How to explain DAO?
Understanding Organizations
Historically, the concept of an organization has revolved around a strict governance structure. The most typical example is the company we work in, for which we can outline a clear hierarchical structure: President, CEO, CTO, CMO, VP, Directors, Managers, and Employees. In this hierarchy, the higher the position, the more power the role has. In addition, early-stage startups and large companies have clear ownership and leadership structures. While it is possible to own equity in a company and, in theory, a part of the organization, we still have minimal influence on its functions.
Over the past few decades, companies have begun to introduce open and flat organizational structures such as holacracy - a system of corporate governance where members of a business can form autonomous and symbiotic teams to accomplish tasks and achieve company goals. It allows more people in the company to express their voices and have their voices heard by others. However, the responsibility for making significant decisions for the organization usually falls on one person or a small group.
Defining ownership, hierarchies and rules have been an obstacle in organizational development for centuries, yet until now, the solutions to these obstacles have primarily been based on idealism. Now DAOs have emerged to provide organizations with a new and effective governance structure.
Understanding DAO
As an emerging concept, its definition is still in a chaotic state today. In general, a decentralized autonomous organization (DAO) is a group built around a coordinated and collaborated mission through shared rules implemented on the blockchain, allowing any member to make decisions and participate in governance.
More specifically, a DAO is a decentralized organization that operates on the blockchain. Its rules are coded into a computer program, making it transparent and controlled by shareholders and token holders, independent of a central authority. It is like a company with no CEO, no employees, no entity, no jurisdiction, and no holders, but it can still operate through a decentralized token governance process. The DAO's rules are written into the network code and automatically enforced according to the protocol. When specific conditions occur, the corresponding rules are automatically enforced.
The rules written by the code in the DAO cannot be changed and will operate as expected until the community (token holders) vote to change them through a set process. Thus, DAOs are a new form of technically empowered organization that allows people to come together behind a common goal and work together formally to achieve their goals.
The specific structure of DAO is graphically inspired by Brian Flynn, Zakku, and the Orbit team.
Advantages of DAO
The emergence of DAO is why many people are starting to believe that the future of mass work is not the enterprise but DAO. So what is it about DAO that makes it so attractive? Let's look at some of the advantages of DAO next.
1.High transparency
Because a DAO's balance sheet exists on a public blockchain, it is entirely transparent, down to every transaction. In a DAO, anyone can view all actions and the flow of funds, which significantly reduces the risk of corruption and scrutiny.
2.Easier globalization
The barriers to membership in a DAO organization are low and allow everyone to work under the same conditions by following a standard set of rules that apply to all parties and are not limited by geographic location. In essence, one of the main reasons for creating a DAO is to provide an equal platform for establishing and operating the organization. Therefore it is often easier for DAO organizations to be global than corporations. DAOs with similar missions may need to compete for members and be incentivized to attract top-tier members as transparent as possible, thereby reducing collective rent-seeking costs.
3. Organization-wide participation in voting
A DAO changes a decision by allowing everyone in the organization to vote on issues they care about. Therefore DAO will not ignore or exclude members' opinions and ensure that all votes are counted and displayed with a certain degree of transparency.
4. Rules are not tamperable
In a DAO, we can use code to ensure that the rules apply to everyone, without exception. Furthermore, the set of established rules within a DAO organization cannot be tampered with without the consent of the voters, which ensures fairness in governance and guarantees the efficiency and transparency of the DAO organization.
How do I get involved in a DAO?
Working Model
From the above, it is easy to sort out the working model of a DAO. Governance is shared in the DAO, allowing everyone to make proposals and vote on decisions. Governance tokens of the DAO network represent votes in the voting process, and the option with the highest number of votes at the end of the voting period wins. Often, the proposal is a yes or no question. For example, should DAO "A" develop product "X"?
The Bitcoin Network, for example, is an organization that operates at the behest of people who care about the development of Bitcoin. No one owns it, and everyone can participate in its governance. As with all other blockchain networks and decentralized applications (Dapps), the more extensive and decentralized the network, the more flexible and reliable the DAO becomes and the more powerful it becomes.
