Decentralized autonomous organization

Usually each organization will have a person to make decisions on behalf of, for example, administrators will represent shareholders, politicians will represent citizens. In such organizations, there is often a moral hazard, when rights are vested in the person who brings personal interests above the common good.

For traditional organizations, the relationship between an organization and an individual is established on an agreement (law, paperwork, tacit agreement), the rights and obligations of each party are regulated and enforced. by a third party or individual.

A DAO is an organization of a group of people interacting according to a self-enforcing open-source protocol. Keeping the network secure and performing on other networks will earn you tokens of that network. The members of the DAO are not bound to each other by a single legal entity, instead, they are governed by smart contracts

How DAO works

• A group of people will operate this program (based on Smart Contract).
• Next, it's the stage of raising capital by buying shares, also known as ICO (Initial Coin Offering).
• After sufficient funds, the DAO will be put into operation.
• Participants buying shares will have the right to vote on decisions made with the DAO.
• It is important to note that the DAO is not owned by anyone, it is just a piece of software that runs on top of the Ethereum system. People who contribute shares to the DAO will be able to vote on decisions, but do not own the DAO.

Public interest

• From 2020 to 2021, along with the development of Defi, DAO began to be mentioned more.
• Currently DAO has not been recognized by any country and has no clear legal regulations. However, DAOs are widely used in the Defi market, and are recognized in places of legal autonomy (eg. Wyoming in USA)

DAOs can be used for:

• Aggregate resources to buy and sell expensive NFT artworks for profit.
• Fund blockchain public goods that are necessary but do not have a business model behind them, with votes issued as donations and donations matched by a pool.
• Essential crowdfunding running on blockchain but no business model, with votes issued as donations and donations combined by a team. Provide policy options on DeFi protocols.
• Accept and reject members who want to join the organization and make decisions in the organization.
• Create talent and non-hierarchical organizations.
• Buy and sell digital assets, such as tokenized real estate or cryptocurrency.

Is the world moving towards a DAO model?

• The legal system began to closely monitor DAOs
• DAO pioneers argue that the importance of DAOs can replace paper organizations, even governments. Regardless of the possibility that governments will soon run countries on-chain, many use cases for DAOs suggest that the ability to combine with other blockchain-based options will greatly contribute to making DAO more popular. . As on-chain solutions and dApps evolve, so will the accessibility and utility of DAOs.

Reference

https://d-core.net/decetranlized-autonomous-organizations-explained/