Decentralized Autonomous Organization DAO
Last updated
Last updated
At the end of July this year, the YGG organization, a game guild that became popular with Axie Infinity (AXS) on-chain games, announced that it would try to transform from a single game guild to a in the past, and established its sub-DAO (SubDAO) to conduct assets and activities for specific games. Custody, gradual decentralization and community autonomy.
The tepid DAO has always been known as an "indispensable role in the encryption world", why is this, and what is the current development situation, let us find out today!
In forums and chat groups, DAOs were more commonly known as DACs (Decentralized Autonomous Corporations), or Decentralized Autonomous Corporations. It was not until 2013 that DAO was gradually used instead of DAC, as Buterin was mentioned several times in public and in magazine blogs.
Wikipedia defines a DAO as: "An organization represented by rules coded as a transparent computer program, controlled and decided by its members, without being influenced by a single center."
Binance Research defines a DAO as a form of organization that mobilizes the actions and resources of its members through binding, formal and transparent guidelines agreed upon by multiple parties.
Some people also think that DAO is a kind of commitment to share value among communities, because DAO often starts from a chat group and gradually transforms into a self-driven community.
Wiki definitions put more emphasis on code, while these latter definitions are more about rules and patterns. Through the common points in the definition, we temporarily define the DAO as a decentralized autonomous organization based on the blockchain.
In the 1990s, DAO was mainly used to describe the multi-agent system in the Internet of Things environment at that time, It was regarded as a kind of original product of the information age. In this era, the emergence of a new generation of digital nomads, these Nomads were born and raised on the Internet.
In 2016, slock.it, a startup at the time, launched a project called "The DAO" to support their decentralized version of Airbnb, while innovatively proposing a DAO governance model, which also helped the company raise about $150 million worth of ether, which was a very high 14% of the total ether supply at the time.
It is also because of this that many people think that "The DAO" is the DAO. Later, news that "The DAO" was hacked to steal coins was often heard, which caused even greater misunderstandings. Many people showed a critical attitude towards DAO. Nonetheless, the governance model of the DAO has also been preserved.
The popularity of the DeFi and NFT markets has spawned many different DAOs, including DAOs for projects and DAOs established by foundations. Today, there are hundreds of DAOs, responsible for managing more than 10 billion US dollars of assets.
People classify them according to their characteristics, criteria, and project parties, including infrastructure, protocol, investment, service, social, media, and collection.
Since there are too many types, we will divide DAOs into the most common DAO organizations according to their characteristics: protocol governance, investment, application and collection.
Protocol-governed DAO is Protocol DAO. Currently, it has the highest participation in the DAO circuit and plays the most important role. It mainly plays a role in community governance.
Decentralization is an important part and process of DAO. Protocol DAO decentralizes power from the core team to the community, and community users vote on community proposals through the proportion of recognized assets they hold to decide whether the proposal is approved or not. , to directly influence the direction of decision-making.
Investment DAO is also called Ventrue DAO, which refers to investment-oriented DAO. This type of DAO plays a very important role. It focuses on investment and plays more of an early value discovery function. If the investment DAO is subdivided, it can be divided into the following three types:
Investing in clubs, many of the current investment DAOs belong to this category, such as the earliest The DAO mentioned above, as well as the YGG guild, Metacartel DAO, etc. belong to the investment clubs.
Investment DAOs also have Grants DAOs. Different from investment clubs,the main purpose of members participating in DAOs is not the most direct financial returns, but social capital resources.
There is also the relatively novel Market DAO, which builds the market through DAO, so that users can obtain benefits from it. Like Aladdin DAO is a representative of this type. It manages income farming projects through DAO. Through hundreds of thousands of asset management managers, they contribute their labor and intelligence, provide services to users, and get paid according to performance, so as to provide projects, Farmers and DAOs build a three-way win-win market.
Application-based DAO actually mainly refers to vertical application-based DAOs in the atypical DeFi fields such as the above-mentioned services, social media, and media.
