example is the Decentralized Autonomous Organization (DAO) that was created in 2016 and raised over $150 million worth of ether.
Multi-Sig Wallet Management Solutions are DAOs that allow for the secure management of multiple cryptocurrency wallets. This type of DAO is designed to be an enhanced version of existing wallet software and operates with higher security than normal multi-sig wallets. The first example was Bitshares, which launched in 2014.
You can find more information about DAOs on the Ethereum Wiki. We also recommend checking out Swarm (decentralized crowdfunding), Boardroom (private governance), and Colony (company management).
Here are some examples of DAOs that are currently in operation:
The LAO is a for-profit, VC DAO. The LAO is a global group of Ethereum enthusiasts and experts supporting the work of Ethereum builders.
Gnosis is a decentralized prediction market that allows users to bet on the outcome of future events.
The Swarm Foundation is a decentralized crowdfunding platform that allows users to raise money for projects.
The Golem Project is a decentralized computing platform that allows users to rent out unused computing power.
Augur is a decentralized prediction market that allows users to bet on the outcome of future events.
Here is the full landscape
The future of DAOs
DAOs can run their own decentralized software that automatically interacts with smart contracts on the Ethereum blockchain. In this way, the future for DAOs is bright because they enable any organization or company to create its own digital token that can be used in a wide range of applications. Imagine being able to run your own corporation without being at the mercy of a CEO who controls all the money.
An example of this would be if McDonald's wanted to test out having its own digital token that people could buy. The public could then vote on how much money should be released from the corporation's bank account in order to fund different kinds of projects. This would be a way for the company to decentralize its operations and get feedback from the community on which projects it should invest in.
I believe that DAOs have the potential to revolutionize how organizations are run and will play a big role in the future of the internet.
Let me know if I miss something, let's be constructive and let's remember:
