Historically, we have seen new business models emerge every 40-50 years. We are fortunate to be in the midst of another transition. DAOs (Decentralized Autonomous Organizations) are one business model fundamentally reshaping how people coordinate and deliver solutions to problems. While many large institutions have forgotten that we are humans first and that they were incorporated for noble missions, organizations that follow the DAO business model are the ones who are bringing people and humanity to the forefront of their missions. As of March 2022, there are around 216 DAOs with a cumulative valuation of nearly USD 10 billion.
Decentralized Autonomous Organizations typically have the following features :
A) DAO has a horizontal structure by design; there is no management hierarchy in the DAO business model.
B) The DAO business model allows everyone from its community to participate in organization-wide decisions through governance processes and voting.
C) DAOs have decentralized ownership – founders or CTOs share ownership with community members.
D) DAOs are open-sourced and completely transparent.
The DAO business model follows a similar pattern to cooperative societies but is more effective with a democratic set-up of protocols and tools at their disposal. DAOs need no managers or hierarchy – every member has a say in decisions that impact the organization through protocols, forum discussions, and voting with tokens. Minor decisions within workstreams can be taken without getting everyone involved which makes organizations that follow the DAO business model agile and decentralized at the same time.
The DAO landscape’s standard operating protocols are embedded into a software code via smart contracts rendering the need for managers unnecessary. Bureaucratic or hierarchical hurdles are also removed thereby. Most DAO landscapes have their workflows built on Notion and other office discussion portals openly on Discord and the likes. While the decentralized structure brings about higher ownership in contributors, eliminating bureaucracy and management reduces overheads/bottlenecks, making DAOs efficient. By being open-source, DAOs have higher scalability and virtually no barrier to entry for average community members.
So far, we have briefly discussed What is a DAO Crypto. Cryptocurrencies and DAOs are intertwined, and both have blockchain as their infrastructural layer. Let us now move forward to get a better understanding of the DAO business model and understand different aspects of it, such as what is DAO crypto, what is DAO in blockchain and also discuss the types of DAOs that exist currently. We will also understand how DAOs work.