What is DAO or how to run company of the future?

Hi, guys. In my previous articles, I’d often mentioned DAO abbreviation, but he didn’t talk a lot about this phenomenon. Thus I offer you review DAO much closer today.

First of all, the concept of DAO emerged with the advent of The DAO in 2016.

From Wikipedia:

The DAO was a digital decentralized autonomous organization, and a form of investor-directed venture capital fund.

The DAO had an objective to provide a new decentralized business model for organizing both commercial and non-profit enterprises. It was instantiated on the Ethereum blockchain, and had no conventional management structure or board of directors. The code of the DAO is open-source.

The DAO was stateless, and not tied to any particular nation state. As a result, many questions of how government regulators would deal with a stateless fund were yet to be dealt with.

The DAO was crowdfunded via a token sale in May 2016. It set the record for the largest crowdfunding campaign in history.

The idea was so favourably accepted by investors, that with the help of crowdfunding in The DAO was attracted about 150 million dollars in less than a month. At that time, it was 14% of all ether tokens.

By the way, The DAO appeared to be a stumbling block for network Ethereum separation and Ethereum Classic appearing, for the reason that hackers have found a vulnerability in the system, and successfully take advantage of this, withdrawing a third of the funds from the network to a secondary account. After such a transfer under the terms of the smart-contract, the funds had to be frozen for 28 days. Therefore, the developers had time, and in order to prevent the final withdrawal of funds, the community decided to conduct a hardback with the withdrawal of the block.

After this incident, The DAO tokens were delisted from major exchanges such as Kraken and Poloniex.

I offer you to review principle of the DAO and its tasks in details.
DAO is a decentralized autonomous organization that utilize smart-contracts with already approved programmed rules for self-regulation.

A sense DAO in its independence from legal norms and most human factors, such as, for example, corruption and fraud. The purpose of DAO is to ensure transparency and accessibility in the management of the system by investors.

For example, a project issues its tokens and wants to make the management of its project decentralized, then the DAO principle helps it. Tokens at various sales stages are gradually distributed among investors and enable them to make decisions on the management of the system, as well as the opportunity to put forward their ideas for consideration. To do this, investors simply need to freeze their tokens in a special smart-contract. Usually for a time of this freeze, bonus tokens are added. It reminds of PoS-mining. This motivation is necessary in order to take more investors in the management of the system.

At the initial stages, of course, the development team will have the majority of votes and will be able to make decisions independently, but in the future, for example, it may even be that if the majority of participants decide to change someone from the development team, they will immediately replace it another or completely removed.

In substance.
Everything looks very nice and progressive, but if you will see beyond the surface, you can see the analogy of DAO to the modern Joint-stock company. Both of them have shareholders with shares, whose opinion can be taken into account in the management, as well as there are internal rules by which the system is regulated. The difference is in DAO positions itself as a digital company, hasn’t bonded with any legal entity. Roughly, we can say that the members of this community are anonymous. Accordingly, instead of the laws on which regulation would take place, the rules programmed in smart-contracts with open-source code come into force. And since all DAO activities are recorded in the blockchain, the system becomes transparent.

Therefore, there is no need to talk about a revolutionary idea. Just the management of companies with DAO goes into digital form.

But still in the crypto-currency world such a system, as for me, better than the usual centralized fact that the opinion of each participant is taken into account in decision-making.

Yes, since DAO participants can be completely different people, with different outlooks and experiences, it is difficult to talk about the immediate prospects of giving management back into the hands of the crowd. But, I think, over time, the top humanity minds will be able to come to some kind of revolutionary solution and will be able to break the general idea of ​​the usual hierarchy.


Which projects utilize DAO?

1. LibreBank
2. Maker
3. Digix

To its credit these projects, because they move humanity forward, which cannot but rejoice, because with each innovation our life is becoming more comfortable. Yes, it gets complicated, but we do not get used to it. ;)

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