What is a DAO and Which One Should You Join Today?

A DAO is what? A Foundation

Today, in public and private life, a small number of people make most of the decisions. For a long time, it was believed that massive, complicated organizations needed to be structured with an ever-narrower top to respond swiftly and on time.

That kind of organization controls everyone’s daily activities in the modern world. DAOs are a brand-new organizational framework that uses decentralized technologies to address the problems of contemporary living. Moreover many larger companies are hiring DAO Development Services In USA for their business.

A DAO is a special kind of organization where every member can influence how the group will develop. What distinguishes DAOs from other types of organizations?

Traditional Corporations Versus DAOs

A firm goes through various stages throughout its life, including start-ups and personal ownership. However, most successful businesses aim to go public through an IPO (Initial Public Offering). A CEO is at the top of a vertically organized hierarchy in a general firm. A corporation board that represents the business’s owners chooses the CEO.


The CEO and administrative levels make decisions. The board has the last say over strategic decisions and leadership transitions. Consumers and employees do not influence what a business does.

Cooperatives vs. DAOs

In a cooperative, the employees directly involved in the business’s main operation have voting rights. That seems more equitable, but everyone else participating in the industry—including support employees, secretaries, lawyers, and other professionals—is at the whim of the workers. Additionally, none of the customers or users of the services offered may influence the cooperative’s future.

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Thus, we now come to DAOs. In this kind of organization, every member has the potential to shape the organization’s destiny. The DAO tracks preferences via the distributed ledger and can display the consensus. Because there is no central authority, it is decentralized. Because it does not depend on other structures to exist, it is autonomous. People form an organization around the project’s goal, pool resources to make it happen and decide on its future.

Which DAO was the first? In the past

While readers already aware of DAOs might skip to Ethereum, there was the first Bitcoin. Decentralized, independent, and a company, Bitcoin. The network is governed by rules embedded in the way protocols operate, including block size, average block duration, block rewards, etc. Finally, PoW miners agree on the next block and propagate it throughout the network.

Due to its durability, Bitcoin became not only the first cryptocurrency but also the first DAO. Now, this particular sort of DAO has a specific objective and can only be used to maintain the functionality of the Bitcoin Network. Let’s examine the first complicated DAO and see how it is also a tragic story.

A lesson in the decentralized organization from the DAO

The DAO project got underway not long after the Ethereum main net launch. The DAO is credited with popularising and introducing the idea of a decentralized autonomous organization. One of the first significant crowd sales in the history of the blockchain was used to launch it in April 2016.

The DAO raised 34 million US dollars thanks to the contributions of over 18 thousand Ether users. The DAO’s goal was to establish itself as a decentralized venture capital firm. Members of The DAO community would hear pitches from the ideas, and holders of DAO tokens would vote on which ones to support.

After that, everyone who participated would receive a share of the earnings according to how many tokens they had. Everything made sense, and the first token sale was a huge success. However, the smart contracts that controlled how The DAO operated were discovered to be flawed. Strangely, the team responsible for it was informed in advance of this potential, but they insisted it was not a problem.

A malicious attacker stole 11.5 million US dollars from The DAO’s funds in June of the same year. Although the process was quite technical, this article provides further information for anyone interested. After the attack, a solution was put forth: restore the Ethereum network to its original State and refund each contributor’s money. It would be the end of the DAO.

The argument over the solution was heated, and as a result, Ethereum had its first hard fork. The network is divided into Ethereum (ETH) and Ethereum Classic (ETC). The former maintained the State of affairs following the DAO hack, while the former kept the ledger where it was.

What else can DAOs do?

A DAO can operate on two different levels. First, we have a protocol with explicit consensus rules and organizational goals, like Bitcoin, Ethereum, or Cardano. These DAOs’ constrained system settings to place restrictions on the organization.

This is intentional. A reliable network’s goals and regulations shouldn’t be subject to frequent change. Here, DAOs can ensure that the protocol’s guidelines are followed, the consensus is reached on time, incentives are distributed equitably, and the network keeps operating as intended.

