What is the DAO in blockchain?

The “DAO” abbreviation means Decentralized Autonomous Organization. Based on the name, it can be understood that such organizations differ from the usual in autonomy and lack of centralized management. In such a system there is no vertical of power, there are no such institutions as the Board of Directors or the company owner. The power divided between all participants of the platform; in fact, there is a horizontal distribution of influence. This distribution becomes possible thanks to the development of blockchain technologies, which makes it possible to record all participants in a single open register, which is a guarantee of transparency of the processes taking place.

Autonomy achieved through the creation of a certain set of rules binding for all participants, an approved plan for the development of the platform and automatic execution of daily operations based on the program code. Decisions on the future development of the system made by Consensus, but decisions not formed randomly, but strictly per the development plan, where laid the foundations and vector of development of the organization. The” weight “ of a user’s vote usually determined by the number of platform tokens owned by the user. Than more he holds, the more weighty is his opinion. However, there may be other options for the distribution of effect on the organization development. So, by consensus, the most authoritative users can be elected who will be allowed to submit to the General discussion of the future stages of development. Thus, the system minimizes spam in the sphere of proposed solutions by itself.

Replacement fiat currency to cryptocurrency eliminates the reference to the traditional financial and political institutions, but does not exclude the cooperation with these institutions if it is needed.

It is also important to use smart contracts in the process of user interaction. In such contracts are fixed as rules and conditions of use of the system that are mandatory for execution by all participants, and personally customizable terms that are chosen by the participants of transactions. Automation of interaction between users eliminates unnecessary costs for legal support of operations.

Greater control over investments achieved through an equal share of each user’s participation in the organization. And this development of systems is promising, at least because such a structure is more reliable than the traditional one, by eliminating the influence of the human factor, as mistakes of managers or their dishonesty. Such errors are impossible if all users make decisions.

The use of DAO structure is also suitable for traditional corporations, where it is possible to replace the vertical structure of any Department. For example, the replacement of the financial Department will avoid fraud with the company’s budget and disputes with the remuneration of employees.

The possibility of joint development management, transparency of decision — making, minimizing the risks associated with the sole management of the system or the concentration of power in the hands of a narrow group of people — these are the reasons why our project includes such a crucial stage of evolution as the creation of DAO.