Definition of DAO and introduction to various DAOs

Author:@shscry31

Historically, the concept of organization has always been centered on a strict ownership structure. In the last few decades, companies have begun to introduce open, flat organizational structures, which allow more people in the company to have their voices heard. Ultimately, however, making decisions for the organization as a whole is usually the responsibility of one or a few individuals.

When we look at large companies, a clear hierarchical structure is the norm. After all, Apple, Google, and Facebook all have a CEO, CTO, and CMO, along with directors, managers, and corresponding subordinates. Early stage startups and large companies alike have clearly defined ownership and leadership structures. While it was possible to have equity in a company and theoretically own a part of the organization, its influence was very limited.

For centuries, the dilemma of defining ownership, hierarchy, and rules has presented a major obstacle to organizational development. But what if a company doesn’t necessarily need owners? This question has been based on idealism for most of history. And today it is possible to achieve distributed ownerless organizations thanks to the emergence of DAOs (decentralized autonomous organizations).

What is a DAO?

A DAO, sometimes called a distributed autonomous corporation (DAC, decentralized autonomous corporation), is an organization represented by rules encoded in a computer program that is transparent, controlled by shareholders or token holders, and independent of a central authority. DAO uses the blockchain to validate transactions.

Everyone in the DAO can post proposals and vote to make decisions. Cryptocurrency is used to represent key values, and the vote with the highest amount at the end of a specified period wins. This is in direct contrast to other forms of voting, which usually have equal weight per person. Typically, the proposal is a “yes or no” question, i.e., should company A develop product x?

Why do people want this?

Fast, borderless business decisions

If someone in country A wants to start a business with a founder in country B, C, etc., the current process of doing something is very complicated. Different jurisdictions have different requirements. The timeframe required to make a decision also varies. For example, let’s say that someone in country A only needs one day to officially set up the business, while the one in country B needs three months to get started. Clearly, the person in country B does not have the same resources as the person in country A. DAO provides a solution by adhering to a standard set of rules that allow everyone to work under the same conditions, regardless of their geographical location. Essentially, one of the main reasons for creating DAOs is to provide an equal system for setting up and running organizations.

Organization-wide voting

Many companies have a board of directors to make important decisions. The problem with doing so is that these organizations typically only vote on a small number of elected issues and do not necessarily represent the majority of the organization. DAO can change this by allowing anyone in the organization to vote on the issues they care about. For example, A may care about Issue A and Issue C, but not much about Issue B.

With a DAO, A can vote on proposals with the appropriate percentage of tokens based on how much they care. Instead of using a system that ignores or disregards input from members of the organization, DAO ensures that all votes are counted and displayed to everyone.

No tampering with rules

Within any organization, policies and rules dictate what can and cannot be done. For example, in one company, employees who don’t follow the rules may be penalized. If someone is late for work, this may or may not result in a corresponding deduction in pay. This decision can be automatically enforced by a time stamp, but not all organizations enforce it. For example, if the boss is late, it may change this rule by setting an exception. In a DAO, it will ensure that the rule applies to everyone through code. An established set of rules within an organization cannot be tampered with unless the voter base agrees to do so.

The most popular DAO at the moment

Dash DAO

DashDAO is managed by a master node (an equity holder holding at least 1000 DASH tokens). Master nodes can run important functions, including InstantSend and PrivateSend. They also vote on proposals for the use of Dash treasury funds. Anyone can submit a proposal to the master node. A fee of 5 DASH is required as an anti-spam sending fee. If enough master nodes vote, then the proposal can be funded.

BitShares

Released in 2013, BitShares was the first platform to implement DAOs through a delegate and witness election process. Delegates submit updates and improvements to the platform. Witnesses validate transactions and publish them to the blockchain. Anyone who holds a BTS token, which is the platform’s native token, can vote.

Aragon

Aragon has a DAO which allows its token ANT holders to create their own DAO organization and vote on decisions. Other features include mining new tokens, paying out various tokens to users, and setting up custom permissions for individuals within the organization. Projects like Liverpeer, MyBit, and BrightID all use Aragon.

MakerDAO

MakerDAO uses a DAO where holders of its native token, MKR, can vote on decisions affecting their P2P lending agreements. MKR token holders vote on the annualized lending rate (stabilization fee), the ratio of collateral assets required to open each CDP (collateralization rate), and the ability to shut down the protocol in the event of an ETH flash crash or other unforeseen circumstances.

Moloch DAO

Members of the Moloch DAO enjoy the collective benefit of DAO-funded improvements to the public good. Moloch DAO is currently focused on funding the development of Ether 2.0.

DAOStack

DAOStack functions for Alchemy, the first real-time decentralized application built on DAOStack. Alchemy is currently managing real-time DAOs for organizations like ETHGlobal, Kyber, and Polkadot. When the voting is over, people who predicted correctly can gain from their pledged interests. GEN is the native token of DAOStack, designed to help decentralized organizations scale efficiently without compromising their value.

Can a Fortune 500 company become a distributed organization?

In 2017, Siemens became the first Fortune 500 company to use a DAO within its walls. The concept of running a large company entirely on a DAO is intriguing, but not quite practical yet. If a Fortune 500 company were to suddenly decide to move to DAO today for all of its governance, this would create a myriad of technical challenges (UI/UX, security, scalability) that would need to be addressed to enable the blockchain to support such organizational structures. The limitations mentioned above will also apply. There will be a learning curve here for the participants.

Finally, there is the human factor to consider. If participation rates are too low, it will be difficult to discern whether the vote actually represents a true majority of the organization. Too much reliance on DAO proposals and voting can also lead to individuals making many small decisions on an ongoing basis, which fundamentally limits the amount of time voters actually have to complete their assigned tasks. Realistically, creating smaller organizations running on DAOs is more feasible for the reasons mentioned above.

DAO on ICP — NnsDAO

It is worth mentioning that in addition to some of the DAOs mentioned above, NnsDAO is a DAO that exists on Internet computers. for NnsDAO, their vision is to be a DAO platform for development, and for users can log in through the IC account, and create their own digital passport system, in the Nnsdao ecology can participate in the ecological projects, and can have the function of continuous unlocking skills, such as Icpdrops, NFTs, Grants, etc., and for the conditions required to unlock, everything will be bound by smart contracts, the development of the agreement by the user governance voting decision, and ultimately will be a completely open, user-governed decentralized organization.

There is no doubt that NnsDAO exists as a decentralized organization that all ICP enthusiasts would like to join, so if you like ICP, have you joined NnsDAO yet?