A DAO is a group or community built around a certain mission, and is coordinated through a shared set of rules that are enforced on the blockchain. Just as the name suggests, these organizations have no central authority. Instead, they run on code agreed upon by the organization’s developers.

DAOs come in all shapes, structures, and models, depending on the team behind the project, and they are differentiated by the terms and conditions each agreed upon in their respective smart contracts.

Any Crypto projects can be considered to be DAOs if they are managed by decentralized governance where token holders can vote on the direction of the project.

Further, most DAO projects are open-source so that anyone in the community has access to the contract code. In this way, transparency is a significant selling point for these organizations.

Bitcoin, the first DAO

It is interesting to point out that Bitcoin is the biggest DAO – even if it is a simple one, because it aligns incentives using software, without third parties to make a digital coin with the properties of gold. People contribute hashing, and they get a reward in Bitcoins.  With time, we will see this success repeating with other projects, bringing forward DAOs to the level of Uber and Airbnb, and showcasing to the business world that such success scales are possible.

The Internet of Value

DAOs are often referred to as the next generation of organizational structure. A pure mechanism of coordination that distribute risks and rewards. A business structure where control is spread out rather than hierarchical, and where a community of like-minded people is working together towards a common interest, without a central authority figure leading the way.

Internet has allowed to exchange information at zero cost with anyone in the world. The main idea behind DAOs is managing the production and exchange of VALUE: invest, raise money, especulate, trade, insure, lend, borrow, cash in, create joint-ventures, etc. in ways that were not possible till now. But the precise legal status of this type of business organization is unclear.

A Matter of Incentives and Collaboration

DAOs are basically abstractions used to collaborate, and mechanisms that align economical incentives in the internet through software.

DAOs are so far risky, early adopters, like wild west. But they allow collaboration among thousands of people who have never seen or known each other. They allow humans to collaborate on a large escale for a common objective, and conciliate incentives among individuals that don’t know each other, and without the need for a third trust party.

Collaboration with people that hold our same beliefs is easy, but working productively with those that hold dissimilar beliefs is more powerful. Could this kind of collaboration foster a more understanding and connected global community? Would individuals with this validated superpower be more sought after for certain projects?.

Some references

📌 Learn Web3: What is a DAO? – DeSo Blockchain

📌 How a DAO for a bank or financial institution will look like

📌 Three Books to Map Crypto’s Confusing New Landscape
After Bitcoin came Ethereum, and debates over the future of cryptocurrency were not far behind.

📌 “DAOs for the first time feels like a third choice between capitalism and communism. It’s a different community-oriented approach to deploying capital.” https://www.campaignlive.co.uk/article/platform-power-people-power-navigating-web3-hype-sxsw/1749752

📌 What are DAOs? Here’s what to know about the ‘next big trend’ in crypto https://www.cnbc.com/2021/10/25/what-are-daos-what-to-know-about-the-next-big-trend-in-crypto.html

📌 Decentralized Autonomous Organizations (DAOs) Canon. What is (and isn’t) a DAO? Why do DAOs matter? How do DAOs fit into web3, crypto, the creator economy, future of work, and many other areas? https://future.a16z.com/dao-canon/

📌 What is a DAO? | Blockchain Basics https://www.youtube.com/watch?v=CQKoyMpFo_E

📌 Gumroad CEO “Every Company SHOULD Be A DAO In The Future” https://www.youtube.com/watch?v=QVmlKuHLbNY