Decentralized Autonomous Organization (DAO) 101; What You need to Know About Them
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With the introduction of Web3 comes the need to know how one can participate in the space. Understanding DAOs, their workings, benefits and how you can earn from them is just a good place to start.
Definition of DAO
Decentralized Autonomous Organizations (DAOSs) are organizations, but unlike the regular organizations you and I know, they are different. Simply put, DAOs are organizations that are self-governed.
Self governed in what sense?...
Here's a breakdown
Usually in a traditional publicly traded organization, there is the hierarchical management where provisions are made for the board of directors, the head of the organization (the C.E.O or chairman), the employees and the customers who fall below on this ladder. In this setting, the board of directors and the CEO have the final say on decisions and initiatives brought up in the organization. This leaves employees and customers out in some crucial discussions on the future of that organization. Here, the top-down approach to decision making is practiced, which makes everything centralized on this end.
Decentralized Autonomous Organizations on the other hand are decentralized, as the name implies. This means there is no hierarchical management of any sort. Instead, it is governed and controlled by a community that is ordered by a specified set of rules, on a blockchain technology. Every person has the equal right to make profitable decisions for the organization. Here, the bottom-up approach is the base of every decision made.
It is then safe to describe DAO as a group of people working together to drive a shared goal by making critical decisions about the progress of the organization in a fair, transparent and efficient way, using blockchain technology.
How DAOs Work
Web3 has introduced Decentralized Autonomous Organizations as the newest way for groups and individuals to manage all tasks and projects easily and efficiently online. This allows people and organizations to come together over the internet, irrespective of who they are or where they are on the globe, to facilitate the same goal.
While discussions on DAOs might surface, traditional organizations cannot be overlooked either. DAOs and traditional organizations might sound the same seeing as they both involve a group of people coming together to ensure more value is added to a particular entity. However, they work differently.
DAOs are autonomous, in that they are not owned by anyone or a group but belong to every member of that community. These members collectively decide what action is to be taken for the organization to improve or move forward. Having rules laid out in the form of smart contracts which restrict the additional authorization of some actions by other people makes it impossible for one person to decide on behalf of every member. So technically, every one owns their vote.
DAOs are open, which is why they allow individuals to participate in submitting proposals for the sake of the organization's growth and improvement, while everyone can also vote in support or against the motion.
However, it is good to note that, for people to vote, they must own the organization's token. This token can be likened to traditional organizations' shares. The more tokens you hold in DAO, the more you have a say in the organization's development.
Why You Should Join A DAO
Presently, DAOs remain a new invention that most people seem unclear about and It is very fine if you are looking up reasons that will help clear out your doubts.
Here are a few reasons you should check out a DAO as soon as possible.
Autonomous
One big reason you should join a DAO is for its autonomous structure. Some traditional organizations and companies of today face serious problems as a result of the top down approach to management. With DAOs' autonomous structure, every member will have the right to make well-thought decisions and initiate ideas that would add value to the organization. This way, you can confidently contribute to DAOs growth by initiating ideas, knowing that they are welcomed.
Anonymity
Before you can become an employee of a traditional organization, you would have to go through the process of submitting your credentials - your name, home address, your experiences, and some personal information. This information in some way gives the organization an access to your life outside your fiat job.
Being a member of DAOs, on the other hand, allows you to participate in the organization anonymously, as you don't need to submit your credentials nor your personal information before you can make any contribution. This gives you the room to be more flexible and versatile with your investment.
Transparency
In DAOs, every set of rules and regulations are clearly laid out in a transparent and open source blockchain record. This means you don't have to know anyone to join DAOs since the rules of engagement are accessible to everyone. This makes it difficult for anyone to alter any of the practices without everybody's collective vote.
Accountability
With transparency comes the need to be accountable.
It is no doubt evident in the increased number of DAOs that investors are now finding their way into the organization. The blockchain technology has made accountability in DAOs a germaine highlight, and with blockchain ledger, every member can view all the recorded activities and transactions made in the organization. This makes it very easy to trace back transactions to the exact day they were made, and exactly by whom.
How To Make Money In DAO
Although some people participate in Decentralized Autonomous Organizations (DAOs) to learn and add value to the organization, others want to do what they love. While at it, everyone wants to earn too.
These are some of the ways to make money in DAOs.
By testing tools. If you're excited by the Web3 innovations and technologies, here's an opportunity to test out new Web3 tools, and earn while at it.
By playing games - as funny as this might sound, you can totally play your hearts out to make money.
You can also learn-to-earn. You can make money by adding to your knowledge sack.
You can create-to-earn. So if you happen to be creative - either a designer, writer, developer, any skill set you have, you can make money in DAOs by putting these skills to use.
And it's okay if you don't have a skill set, you can also participate-to-earn. From the smallest tasks of engaging posts on social media to note taking, every contribution towards DAOs growth is compensated.
You can make money from DAO by buying and holding its native token. If the DAO succeeds in the long run, you can sell it with a profit.
In a nutshell,
Like every new invention, DAOs are still taking the necessary steps needed to improve and experiment new innovative tools that will ensure its absolute independence and smooth running. On the other hand, some improvements in DAOs look like they will go far into the future.