What is DAO ?

Decentralized Autonomous Organizations or DAOs are organizations that operate without any central authority. 

The WEB-03 users can combine be the owners of the platforms by using tokens that act like shares in a public limited company, DAO can be technically defined as a smart contract that automates the decision-making on reserves (tokens).

The token holders (members) of DAO approve the decision beforehand regarding for instance ‘when and where to make the investment’ the code in the smart contract automates the voting and result process.

Many communities of WEB-03 are defined as DAOs because of the layers of decentralized coding and automation.

How DAO works?

DAO operates through a blockchain technology, smart contracts and token-based governance system, basically a programmer creates a code or a smart contract which includes the rules for operating procedures of DAO this smart contract also includes rules for membership, voting and how the funds would be utilize. One can become the member of DAO buy purchasing initially offered coins.

Why DAOs are created?

It seems like most of the DAOs are created to facilitate the crypto currencies transactions and to provide more authority to the users also to validate the concept of decentralized organization that operates through a computer code which allows global collaborations and excogitation.

Advantages of DAO

The most common benefit of DAO is decentralized decision-making, further through DAO many complex business transactions can be automated which makes them much easier such as sea and air logistics. DAO runs through smart contracts on a blockchain platform, an open and transparent digital ledger that keeps the members involved in all activities.

DAOs operate using cryptocurrencies and do not require the involvement of financial institutions, and their policies are established through computer codes here the decisions are made through an anonymous decentralized voting process thus also don’t require any involvement of judicial courts. The transparent and decentralized model of DAOs creates trust among the members which in the future can potentially overshadow the conventional business practices.

Examples of DAO

In the contemporary world, there are thousands of examples of DAOs, we provide a limited few prominent decentralized organizations one such is, Uniswap it is an automated market maker (AMM), in elementary terms it is a collection of smart contracts that define a smart way to create liquidity pools, provides liquidity and swap assets. Another example is Internet computer organization or IC it’s an organization that allows WEB-3.0 service to run 100% on the chain or create fully decentralized applications (daps) along with many other such as non-fungible token (NFT) projects, eradicating traditional corporate cloud computing, etc. LIDO Dao LDO, Maker MKR, and Arbitrum ARB are further practical examples of Decentralized Autonomous Organizations (DAOs).

Decentralized Autonomous Organization (DAO)