We aren’t equipped to talk to you about your daddy issues, but we can introduce you to one DAO-DDY who can offer a much more straightforward relationship than the one you may share with your own papa. We’re talking about Decentralized Autonomous Organizations. And don’t worry — like many things in the cryptosphere (and life) it isn’t as difficult to understand as the name might have you believe.
What is a DAO?
You might associate it with the first Decentralized Autonomous Organization, which was infamously hacked in 2016, resulting in the theft of millions of dollars. Don’t let this first impression leave a sour taste in your mouth (leave that to your drawer of Warheads); provisions have been made since then to make them more tamper-proof.
Put simply, a DAO is a blockchain-based, investor-directed venture capital fund organization that doesn’t have a hierarchical governance structure, but is instead run by its members. CNBC referred to them as “an internet community with a shared bank account.” There are two major forms of DAOs: those that manage open-source projects as a collective, and those that act as an investment group. They run on open-source code, to ensure transparency and reduce human error.
In general, all DAOs need the following qualities to run smoothly:
- A set of rules
- A chosen token
- A structure and roadmap
- Voting provisions
The specificities of these qualities are all determined by the members of the group, and what it is they want to accomplish. And what is it that DAOs want to accomplish? Well, who are we to explain why people develop certain hopes and dreams!? DAOs’ goals can range from buying the only remaining copy of a Wu-Tang Clan album (challenge for your next night out on the town with your besties: pull together $4 million dollars), to the Komerabi Collective, which funds female and nonbinary crypto founders.
Voting power is obtained through the use of governance tokens, currencies associated with a particular project. As CNBC describes, “In some DAOs, governance tokens can only be obtained in structured funding rounds, and occasionally, demand exceeds the amount of tokens available. By holding these tokens, members are typically able to own equity in the DAO and help shape the DAO’s future.” The value of the token is based on the usefulness of the organization. When governance token value hits 0, it’s game over for the DAO.
Because DAOs are democratized, investors vote on any proposed change until a consensus is reached. Because rules and ordinances are coded on the blockchain via smart contract, they can be changed only by vote. It basically ensures that the organization functions opposite of how business is done in Succession.
Want to join a DAO?
Just invest in whatever token they use. Most DAOs operate on the ethereum blockchain, so if they don’t use governance tokens, they probably use Ether. Well known DAOs include: Please, Herstory, Friends with Benefits, and the Metacartel Venture.
DAOs are future-facing. What exactly does that mean for the space right now?
- Widespread adoption means that they could compete with traditional businesses and organizations. DAOs could become the new LLCs.
- There’s potential for DAOs to boost ethical deployment of capital and the voices of underrepresented communities.
- Mainstream investors A16z and Alexis Ohanian have backed the DAO building company Syndicate; it’s raised $20 million so far. Building a DAO is about to become a whole lot easier.
Is your interest piqued?
If you find a DAO you’re interested in joining, slide into their main Discord chat and introduce yourself. It’s also a good idea t join a governance forum, where you can read discussion threads and even chime in when you have a piece of info that you’d like to share. Tech Billionaire Mark Cuban (of no relation to sandwich fame) tweeted that DAOs are “the ultimate combination of capitalism and progressivism.” We’re inclined to agree with him — and wonder how soon that tweet is gonna be sold as an NFT.
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