The second kind of DAO is more complicated and has a broader range of capabilities. A DAO has the same powers as a traditional business, enterprise, non-profit, venture fund, or any other organization. However, under a DAO, the entity’s future is decided by everyone who contributes and adds value to it.

That makes DAOs so potent; they may introduce a novel method of managing human activity while guaranteeing that all participants have a voice and benefit. In the future, the DAO will predominate over all other types of structures.

Why a DAO?

The following logical query is, “How can a DAO achieve all of this?” This is accomplished by using restrictive laws incorporated into the protocol’s workings in the more constrained form of a DAO, the one that functions as a distributed network. Actors are prevented from acting in a way that undermines the DAO’s continuity by the rigid boundaries.

A collection of connected, intelligent contracts works together to further the goals of the larger DAO. First, the DAO’s governance structure is determined through intelligent contracts using tokens. The initial usage of these tokens is to raise money for the DAO’s operations, but they also serve another purpose. They then turn into voting rights that empower those who want to decide how the DAO will develop in the future.

An individual must typically have a certain number of tokens in a DAO to vote. There is another minimum need for anyone who wants to suggest changes to the DAO. Once a DAO is fully functional, there are no restrictions on what it may do or what the community can vote on.

A DAO can hire an external developer to carry out proposals. These can be compensated with tokens or cash. It’s critical to understand that DAOs can isolate their governance from the organization’s management and development.

DAOs’ legal standing in the US

Naturally, a DAO was once only something that existed in the cryptosphere and not in the rest of the world. They had to put up a different front to deal with legal concerns because they operated in the same legal grey area that most cryptocurrency projects do. That’s not the situation anymore.

In the same way, as Wyoming was for the birth of businesses, it hopes to lead the way in the emerging crypto economy. After all, the LLC was initially established as a legal entity in this State. Businesses are already registered in the State as DAOs before the year ends.

The first is the NFT-DAO, a Cardano project that seeks to establish itself as the gold standard for NFT use cases in the commercial world. The business was announced on September 24th, during the WyoHackathon 2021 DAO Day. It is the first organization registered under the new State’s law as a legally established DAO.

But this action has resulted in much more news. Another DAO with a Wyoming address, CryptoFed DAO LLC, has registered with the Securities and Exchange Commission by referencing its Wyoming legal status.

The two illustrations, as mentioned earlier, serve as emissaries of future events. Thousands of DAOs will move to Wyoming now that it is feasible to be one and have legal status as one. The decision benefits the whole crypto industry, which can now operate decentralized and with legal protection.

DAOs in underdeveloped nations

A DAO’s transparent governance is one of its most enticing aspects. Everybody has access to and may independently verify the rules encoded in a smart contract. Every proposal’s vote history is kept in the ledger and is accessible to anybody, anywhere.

DAOs are particularly intriguing to emerging countries with weak domestic institutions because of these characteristics. In them, any initiative is constantly in danger of failing due to corruption and other unethical behaviour.

Argentina’s MakerDAO is among the best examples of this kind of technology. The country in South America has seen significant inflation for ten years. Due to constraints, its inhabitants cannot purchase US dollars and hedge their savings against inflation.

In this case, the stablecoin DAI has emerged to fulfil a crucial demand for Argentinians. Many people in the nation utilize DAI to save money since they know their money is secure because the DAI token’s operations are transparent. In addition, many people in the country own MKR and participate in the MakerDAO. The MakerDAO community has a sizable Argentinian and South American population. Due to this, Argentina is now the fourth largest DAI user in the world and ranks 10th in terms of overall crypto usage.

What should DAOs not be able to do?

We also need to be aware of DAOs’ limits. The fundamental restriction of the first iteration of DAO is its lack of adaptability as a decentralized network. These DAOs are networks that need to be maintained, and specific rules must be kept to guarantee that the protocol is operating as intended. Due to these factors, these DAOs have highly restricted goals and have difficulty altering the fundamental laws.

