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Topic: What is DAO? How DAO's work? (Read 155 times)
The main idea behind DAO or a Decentralized Autonomous Organization is establishing a company or an organization that can fully function without hierarchical management. Any autonomous organization with a decentralized governance and budgeting system can be called a DAO.
The idea of such management model has been in the cryptocurrency community since Bitcoin managed to get rid of middlemen in financial transactions.
Examples of such community using DAO's are: Dash Cryptocurrency, BitShares etc.
How DAO'S work?
Bitcoin was considered to be the first ever fully-functional DAO, as it has a pre-programmed set of rules.
There are set of rules according to which it will operate. Those rules are encoded as a smart contract, which is essentially a computer program, that autonomously exists on the Internet, but at the same time it needs people to perform task that it can’t do by itself.
Once the rules are established, a DAO enters a funding phase. Firstly, a DAO has to have some kind of an internal property tokens that can be spent by the organization or used to reward certain activities within it. Secondly, by investing in a DAO, users get voting rights and subsequently the ability to influence the way it operates.
Advantages of DAOs
Every innovative idea can be put forward by anyone and considered by the entire organization, as there’s no hierarchical structure. A set of pre-written rules that every investor is aware of before joining the organization as well as the voting system leave no room for quarreling whatsoever.
DAOs are completely transparent, every single financial transaction, are recorded in the Blockchain, available for review to anyone.
>> What are your thoughts about DAO's? Should this model be followed by every cryptocurrency or exchanges?
Source Article: https://cointelegraph.com/ethereum-for-beginners/what-is-dao#how-daos-work
The idea of such management model has been in the cryptocurrency community since Bitcoin managed to get rid of middlemen in financial transactions.
Examples of such community using DAO's are: Dash Cryptocurrency, BitShares etc.
How DAO'S work?
Bitcoin was considered to be the first ever fully-functional DAO, as it has a pre-programmed set of rules.
There are set of rules according to which it will operate. Those rules are encoded as a smart contract, which is essentially a computer program, that autonomously exists on the Internet, but at the same time it needs people to perform task that it can’t do by itself.
Once the rules are established, a DAO enters a funding phase. Firstly, a DAO has to have some kind of an internal property tokens that can be spent by the organization or used to reward certain activities within it. Secondly, by investing in a DAO, users get voting rights and subsequently the ability to influence the way it operates.
Advantages of DAOs
Every innovative idea can be put forward by anyone and considered by the entire organization, as there’s no hierarchical structure. A set of pre-written rules that every investor is aware of before joining the organization as well as the voting system leave no room for quarreling whatsoever.
DAOs are completely transparent, every single financial transaction, are recorded in the Blockchain, available for review to anyone.
>> What are your thoughts about DAO's? Should this model be followed by every cryptocurrency or exchanges?
Source Article: https://cointelegraph.com/ethereum-for-beginners/what-is-dao#how-daos-work
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