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What is a Decentralised Autonomous Organisation (DAO)?

What is a Decentralised Autonomous Organisation (DAO)?
Author: Mansi Patodi

The Crypto world is exponentially growing in terms of technology. Each day a new name is tagged to the crypto industry, leaving a question mark in our minds. 

We know it is quite daunting to learn and understand the hidden theory behind those terms. But, if it troubles you, then why are we here? We will answer all your dilemmas.

One such term is DAO or Decentralised Autonomous Organisation, trending widely nowadays. Let us learn about its emergence, how it works, and the benefits and downsides of DAO.

Also Read: Which Cryptocurrencies to Buy in 2022?

Who Founded DAO?

The DAO a decentralised autonomous organisation was founded by Christoph Jentzsch, established on Ethereum blockchain in 2016; the primary purpose of DAO was to build a decentralised governance organisation that operates through a set of smart contracts.

Also Read: Types of Crypto Coins and Tokens

What is DAO?

If you work or own an organisation, how do things work there? To take a decision, you might have to conduct board meetings. To offer an appraisal or get an appraisal, your HR and Team Lead might have to sit together and discuss the performance. To distribute work among teams, several meetings have had to be held to synchronise the work effectively. 

And what does this all take? A lot of time management, resources, and still, sometimes things did not execute as required. There is also the possibility of manipulating results and decisions by some people, which creates disappointment and fuss among employees and the organisation. Right?

Now, imagine working or owning an organisation that works without any person's governance, where all the above tasks are automated and do not involve a middleman. We know this sounds unrealistic. But, this is what a DAO does. As the name suggests, Decentralised Autonomous Organisation is an entity that works independently through a couple of smart contracts.

Also Read: Cryptocurrency Taxation in India: Budget 2022

How do DAO works?

Decentralised Autonomous Organisations or DAO are code-driven and work on smart contracts. If you do not know what smart contracts are. Smart contracts are a predefined set of instructions that perform certain functions on meeting the applied conditions. 

You might be wondering, if there is no person involved, who makes decisions in such organisations?

The decisions are made through voting, so if you are the member of a DAO and a certain decision is to be made you will have the voting rights. Where each member votes and the decision with the highest votes wins and is executed.

What’s the point of being the owner if everybody has equal voting rights?

Everybody does not have equal rights. DAO have their tokens and the members who possess more tokens have more voting rights and vice versa. Through voting improvements can be made to DAO.

DAO is an open sourced, so every information is equally available for each member, no manipulations in the data or reports can take place anonymously. This helps employees track various activities, profits, deadlines and much more.

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Benefits of DAO


You do not have to be dependent on any manager or CEO for working of a DAO. It will keep running and the projects on DAO will be still on, no matter whoever leaves the organisation.

Cannot be ceased

No, government entity can cease your organisation, and if they wish to do so, they will require maximum voting rights.

Open Source

Everyone can access DAO. Anyone can view this organisation, since the code is live and all the rules, the profits, the policies are public. This can be considered one of the downsides because there are no business secrets, even outsiders can view this type of organisation.

Examples of DAO

Maker DAO, Aragon, Metacartel, Bitcoin DASH and the DAO are some examples of decentralised autonomous organisations.

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