In the face of growing blockchain, NFT, and crypto markets, terms can often be passed around that no one fully understands. (Some people are still just trying to understand what the heck Web3 is.) Fortunately, there is one term that we’re happy to break down for you — DAO, or Decentralized Autonomous Organizations.
With this guide, you’ll get a better understanding of just what a DAO can do. You’ll also learn what kind of DAOs are on the market, and how they can impact the market in the future.
Breaking Down the DAO
A decentralized autonomous organization — also referred to as a DAC, or decentralized autonomous corporation — is a group that basically works its way into a business circle all on general terms, without so much as a supervisor or a leader to guide them.
Participants typically form a DAO using smart contracts. This usually revolves around some kind of investment, say crypto or with other funding, depending on the rules.
With their acceptance into the DAO, members are able to make decisions on how money goes within their circle. What’s more, they aren’t limited to specific markets, and they can buy into these groups worldwide.
The original DAO actually got its start way back in May 2016. At that time, it managed to build $150 million in crowdfunding.
However, without security in place, it became the target of hackers, with $50 million in cryptocurrency lost within a matter of weeks. (Fortunately, the money was returned with the help of the Ethereum blockchain.) After that, investors set up better security measures for future programs.
A DAO can have any given purpose, depending on what the group has in mind.
In fact, one group even attempted to try and get one of the original copies of the U.S. Constitution. (Look up ConstitutionDAO, if you’re curious.) They weren’t successful, but many have gone on to other groups to see what kind of investments are on hand.
What Kinds of DAOs Exist?
There are a number of decentralized autonomous organizations on the market today, though only a handful has received recognition.
We mentioned ConstitutionDAO above, under the token name PEOPLE, as in “We the People.” However, there are others, such as the original DAO (under simply “DAO”); Dash (“Dash”); Steem (“Steem”); and Uniswap (“UNI”). Each one was established over several years, with buyers joining in on the fun to see what kind of investments are available.
As far as other types of DAOs, some exist merely for the sake of getting a business up and running.
Considering the growth in blockchain, NFT, and crypto over the years, a majority keep focusing on digital financial gain. However, there are also those that were built around strong communities, such as Mantra DAO, which lets people do with their crypto assets whatever they see fit, depending on their business savvy.
The problem is keeping a balance so that the DAO doesn’t get out of hand, and someone doesn’t invest too much.
Case in point, Build Finance DAO went through a coup last year when one person ended up getting too many tokens. Unable to stop them with a proper amount of tokens to outvote them, they seized all the assets within the DAO, eventually closing it down.
This is why balance within decentralized autonomous organizations is so vital. It can get out of hand if the proper governing and security aren’t on hand. And that brings up an important question about its future.
What’s the Future of DAOs?
The real question is if DAOs hold any kind of value. The truth is, despite unscrupulous conditions that can occur, they do.
Companies use them all the time in an attempt to build advertising opportunities, while others act as institutions in which people of all skill types can invest, if only to have a say in a major company without having to invest billions into it. (Though the bigger, the better, in some cases.)
One key asset that comes with DAOs is building a business community.
True, there are some shady types out there, like the one that drained Build Finance DAO without anyone looking. However, there are also those curious about the new markets taking shape. With the right guidance from fellow buyers, they can truly find success. It all depends on experience, investment, and wanting to see a decentralized autonomous organization succeed.
How Does One Start With a DAO?
Honestly, the best way to learn what a DAO can do for you in terms of business is to get advice and simply jump in.
Is it a risk? Sure, but a lot of markets are these days, and there’s pure excitement in watching stock value rise. That and having a purpose when it comes to your business investment, even if it’s something as ridiculous as buying a copy of the Constitution.
Obviously, check all the bases before you consider putting your money in. But who knows? You just might find a decentralized autonomous organization that’s worth your time. It may secure your future faster than you might even imagine.
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