DAO: How Code Can Govern The Users

Can you imagine a company having no CEO, no headquarters, and no HR department, yet managed billions of dollars in assets? Well, it seems like what seems to be just theory at one point of time is on the verge of becoming a reality through what we call Decentralized Autonomous Organizations (DAOs).

Briefly, a DAO is an organization represented by rules encoded as a transparent computer program. Instead of a traditional top-down hierarchy, DAOs use smart contracts on a blockchain to execute decisions. If you hold the DAO’s governance tokens, you can have a seat at the boardroom table and have your say in decisions that will impact that token's future. For example, you can propose ideas, vote on how to spend the treasury, and help steer the organization’s future. It’s like "The People’s Boardroom" in the Web3 realm where anyone with an Internet connection and a stake in the blockchain can participate.

The Maturing of DAOs

The creation of the Bitcoin network gave realization to the first peer-to-peer consensus mechanism upon which all other DAO was based on. Perhaps one of the best examples of a DAO was The DAO built on the Ethereum blockchain, which was later disbanded following a major hack that resulted in the organization losing a third of its funds. Despite this incident, DAOs still remain fairly popular e.g. DAO Maker.

Early DAOs were mostly experiments for crypto-enthusiasts but in recent years, the sector has matured into a sophisticated governance engine. So, let's list some factors that are fueling the growth of DAOs:

1. Hyper-Transparency:
   In a DAO, every cent spent and every vote cast is recorded on a public ledger. This pure level of transparency makes the financial corruption and "backroom deals" of traditional corporations virtually impossible.
2. Global, Permissionless Talent:
   A DAO can allow a developer in Tokyo, a designer in Berlin, and a researcher in Lagos to work together seamlessly. There are no visas required and no borders to cross—just a shared mission and a digital wallet.
3. Automated Trust:
   Because the rules are written in code, you don't have to trust a manager to follow through on a promise. If a vote passes to release funds for a project, the smart contract executes the transfer automatically. If the principles within a DAO execute as it is intended, you can pretty much eliminate red tape, corruption and bureaucracy.
4. Incentive Factor:
   Traditional employees often feel disconnected from a company's success. In a DAO, contributors are often rewarded by the native tokens. As the DAO thrives, the value of the members' "stake" increases, creating a powerful atmosphere of motivated participants.
5. Governance Innovation:
   We are seeing a shift toward "Governance 2.0," using models like Quadratic Voting (which prevents whales from bullying smaller holders) and Delegated Democracy (allowing you to give your vote to a trusted expert).



Web3 Onboarding You Can Try Now

Understanding a DAO (Decentralized Autonomous Organization) is less about reading code and more about understanding "digital democracy." It is a group where the rules are set by a smart contract and the decisions are made by the members, not a CEO. You can get your feet wet by trying the following:

1. Most DAOs live on Discord or Snapshot. So, why not try Snapshot.org and search for a project e.g. ENS, Uniswap or Arbitrum.
2. You may also try Developer DAO. They welcome developers of all levels who are interested to learn and build for Web3.

Some quick tips for DAO newbies:

1. Don't try to join 10 DAOs at once. Focus and pick one that aligns with your interests (e.g. a "Social DAO" for networking or a "Protocol DAO" if you like DeFi).
2. Turn off Direct Messages (DMs) in your Discord settings immediately. DAOs are prime targets for scammers who pretend to be "Support" and message you privately.
3. You do not necessarily need to be a techy to participate in a DAO. Perhaps you can contribute by translating languages, managing the Discord or take on other non-technical roles.

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DAOs are proving in the real world that we do not necessarily need bosses to be productive. Instead, it seems like we as an organization just need clear rules and shared ownership. From managing decentralized banks like Sky (formerly MakerDAO) to funding public goods, DAOs could act as the blueprints for the next generation of human coordination.

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