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There is no doubt that DAOs (Decentralized Autonomous Organizations) are changing the way people work, organize and participate in their communities.
While these groups may be a little difficult for the average person to get involved with (for now), they represent a coming paradigm shift for everything from work to politics, culture, and more. There are thousands of technologists working to build tools that will make these amazing entities more accessible, easier to organize, clearer to navigate and more integrated into existing societal infrastructure, so it’s only a matter of time before they become mainstream, en masse. .
Here’s what you need to know about how DAOs work, what they represent, and how to see them appear in your everyday life.
What is a DAO?
DAOs are basically groups of people who organize themselves around a specific project, purpose, organization, cause, or really something else. Their most common use cases today are in the crypto community, where people interested in participating in blockchain projects can organize, communicate and vote on what they want the community to do.
For example, most web3 projects have DAOs voting on community-generated proposals about what that project should do — such as what features it should have, who should pay for software development, or how it should spend reserves to recruit users. Pull. From hiring team members to providing grants, DAOs empower the entire project community to take an active role in determining how those projects grow and change.
We are still in its infancy, but we are also seeing DAOs with unique goals beyond the development and growth of engineering projects. Examples are collectives such as the Constitution DAO who tried to buy a copy of the original US Constitution, the AssangeDAO who organized to buy an NFT from Julian Assange and thereby help fund his legal battle all the way to a thriving ecosystem of climate action and collective good DAOs.
To gain voting rights in these groups, members typically earn crypto tokens, and those tokens represent the extent of their influence over governance within the DAO, with their voting power proportional to the percentage of the total supply of tokens. But other mechanisms are also used to determine DAO membership.
For example, NFTs can act as membership cards and all holders of certain NFTs can access private communication channels, view proprietary documents and have the right to vote on board proposals submitted to the DAO. These different tools to enable DAOs to function give these organizations the flexibility to experiment with different democratic approaches. Some may take a shareholder model and make voting rights dependent on the financial stake each member has in the DAO. Others may take a one person, one voice approach. The possibilities are wide open.
How will DAOs be implemented in the real world?
In the future, I expect to see DAOs run to serve everything from corporations, political action committees, and even cities or homeowners’ associations (HOA). Imagine if your HOA dues give you access to private communication channels within your housing project and the community can vote on which flowers to plant or how to allocate resources to maintenance projects.
Instead of centralizing power in the HOA’s board of directors, a more democratic solution could exist. Community members could be empowered to take an active role in shaping their environment. For example, when HOA dues are paid, homeowners would receive an NFT that would unlock votes, communications, and other materials needed to participate. These would remain out of reach for non-members, so only people belonging to the specific group could participate.
This could also extend to the non-profit space, where people donate and in exchange for their donations are issued a cryptocurrency that correlates with voting rights. People who donate a lot have more voting rights than those who donate a little, giving them more influence over which causes are funded and which are not.
The D in DAO also stands for democracy
The applications for this technology are truly endless and represent a potentially huge shift for democracy and society in general. Theoretically, this could lead to voting for politicians, giving every citizen a lifetime NFT that allows them to vote in elections and participate in a more direct form of democracy.
In a business sense, shareholders of public companies can get a cryptocurrency from the company corresponding to the number of shares they own. Through board proposals, shareholders could play an increasingly active role in what companies do. Imagine if the Chevron shareholder community could vote on how the company makes environmental impact data public.
At a time when many people feel unheard of and powerless, DAOs can bring about a significant shift in the way organizations of all sizes operate and how they remain obligated to their users, shareholders and communities. Applications like this are already being tested in countries like Taiwan to a large, positive effect.
It’s only a matter of time before the user experience catches up with technology, driving mass adoption and bringing this new, better way of organizing people into the mainstream.
Julien Genestoux is founder and CEO of Unlock protocol.
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