DAO, or decentralized autonomous organization, is seen as a new kid on the block but it has already evolved into a disruptive technology. It’s only recently that this community-led organizational structure has emerged as a huge success under DeFi 2.0 protocols. DAO is changing the way organizations run their businesses, giving power in the hands of participants, which has led to the increasing demand for DAO development.
DAO has inherited its features from its underlying blockchain technology to become disruptive governance model for big and global organizations. It is a community-led governance mechanism that is fully automated and runs on a blockchain network and smart contract-based apps without any central authority. A DAO is highly transparent compared to old traditional organizational structures. Its rulebook, activities, and financial statements- all exist on a public blockchain network and are verifiable at all times, down to every single transaction. DAO is also offering huge scalability to the organizations, giving them global accessibility by removing all the geographical barriers.
DAO was first conceptualized by a few members of the Ethereum community and the first-ever DAO was called Genesis DAO. It was created to build a kind of crowdfunded investment firm. Though it did not pick up, the good news is that it did not completely prevent the initiation and development of new DAO projects.
Earlier, it was used only for running financial platforms like Olympus DAO that allowed anyone with a project to pitch their business idea to the community and receive investment for funding the project giving investors full say in the business activities through voting rights and sharing the profits. Now it is being crowned as a revolutionary governance model which has immense potential to transform the way businesses or organizations, in general, are run.
DAO development now is looking beyond funding and finance and a vast majority of businesses across the industry are embracing DAOs. DAO has been leveraging blockchain technology to penetrate new industries and industry experts are predicting it to explode big with its disruptive use-cases.
To understand what potential DAO holds for the modern business world, it’s important to look into a few interesting and futuristic use-cases of DAO which can deliver truly decentralized, reliable and scalable platforms. But before talking about its use cases, let us first briefly understand how DAOs work.
DAO runs on blockchain and computational algorithms which are called smart contracts define the rules for participation and cooperation among the users. These rules stay immutable and transparent. This helps everyone in the DAO to review its operations and to ensure that rules are being enforced without compromising the protocols. DAO is operational under proposals that are concluded under a voting mechanism ensuring participation of all the users through governance tokens. The power of each person in the decision-making process depends heavily on the number of tokens they own. The governance process is completely transparent and autonomous as participants take crucial decisions for managing the DAO resources. Now let’s have a quick look at its use cases.
One space where DAO development is changing the game is metaverses. Metaverses are emerging as investment platforms and when a bigger community is involved, it becomes crucial for the platform to ensure decentralization and transparency. To democratize these gaming economies and induce decentralized trust, DAO has emerged as a front runner. As it is strongly built over a blockchain, it leverages all the features that blockchains are lauded for. Besides, it is also enabling shared ownership of virtual land in the metaverse. The prices of virtual lands have gone up manifolds making it nearly unaffordable for a normal investor to participate. Through DAOs, metaverses are able to let users invest in shared land ownership schemes, making them accessible and inclusive to all types of investors.
NFT-based Investing is also applying the DAO governance model to establish group ownerships. One of the examples of DAOs for NFT-based investing is HeadDAO, in which members have collective ownership of blue-chip NFTs. DAO offers a great trustless and transparent environment where group members can collectively make decisions regarding the NFTs they hold.
DAOs have been used to purchase assets also; like ConstitutionDAO which raised $47 million from 17,000 crypto enthusiasts. Contributors received governance tokens called PEOPLE, which gave them the ability to vote for all the proposals regarding the project. As the participants on the blockchain network don’t share any trust among themselves, proposal execution needs a fair participatory environment and high levels of trustlessness and DAO has delivered just perfect in this regard.
Crowdfunding is another project where DAO can play a much larger role in community building. When a project is in need of investment, the project team asks a large group of people to supply the investment. The investors are given DAO tokens and it is with this token that it is possible to take part in decisions and propose ideas. If the funding project is successful and is able to earn profits, the price of the token increases, offering good returns to the investors. DAO here removes the general apprehensions which creep in due to the wide prevalence of the Principal-Agent relationship. The possibility that the agent’s own self-interest might motivate him to take certain decisions not aligned with the principal’s interests gets eliminated with DAO. No more does the power to make decisions remain with any central authority. Investors vote for every decision and run the project.
dApp governance is also a huge space where DAO is proving to be a source of real decentralization. DeFi platforms are highly scalable and with this comes a dire need for inducing reliability into the platform. DAOs when integrated with dApps offer autonomy, transparency and trustlessness to a decentralized platform.
Boardrooms are also going to get transformed completely. DAO has the potential to radically reshape the future of corporate governance. Entrepreneurship are getting democratized and so is the management. Agent structures and even traditional hierarchies are being criticized for causing inefficiencies in information processing and flow. Hence, DAO can help big corporations get rid of inefficiencies that usually stay hidden in processes, human resources, policies and regulations. It is not very far when we see no CEO, no boss, fully managed by DAO organizations.
DAO is certainly a new, exponential technology that has the potential to create significant changes across the future-oriented organizations which seek a truly decentralized, autonomous and transparent governance model. DAO model is merging with the existing organizational structures and this will certainly start an era of renaissance for corporate governance.
At Antier Solutions, we offer DAO development services to help businesses tap into this market. Our cross-functional team leverages their deep domain knowledge, rich experience, and technical prowess to implement any use-case of DAO and help you accomplish your business goals.
Connect with our subject matter experts to share your needs for DAO development.