'DAOs (Decentralized Autonomous Organizations) for Beginners ' cc: tatum_io blockchain dao
DAOs offer a unique way to grow and build decentralized communities with blockchain technology. That makes it a great use case of decentralized governance with blockchain technology.According to Wikipedia, a DAO is:
However, A DAO is not a company, and its members are not shareholders. DAOs are governed by smart contracts that can mimic real-life contracts. They are internet-native businesses collectively owned and managed by the members . On the other hand, DAOs are usually flat and fully democratized with no hierarchical management; members vote before any decisions are taken.
Also, the lack of hierarchy means that anybody can bring up innovative ideas for the group to consider. Since decisions are made by voting, nobody can shut down someone's idea. Although the governance was set to take care of that problem, a hacker took advantage of that bug. One month after its launch,At that time, 14% of the ETH in circulation was invested in DAO, so the attack was a significant blow to both the Ethereum network and DAOs in general. The network was concerned that many Ethereum tokens were under the hacker's control and could pose a significant problem.
There is no centralized Legal Entity; instead, the smart contract moderates voting and implementing decisions. An example of token-based membership is the MakerDAO token which is available on decentralized exchanges. Anybody can buy MKR and get voting power on the Maker protocol governance.Shared-based membership models are more permissioned ; you can't buy access to the project on an open market like the token-based membership model.
An example of this is MolochDAO, a Grant DAO that focuses on funding Ethereum projects. To join the DAO, a prospective member must submit a proposal to the group to decide if the prospect has the necessary experience and capital to join the DAO.
Like every other organization, DAOs must be able to balance the force of voice , exit , and loyalty . Community members can also vote on the protocol services like token distribution or opening up to liquidity mining or yield farming and fair launches. Protocol DAOs also introduced the concept of ERC20 tokens that have secondary market value and can be transferred from one platform to another.
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