Crypto Made Easy | DAOs
Welcome to our ‘Crypto Made Easy’ series, where we simplify the complex world of crypto so that you can better understand, be informed, and feel good about joining the future of web3, internet, and connectivity.
DAOs are a way to organize, establish rules, and make decisions transparently & autonomously… all encoded on a Blockchain! A DAO (Decentralized Autonomous Organization) is a group governed by rules in its code, controlled by its organization members, and not influenced by a central government. Since the rules are encoded, no central body of power is needed, removing any bureaucracy or hierarchy hurdles.
A DAO functions without centralized leadership or management, helping everyone in the organization to have a say. DAOs are owned and managed by its members in the network. They have treasuries that are only accessible with the approval of the DAO’s members.
Decisions are made through proposals that the DAO’s group votes on. There are no leaders who can make decisions based on their own interests. Everything is transparent, and rules around voting and treasury-spending are encoded right into the DAO itself. All activity is recorded and public.
The fundamental mechanism of a DAO is its smart contract. The smart contract defines the rules of the organization and controls the group’s treasury. If anyone tries to perform an action that’s not covered by the rules in the code, it will fail. No one can spend its money without the group’s approval. Its members make decisions together without a central authority system.
A DAO can have many varying purposes. Some examples of DAOs include:
- Charitable organizations in which its members approve donations.
- Investment firms owned by a group who approves what or how much to invest in.
- A network of workers who pool their funds for office spaces and software subscriptions.
The possibilities are endless, transparent, and decentralized, making for a more fair and seamless way of voting, spending, and making decisions!