The DAO Participation Process
At-a-glance engagement checklist.
- Research the DAO ecosystem to find the proper organization
- Check out guides and links to useful pages in the target organization's social media and online resources
- Join Discord and start contributing to your area of interest
- Earn on-chain compensation and reap the benefits
- Research the DAO ecosystem to find the proper organization
- Check out guides and links to useful pages in the target organization's social media and online resources
- Join Discord and start contributing to your area of interest
- Earn on-chain compensation and reap the benefits
DAO Ecology at a Glance
Getting paid from a DAO can require some commitment and upfront work. So before we can start making big money, we have to prove our worth.
The best way to join for a beginner is to enter the forums and Discord, where some DAOs have free access to their community, while for others, you have to buy tokens. Many people think you need to be a crypto expert or developer to join a DAO, but that's not true. DAOs need people with a wide variety of skills and knowledge bases. For example, many DAOs have writers, graphic designers, marketers, software developers, translators, artists, videographers, community leaders, etc. So even if you are a beginner, you can choose the best DAO in the DAO ecosystem for us to join.
After joining a DAO, you need to go and actively participate in discussions, provide input to governance proposals or discussions and participate in community calls. After slowly getting the hang of it, you can get involved in more serious work, such as helping with the DAO's core projects or providing resources for new members. The most important thing is to keep yourself active and provide value to the DAO throughout this process. When you do something that benefits the DAO's development, people will start to notice what you do.
Once you build a reputation in the community, more opportunities will arise, usually with completing a one-time bounty, then possibly some part-time work, and then maybe a full-time job.
The future of working in a DAO
DAOs as open economies will make work more flexible, fluid, and engaging than the 9-5 we are used to. Unlike the strict 9-5, working in a DAO is all about contributing as much time as you want - you can donate 2 hours a week and still be considered a productive DAO member. Or, you can contribute to many projects and end up with a full-time salary on the chain.
On top of that, the openness of the crypto economy will allow people to participate in multiple DAOs and crypto networks, mixing and matching different income streams and ownership payouts. But, of course, the best DAOs are the ones that distribute ownership to their participants through their native tokens.
In the future, working in DAOs, jobs will be more transient and flexible, the cost of switching between positions will become lower, and the opportunities will be more obvious. Therefore, we will contribute to the organization that best suits us.
Limitations of DAO
Governance mechanism issues
The current governance of DAO is divided into on-chain governance and off-chain governance, and there are also DAO operating systems that provide standardized governance functions. On-chain governance is to code the rules to perform tasks more clearly, characterized by complete decentralization of voting and result execution. In contrast, off-chain governance is the opposite of on-chain, whose rules are not recorded on the chain and are less formal non-code-based rules that can be relatively modified and explored as a model, relying more on tools to achieve weak community constraints on the development team.
Previously, many people thought that on-chain and off-chain should be opposite. However, with the development of the DAO governance mechanism, people realized the importance of on-chain and off-chain integration. Therefore current DAO projects tend to adopt off-chain governance in the early stage, and the centralization of decision making will give more flexibility to the project development. But in the future, as the project matures and its functions stabilize, the project will shift to completely decentralized on-chain governance to truly realize autonomy under code constraints.
This is also why many decisions in today's DAO still rely on manual judgment rather than automation.
Regulatory Issues
The decentralized and borderless nature of DAOs provides efficient operational organization, but because of these characteristics, the regulatory issue becomes a significant limitation. The legal system does not recognize DAO systems, and it may be classified as part of a piece of software whose creator agent created the DAO.
In conclusion
As a concept in the early stages of development, DAOs are bound to encounter various difficulties and challenges in development.
But despite this, we can still clearly feel that the whole development and governance status of DAO has been in a progressive state. It can be said that the emergence of DAO is very powerful and disruptive to the traditional organizational structure. As time goes by, it is believed that more and more new businesses will emerge in the form of DAO.
We can't make an accurate judgment about how the future of the DAO industry will be. But we can know DAO, understand DAO, participate in DAO in advance, enter the wind of Web3 through DAO, eat into a pig and wait for the wind to rise.