The ideology of the crypto-utopian is to remove faulty institutions across the globe by developing a blockchain technology-based model from scratch. Initially, the visualization of cryptocurrency was not an asset but rather a substitute payment gateway. Smart contracts, proposed by blockchain, are an attempt to establish a trustworthy form of legal governance. Incorporating both to develop a reliable, efficient, and secure financial system is the sole purpose of DeFi (Decentralized Finance). However, DOA is the reconceptualized on-chain design of the traditional operation. Stan Larimer was initially the creator of the DAC (Digital Autonomous Corporation) concept, which was later reconstructed as DAO (Digital Autonomous Organization) by Vitalik Buterin, the originator of Ethereum.
Decentralized network architecture is one of the prime attributes of digital currency. Instead of being controlled by a single entity, decentralized networks are controlled and managed by a group of participants. A peer-to-peer network where each node acts as a participant and regulates the functionality of the network. Usually, digital currencies deploy decentralized stature to achieve high-end security and privacy, which is usually not available in conventional currency transactions.
Decentralized Autonomous Organization: An Overview
A decentralized autonomous organization is an organization represented by protocols enciphered as a transparent computer program, under the administration of organization members and not influenced by a single entity (like the central government), occasionally referred to as DAC.
Decentralized Autonomous Organizations characterizes by the application of blockchain innovation to supply a secure digital ledger for monitoring digital exchanges over the web, solidifying against fraud by trusted timestamping and propagation of a distributed database. This methodology eliminates the involvement of admissible trusted intermediaries from any form of decentralized digital interaction or cryptocurrency transaction.
The tariff of blockchain-enabled transactions and the corresponding data reporting equalize substantially by the withdrawal of intermediaries and the need for the iterative recording of contract exchanges in various records. For instance, blockchain data can replace public documents such as deeds and titles if regulatory bodies permit. Thus, theoretically, a blockchain technique entitles numerous cloud computing participants to set foot in loosely associated peer-to-peer smart contract collaboration.
DAO is a type of venture capital fund based on open-source code and without a distinctive management structure.
DAOs to know about
It has been proposed that patents, copywriting, news accumulation, voting certification, advertising, and the next-gen search engines are all upcoming candidates for the DOA model. Thus, in the most developed model of the cryptopian ideal, all organizations would eventually adopt the DAO model.
The idea is still struggling and trying to prove its worth after the original foundering of venture fund “The DOA” in 2016. However, this presently appears protracted in the future.
Apart from the pseudo-DAO organizations, which are groups of crypto investors who want to percentage assets and decisions, an increasing number of authentic DAOs are beginning to attain traction.
Here we will be discussing some DAOs that have caught our attention, with many more aspirants and possibly many more approaching.
- MetaCartel Ventures
One of the most successful applications of the DAO concept is Uniswap. That is, to take the conventional underlying system underlying a foreign currency exchange – the order book- and update it with a Blockchain identical that works as well, if not better. Evaluating the achievements of the DAO model can be done by comparing Uniswap to its competitor Coinbase, which still uses the conventional order-book method.
The major innovation is the hybrid of the Liquidity Pool Concepts and Automated Market Maker (AMM). This combination allows the investors to trade their assets by eliminating the requirement of intermediaries. This is made possible because of an algorithm that guarantees that prices are regulated relatively.
The governing set of rules allows automated transactions amongst crypto tokens on the Ethereum blockchain platform through the employment of smart contracts. Thus, the efforts of bots and humans are brought together, with the bots accepting tasks such as automated liquidation of positions while the market makes unexpected moves.
Developing a real DAO is a tedious task. It requires a team of professional developers to create an autonomous principal nervous system that is resistant to vulnerable threats and in-built logical flaws.
The PhoenixDAO is a revamp of the decentralized financial ecosystem Hydrogen. Unfortunately, the original plan was not successful as though to be due to the member complaints. Moreover, the original idea violated the protocols of a decentralized system and the shortage of safeguards to save your forex dumping via the means of the significant coin owners.
The newly exposed ecosystem, coin PHNX, consists of a pool of optimized protocols to cope with the unique objections. The website features only directors in charge of verticals such as partnerships, communications, etc., in the “team” section.
The MetaCartel Ventures is a non-profit DAO whose objective is to support and fund projects looking to advance usability or demonstrate the new Web 3.0 use cases. This venture proves that there is no involvement of a centralized marketing team in web designing.
