Blockchain Technology and cryptocurrencies are drastically changing the world of finance. Today, decentralized organizations have begun to replace organizations that are controlled and managed by a single center. One of the first steps in this direction has been taken in the cryptocurrency industry, which inherently rejects the centralized structure. Inspired by the idea of decentralized cryptocurrencies, Stephan Tual, Simon Jentzsch and Christopher Jentzsch proposed the idea of DAO (Decentralized Autonomous Organization) in 2016 and founded “the DAO”. Decentralized autonomous organizations run within the framework of rules encoded in smart contracts. All transaction records and rules of a decentralized autonomous organization or application are transparently stored on the blockchain. DAOs are decentralized organizations and operate through protocols in codes, as opposed to centralized organizations that are managed by individuals constantly in communication with each other and work according to a hierarchical order. Traditional institutions have many hierarchical structures and layers of bureaucracy, but DAOs do not. In this way, extra costs and manpower in central organizations are eliminated.
The Goal of Decentralized Autonomous Organizations
The goal of DAO is to eliminate human error or manipulation of large investor funds by giving an automated system and mass community the decision-making power of developers. A DAO cannot be controlled by a single person or an institution, but a community of participants. Participants have rights to vote as much as the amount of assets they have. In this way, DAOs provide a system for open collaboration. This system allows individuals or institutions to cooperate without having to know or trust each other.
DAO Examples
Even though it is one of the first networks, the Bitcoin network can be considered a DAO example. Being decentralized, making decisions by consensus without a hierarchical order among participants make Bitcoin a DAO example.
Dash, which is an open-source, peer-to-peer cryptocurrency offering instant payments and confidential transactions, is one of the best-known and most successful DAO projects. In the Dash DAO, decisions are made by “Masternode”, a decentralized network that anyone in the world can be a part of. There are currently around 5000 anonymous masternodes in the world. One of the advantages of DAO is that there cannot be a centralized attack or a single point of failure. There are multiple participants/decision makers. A traditional organization with a hierarchical order can be terminated by hacking the head of the hierarchy or by law. However, since there is no central hierarchical order in the Dash DAO, there is no single element that will bring the system to an end.
Aragon Network
Aragon Network is a platform where users can connect using their Ethereum wallets and create their own communities. On this platform, users can establish systems for financing, voting, agreements, payments and rewards with the communities they create. The projects that have used Aragon Network to create decentralized communities include Decentraland. Users can make decisions about the future of this platform with the MANA tokens which are powered by Aragon Network.
Daonuts
Daonuts is a DAO platform that offers various online tools to develop online communities. Just like the idea that started DAOs, the community decides what adds value to the platform. In this way, decisions are made by community polls. Tokens called contribution points are needed to vote in the community polls. A contribution point is specified as two tokens on the Ethereum blockchain for Daonuts. The non-transferrable token represents the contribution point and can be used to vote. On the other hand, transferrable tokens can be used as currency within the community.. These tokens can be spent:
To buy a subscription with advanced features,
To reward other users for contents,
To purchase temporary control of certain community assets owned by the platform.
The DAO
The DAO is one of the earliest examples of DAO. Emerged in 2016, the DAO was a type of decentralized venture capital fund managed by investors. The goal was to offer companies a new business model. This business model was built on the Ethereum blockchain and run with smart contracts. Since investment decisions in these organizations were not made by a single person or group of investors, they were made by considering everyone’s votes. Instead of holding their money, investors were given DAO tokens. The DAO tokens were sold in an ICO (Initial Coin Offering), and these tokens provided asset ownership and voting rights. With these tokens, investors could vote for projects as much as they would finance them, and when a project made a profit, they were rewarded. And if they did not vote, they could withdraw their funds at any time.
