Decentralized Autonomous Organization (DAO) in Blockchain Technology




DAO

Contents
  • What is DAO
  • What is the use of DAO
  • How do DAOs work?
  • How to use DAO
  • How to get DAO membership
  • How to become a DAO shareholder
  • Example of DAO


Decentralized Autonomous Organization DAO is another concept in blockchain technology and it's one of the best so far. DAO is a blockchain-based technology that lets users organize and oversee themselves.

The "Decentralized" refers to no need for any central government interventions, and "autonomous" refers to the amplification of smart contracts and encoded transactions on the blockchain.

The creation of DAO was first made public by some members of the ethereum blockchain community in early May 2016. It was an outstanding success that produced 150 million dollars worth ether at that time. Furthermore, this value managed to reach a worth of 250 million dollars which is recognized as the biggest crowding in history.

The system is free from the governance of any central party. Additionally, users can receive funds from DAO by projecting their pitches to the community.

What Is the use of DAO

In building an organization with other people money and funding will be involved in the process and it requires trust in the parties you are working with. 

So by using DAO, no need to be suspicious or looking around for a trusted person as the DAO system will provide you with a hundred per cent credibility and transparency on the DAO code.

This advanced draws in so many opportunities for worldwide collaboration. So this is why DAO hold its importance in the world for trade.

How do DAOs Work?

The foundation of DAO is Smart Contract. DAO group regulations and organization rules are ingrained in the smart contract. The rules can not be changed once the contract is published on Ethereum. However, a voting system can be used to approve any changes. If any member does something that is not under the logic and rules of the created code, the action will cease to function. Without the group's permission, nobody can spend the money as funding is also specified by the smart contract.

The DAO groups decide rulings altogether without the central authority, and donations are granted automatically when votes are passed. Smart Contracts are untameable after they get sent on Ethereum. Nobody can modify its rules without getting caught by other members as everything in this system is public.

How to use DAO

You can use DAO in the ways listed below:
  • In Charitable Organizations: By using DAO in this category, you can approve membership and contributions from people around the world and the respective organization can decide on how they can spend these donations.
  • In freelancer business: Another excellent example of DAO use is creating a network of contractors who are willing to combine their funds for office areas and software subscriptions.
  • Pool investment: One can establish a venture fund that merges investment capital and counts on enterprises to support it. Later on, refunded money can be distributed again among every DAO member.
DAOs are highly functional in numerous funding areas, users can legally use DAOs according to the required scenario. All you need is a DAO membership.

How to get DAO Membership

There are various categories to get DAO membership. Membership can conclude the working procedure of voting and other crucial roles of the Decentralized autonomous organization.
  • Token-Based Membership: Primarily on a decentralized trade, these tokens can be exchanged for permissionless trade. Depending on the type of token, members can acquire full permission for all activities. At the same time, others need to offer contributions in liquidity or any other proof for credibility. Either way, simply having a token offers you access to voting. This is commonly employed to regulated vast decentralized strategies and tokens themselves.
  • Share-Based Membership: This membership is more restrictive yet quite open. All interested members are allowed to enrol into DAO usually by providing valuable contributions in the form of a task or tokens. Having shares gives members unrestrained ownership and voting rights. Group members are free to exit anytime with their earned share of the profit.

How to become DAO Shareholder

It is easy to invest in DAO, if you know how to buy Bitcoin and have a wallet already, you are good to go. All you need to do is to buy tokens of a particular DAO, which is roughly equivalent to buying shares of a company. Once the funding phase is closed, you will be able to make proposals as well as vote on them and perhaps even make a profit.
The number of purchase tokens will correlate with the amount of voting power you will get.

Example of DAO

Any autonomous organization with a decentralized governance and budgeting system can be called a DAO. This makes practically every decentralized cryptocurrency network a DAO, especially considering the initial crowdfunding period the precede the official launch. Below is a shortlist of some of the most well-known successful DAOs.

Dash- An open-source, peer-to-peer cryptocurrency, which offers instant payments and private transactions.

Digix Global- The gold standard in peer-to-peer digital assets. Each Digix Gold token represents 1 gram of LMBA standard gold and is secured in Safehouse vaults.

BitShares - A decentralized cryptocurrency exchange, which markets itself as a fast and fluid trading platform, providing the freedom of cryptocurrency combine with the stability of the dollar.


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