The block size in Bitcoin serves as an illustration of this. The block size has been the subject of numerous discussions, some of which have led to hard for. The division between the original Bitcoin network and Bitcoin Cash is the most notable. But it’s not the only instance; for the same reasons, Bitcoin Cash also split, giving rise to Bitcoin Satoshi Vision.

The other kind of DAOs, based on current blockchains, also have constraints. First, as the DAO attack demonstrated, mistakes in the design of intelligent contracts are fatal for the entity. Additionally, not all of the possible outcomes for a DAO can be handled by smart contracts due to their complexity. Here, human agency is required, and that can result in errors.

What distinguishes DAOs from other cryptocurrency initiatives?


A DAO is not always a project that is launched on a blockchain. It’s essential to understand the features of a DAO because not all crypto projects are DAOs. The blockchain industry must be adaptable and make room for alternative frameworks that meet different needs and have distinct advantages.

A crypto project and a DAO differ primarily in terms of governance. A DAO grants its community the ability to vote and submit suggestions using the tokens it issues. The power of the DAO’s members to alter the organization’s future is closely related to the tickets.

Not every cryptocurrency project has tokens for these purposes. Most people use their tokens as a convenience to access the services that the cryptocurrency project offers. I cannot alter how the project functions simply because I own these tokens.

It’s crucial to realize that a DAO uses its token to manage the project’s governance. The permit may also be used for other purposes and grant exclusive access to certain services or discounts. Still, such is secondary to its primary role, which is governance.

Which DAO ought you to join right now?

DAOs can accomplish many of the investment objectives offered by conventional businesses to people. As a result, countless DAOs cater to various consumers and markets. Here, we can list a few instances of active DAOs that anyone can explore and join right away.

The examples are intended to demonstrate how DAOs function in various markets. They are all significantly different, and there will be more DAOs for every use in the future.

A Creator-focused DAO

One of the metaverse’s most vibrant sectors is the creator economy. As a result, there are a lot of DAOs working to meet market demands and encourage consumers to use cryptocurrency to achieve these goals.

For authors looking for alternate venues to publish their work, Mirror.XYZ is a DAO. The project uses the WRITE token for those who want to submit their projects to the DAO and have them distributed.

A DAO for independent contractors

In many businesses, remote labour is quickly becoming the standard. Since it would give independent contractors a platform to safely interact with clients and get compensated for their services, a DAO may be a significant participant in this situation.

The goal of Braintrust is to create a DAO where independent contractors can influence how the platform operates. The project costs lower fees than comparable centralized platforms and allows users to modify the platform’s functionality and pricing.

For investors, a DAO.

Despite their failure, decentralized venture capital funds like The DAO are still being used today. A decentralized venture capital fund is now referred to as a “launchpad,” Many of them aim to turn into DAOs so that their community can choose which projects to finance.

MaticPad is one illustration. It is a launchpad on the Polygon Network that promises to give funding, access to investors, and business guidance to fresh crypto ventures. Some of the platform’s features are still being developed as they just debuted this year. However, adopting this early project is interesting.

A DAO aimed at gamers

The gambling industry is another booming area of the economy. The gaming industry is larger than the television, film, and music media industries combined. There are some significant projects in the space, and it is one of the sectors most ready to accept cryptocurrency. DAOs are also making an impact in this area.

An example of a gaming project that uses cryptocurrency is DAO Gaming Guild. It has embraced NFT Game as a method of distributing collectibles and employs the play-to-earn paradigm to motivate engagement. So many NFT Game Development Services are taking the help of DAO Gaming guild. 

In Conclusion, DAOs’ future

Since the era of false internet money for geeks, the cryptocurrency industry has advanced significantly. It’s a part of the economy that anyone can work in. DAOs are expanding and making significant changes, making the world more transparent and equitable.

The fundamentals of cryptography naturally extend to the Decentralized Autonomous Organization. a brand-new kind of organization that can guarantee everyone has a voice and benefits from their labour. DAOs are currently legal and in use all across the world. Now is the time to join the change that is taking place.

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