This kind of DAO usually adopts the "traditional application + DAO" model, which is also spawned by the development of the blockchain world, and is also the most likely DAO to come out of the circle, because it reflects the combination of the traditional world and the blockchain world. Type DAO reflects the needs of practitioners and users beyond the pursuit of profit.
After NFTs entered the mainstream, some Collector DAOs focused on collecting NFTs were born. FlamingoDAO, PleasrDAO, Jenny Metaverse DAO all belong to this type of DAO, and are some for-profit DAOs that focus on NFT collections, and they have been actively investing in NFTs.
At the same time, collecting DAOs can also help some artists, especially lesser-known artists, to gain attention and extend their careers.
The DAO model is indeed very similar to our traditional commercial companies, and many things are similar, which is why DAO is called an on-chain company.
Most of the current DAOs rely on the existence of public chains such as Ethereum, so as to achieve decentralization through the chain. Then, a set of open and fair rules will be established on this basis. These rules are usually encoded as smart contracts, which are the basis of autonomy, and then they can run autonomously without human intervention and management. This is often mentioned in our DAO. A confrontation between human decision-making and algorithmic decision-making.
With the continuous development of the crypto market, users have more criteria for evaluating investments. DAO has gradually become the standard for the development of projects on the chain, and it is one of the important conditions for evaluating the maturity of the guild/team. Projects with DAO will make users more trustworthy.
Most DAOs will issue their own community governance tokens (Tokens), because these tokens can better bond the stickiness of the organization, condense the consensus of the DAO community and promote the autonomy of the community, which is a boost to the development of the community device.
These community tokens can also be understood as the equity/equity proofs of traditional listed companies. Investors who have a certain share of proofs can influence the decision-making of intervening companies.
Investors can vote on the company's important changes and proposals, and only when a certain percentage is reached, the proposal can be counted as approved and implemented. Similarly, the same is true in DAO. Community members with tokens vote on proposals put forward by the community, and they can only be implemented after reaching the threshold of approval. If they do not pass, they will be rejected.
Compared with the traditional corporate organization, DAO has the following advantages:
The governance of the DAO is decentralized: Decentralization is the key to DAO autonomy, because the DAO is not managed by the company's board of directors or managers, but through a voluntary democratic, high-participation process or algorithm to manage.
The scope of DAO is wider: because DAO is not only operated and governed in one or a few countries, but will expand and operate on a global scale, just like blockchain, it can radiate to any place in the world with a network .
DAO decisions are more rational: since DAO rules are usually encoded as smart contracts, this is the basis for autonomy. When the conditions are met, the smart contract is triggered, and then the DAO will operate by itself without intervention and management. It is like a fully automatic robot, which is also the algorithmic decision we are talking about.
Moreover, DAO is dealing with 7 billion people around the world, most of whom don't know each other, and they don't need to take human feelings into account like traditional company management. In addition, the openness and transparency of the chain can effectively curb the black-box operation of governance.
Of course, there are still many flaws in the current DAO.
On the one hand, it is not decentralized enough, which is related to its development stage. Due to problems such as high handling fees and public chain performance, the current DAO is more of a combination of off-chain and on-chain models. To a certain extent, it weakens the degree of decentralization of DAO and affects its development.
On the other hand, the current DAO is actually different from the current legal supervision. How to develop the DAO under the regulatory framework is the key to the wider development and recognition of the DAO.
For attempts at DAO governance, as required for all blockchain projects, the decentralized implementation of products and functions is a must. As for the decentralization of organizational management, with the continuous development and maturity of the project, it will gradually become a unified requirement for users.
Just as our traditional business society needs corporate governance, in the world of blockchain, it also needs such a role. Whether DAO can really take on such a role, and perhaps there will be a better replacement for it in the future, that is another story.
DAO is the abbreviation of Decentralized Autonomous Organization (Decentralized Autonomous Organization), which is an organizational form based on the development of and other technologies.
With the rise of the encryption wave in 2020, everyone's attention to DAO has gradually increased. For example, Aave, Bancor, Uniswap, Compound, Curve, etc. have all established their own DAO and governance guidelines.
In DeFi, like Uniswap, Compound often decides token distribution through DAO voting, introducing liquidity , pledge mining, and network deployment.
