The Future Is DAO?
What Is A DAO?
A DAO, for those who are not familiar with it, is a self-managed organization governed by a transparent set of rules encapsulated in a computer program. Unlike traditional hierarchies, DAOs eliminate the need for managers by embedding rules into their code, enabling them to operate independently of members.
In decentralized organizations, leaders and large shareholders have less control over organizational decisions, so they can make them collectively and autonomously.
Potential Benefits Of A DAO
DAOs can enable community-focused development rather than just profit-focused development, and may lead to a more socially conscious structure; one focused on helping people all over prosper instead of just focusing on the desires of a few large shareholders. Our society’s responses to important issues could also be affected by this, not only in terms of businesses.
It is clear that DAOs possess their own challenges, but they are also poised to improve upon an organization style that hasn’t changed significantly for hundreds of years. It is interesting to note that most US companies today operate in the same way as they did in the 1600s: they accept funds from investors in exchange for the responsibility to maximize shareholder value.
Both good and bad have come from this profit-driven directive. As a result of the good, business efficiency has significantly improved, while the bad has resulted in profit-driven business practices that cost employees’ benefits and quality of life, have led to income inequality, and have damaged the environment.
Our planet is still warming, and many workers lack health insurance and a livable wage despite such efforts, and while corporations could be doing more to solve these issues, they do not.
Is DAO The Answer?
Transparency and decentralized cooperation were among the main features that were considered when blockchain technologies and cryptocurrencies were being developed. The inclusion of those elements was vital for ensuring independence and neutrality, as well as ensuring that the interests of the whole group were prioritized over those of a small, powerful group. Furthermore, the format prevented manipulation and allowed for faster action than traditional business, as it allowed for real-time actions.
However, if a collective can run a global financial platform, why can’t an organization? The concept of a decentralized independent organization is both intriguing and innovative; and just like blockchain and decentralized systems, it can help us rethink how we organize ourselves to achieve greater impact.
In closing, an example. With eBay, Uber, Lyft, and Airbnb, we have watched, benefited, and even participated in shared economy platforms since 1995. In exchange for allowing individuals to sell, drive, and host, these services rely on a platform host, willing to extract substantial profits to facilitate the transactions between these two parties. Moreover, this is even a means of manipulating an opaque platform for the benefit of shareholders different from the users of the platform, such as sellers, buyers, drivers, passengers, hosts and guests.
There is a way to create a rich, connected experience without a central operator: letting markets direct pricing and quality, while letting participants directly profit from the experience. This is one benefit of a DAO.
There is still a long way to go before we reach DAO nirvana, even though DAOs show incredible promise and offer the opportunity to move businesses forward. A DAO’s code can make many important structural decisions, and token holders within a DAO may have certain voting and participation rights, but the DAO structure must still take into account the connections to real-world activity that have not yet been fully addressed. Our actual lives don’t take place solely in the metaverse, even if we can utilize technology to operationalize many interactions. We are still very much in the physical world.
In order to deal with real-world questions and liabilities, DAOs must establish some method. There must be a legal way for participants to pursue remedies if a DAO causes injury (whether through a code vulnerability or a malicious actor). The DAO will need a custodian, insurance, and a tax accountant if it purchases a physical good (like a copy of the Constitution). A DAO in code doesn’t avail the online organization of real-world protections and benefits. For DAOs to become truly powerful in affecting the real world, they must overcome the challenges created by their structure that makes them nimble and autonomous. Because even with coded processes and protections, the unexpected can always happen.
There are many aspects of DAOs that are uncharted. There are several significant hurdles to overcome before they can be fully realized in the real world. In spite of this, it is undeniable that companies would benefit from structured differently, and there is motivation to do so. Taking into account these new structures now, rather than simply waiting and seeing, will help us make our businesses reflect all of the desires of the stakeholders, rather than just making more money for a select few.
We need to start heeding the call to organize differently sooner rather than later, as there are so many pressing societal needs. It is possible to evolve an archaic system that isn’t serving everyone’s needs into one that will serve everyone’s needs if we embrace this innovation and create the legal frameworks that will make this possible.