What is a Decentralized Autonomous Organization (DAO)?

Decentralized Autonomous Organization (DAO) is a safe and effective way to work with like-minded people, all over the world.

Think of an online business that is run and managed by some entrepreneurs. They built this business with the certainty that no one has access to the business without the direct approval of the team members. Before a change is made, it must be exposed and voted on because everyone in that business has the right to an opinion.

There is no CEO who can approve payments at will and no CFO with deceptive duties. Everything is out in the open, and spending rules are built into the DAO by way of code.

How do DAOs work?

DAOs are essentially a smart contract. The rules and principles that control how a DAO operates are embedded into the contract and agreed to by members. This means that DAOs do not need a central authority. Instead, the group is governed by the agreed upon contracts, and governance decisions are reached by the community and measured against the agreed upon rules. 

Some examples of DAO uses include a charitable organization, a network of freelancers, a community that issues grant funding, and other similar types of group organizations. 

The original DAO was called “The DAO” and it launched on Ethereum. 

Dig more into this unique part of history on Google.

Why does Web3 need DAOs?

Many organizations are opaque and require high levels of trust to function. Every collective does not need to be a DAO, but humans need an alternative form of organization that is open, permissionless, trustless, and decentralized. 

DAOs make their own rules and run a decentralized form of governance. That’s a powerful invention. But DAOs also have risks. 

Sometimes the code has bugs. Sometimes governance is gamed and tricked. These problems are often due to the nascent nature of most Web3 technologies, and Oasis is building tools to improve voting and management of DAOs – specifically with privacy in mind.