According to MetaCartel, the combination of “code and law” governs the organization. The DAO associates, known as Mages, shoulder the responsibility of performing the tasks that smart contracts are incapable of: performing DD, emerging investment ideas, and advocating the idea of funding.
They also authorize the entry of new members as a measure to avoid violation of decentralized system protocols. However, exiting the group does not require authorization and is carried out by AI protocol. The full share of the DAO assets is awarded to the withdrawing members.
‘Democratizing NFTs’ as the tagline of JennyDAO says so.
Unicly protocol governs the central AI of JennyDAO, which fragments the NFT assets, and controls the crypt consisting of the organization’s NFT portfolio. If a positive threshold of the voting members reaches, the protocol will free up the vault and sell NFTs. Even when the Unicly protocol controls things, the human token holders still need to perform their bit of share.
For example: evaluating the price of NFTs under consideration for purchase. Their reward is much like that of an asset holder in a standard investment fund, except that everyone participates dynamically in the DAO model.
Along with Uniswap, MakerDAO is one of the founding agencies of the new DeFi monetary system. While Uniswap made it viable to exchange cryptocurrency without the requirement of a beneficiary, MakerDAO permits the participants to lend and borrow in a way that mirrors an everyday bank.
The lending and borrowing aspects in a regular bank are decided by something of the political process, involving numerous internal departments negotiating over what the spread ought to be between loans and deposits.
Smart Contracts are responsible for managing the borrowing and lending process in the MakerDAO. The pairing of cryptocurrency with Dai stable coin opens opportunities for crypto investors to borrow a coin and predict the payback amount.
Surprisingly, MakerDAO has achieved a complete circle in phrases of decentralization. Although it began as a small decentralized operation, a “pure” DAO, a sudden surge resulted in the addition of an authoritative layer at the top to assist the new challenges of functioning at scale.
The developers recently assured that MakerDAO is once again a completely decentralized structure.
A DAO that acts as an organizer of the Bankless movement progressing in the direction of the future with greater freedom. Backed up by the globe’s first-ever media and culture, the mission of Bankless DAO is to guide the world to go bankless by developing a user-friendly interface to explore decentralized fintech through media, culture, and education.
The originators of BanklessDAO are currently proposing its associates to create 250,000 new Bank coins in exchange for an infusion of capital to attain the onset plans by creating extra merchandise and involving extra labor. The word labor addresses designers, builders, content creators, and others who manage such projects. It is more like a public offering, with hardly any difference between private and public in the crypto world.
Future of DAO
An increasing percentage of Ethereum supporters believe that DAOs can be the future of work, human organizations, and cultural communities. As such, a few suppose that DAOs like DeFi and NFTs are due for a mainstream breakthrough before them.
For example: consider a vending machine requiring manual operations. It requires manual efforts to look for technical flaws, pay the power consumption bills, collect the money, and reload more products. The human interactions would have witnessed a reduction or elimination only if the machine was a DAO.
The mechanism could be capable of shipping records to the server, and subsequently, an automated system that would perform what humans performed earlier.
DAOs will replace CEOs’ decisions, border meetings, and routine operations in organizations, thus avoiding extra meaningless work. In addition, voting by shareholders can be done through tokens.
Also, DAOs can change the recruitment process, salary decision, or hiring developers, all by the power of tokenomics.
For a better understanding of the future scope of DAOs, let us dig into some of the benefits provided by them.
- Trustless and secure: DAOs ensure security and are trustless. If a developer can no longer continue working on the project, the system continues to operate, and a new developer is assigned through the voting system.
- Continuous functionality: Another benefit that DAOs offer is that their functions cannot be shut down. No authorities or financial entity can close a DAO unless they have significant tokens and submit them for voting. Even so, it will be a troublesome task for the authorizers to reach a consensus on such a proposal.
- Open-source ecosystems: Lastly, DAOs are open-source ecosystems, meaning the code is available for anyone to optimize. Usually, open-source systems are more reliable as the programmers can assist developers in finding the code bugs and suggest appropriate measures to fix them.
Continuous innovations have become an integral part of the digital world. Like in any other innovative system, DAOs are reflecting continuous improvements. As every technology or concept has some advantages and disadvantages, the same is true for open-source ecosystems. However, the limitless opportunities to disrupt analog structures that delay processes with unnecessary administration can be resolved with DAO in every economic sector.
While the DAO is still in its nascent stage and trying to strengthen its roots, it is evident that there is something at the core of the DAO revolution that is here to stay. Therefore, it will be pretty interesting to witness its growth to the peak.