Decentralized Autonomous Organization DAO is an internet organization managed according to rules encoded as transparent computer programs on the blockchain.
The DAO was an organization created by developers to automate decisions and facilitate cryptocurrency transactions. The DAO was an organization created in 2016 by developers to automate decisions and facilitate cryptocurrency transactions. In simple term, DAO is true democracy and only the members of the organization represent and control it.
Most DAOs run on smart contracts, which are collections of code that are powered on the blockchain. These smart contracts act as the ‘rules’ of these organizations, which are publicly available for review and can’t be edited in secrecy.
The rules and features of DAOs can be changed through a democratic vote, however, according to the procedures predetermined. In a Web3 world, the management of platforms and systems is through the consensus decisions of its users and all participants have full ownership and control of their data, which is totally opposite from WEB2 where corporations owns all the data. Instead of having a central management team or hierarchy, DAOs provide their members with the collective power to run the organization using smart contracts according to their defined program. This decentralised model of the internet WEB3 is fundamentally different for the interactions between users based on a “zero-trust” interaction system.
DAOs have the potential to completely change the way that humans think about cooperation, collaboration, and collective resources, actually there is no limit in their use-cases. Given the momentum of Web3 and its decentralized structure, DAOs are likely to see strong growth in the coming years as a key element of WEB3.
Since in 2016, there are over 4000 new organizations have begun operating based on decentralized, autonomous smart contracts. Web3 values shape new developments and services, we will likely see more internet-based companies emerge as DAOs on the blockchain.
DAO enables networks to become truly decentralised and plays crucial role in Decentralised Finance DeFi. DAO’s enable collective management with the implementation of governance tokens, that provide their owners with the ability to participate in the decision-making and management of a DAO.