What are Decentralised Autonomous Organisations (DAO)
What is a DAO?
A DAO is … a group organised around a mission
That’s it … any group organised around any mission
How does a DAO work ?
In simple terms:
- money goes in
- members propose actions & vote on proposals (i.e. a DAO is “member-directed”)
- something is changed in the World
- money comes out
In practical terms
- members join and get tokens that provide voting power
- members propose actions (e.g. pay someone, invest in this art, accept this new member, change this DAO rule)
- members vote on proposals
- a successful vote triggers action (the “A” in DAO)
- decisions & actions are recorded on a blockchain (the “D” in DAO)
As an example, [based on dOrg]
- a decentralised team (who may never have met or spoken to each other or even know each other’s real world identities) build a product
- the team agrees how much they each should get paid
- each member submits a proposal to get paid $x (usually in some form on crypto currency/token/asset)
- a quorum of members from the organisation votes on the proposal
- if the vote is successful the payment is automatically (i.e. autonomously)made
[Note: Here is a sensational article on different DAO voting mechanisms.]
Example DAO use cases
Investor DAO: Works like a venture capital fund with member-sourced deals and collective investment decision-making. Example: The LAO
Curator DAO: Members pool funds to buy collectibles (e.g. a Picasso artwork). Example: Flamingo DAO
Creator (& fan) DAO: Members pool funds to finance creators (e.g. fans fund upcoming artist’s next album or journo to write story). [More] Example: CoinArtist
DAOifyed Company: Members (staff) join then source & deliver work. Example: dOrg [website + handbook]
Activist Hedge Fund DAO: Members coordinate & move markets. Example: WSB Chairman
Token gated community: Member-only access (e.g. working groups or backstage passes). Example: FWB
Digital Product DAO: Open & closed source software and crypto-asset development. Example: Compound Finance
Why are DAO good?
Transparent: all actions and funding in the DAO are viewable by anyone
Efficient: DAOs avoid “inefficient” hierarchy, bureaucracy and red-tape
Global: DAOs aren’t constrained by geography or jurisdictions
Democratic: Members all get to have a say in what the DAO does
DAO tools
There are a number of tools built for creating and coordinating DAOs:
