The goal of a Decentralized Autonomous Organization isn’t just to reduce human inputs—it’s to eliminate them entirely. Though still largely an on-paper idea rather than one that’s been perfected in practice, a DAO is effectively a business that uses an interconnected web of smart contracts to automate all its essential and non-essential processes.
Any business can benefit from a model with DAO-like ambitions. A novelty keychain store that keeps its inventory on the ledger can create a smart contract that triggers at each item’s specific reorder point based on historical customer demand. The smart contract will autonomously create an invoice for the store’s relevant supplier, send it and specify the date of delivery. When the shipment arrives, the smart contract will be notified using scanners or IoT beacons connected to the ledger, and execute the release of a payment in cryptocurrency. It can then pull customer information from a CRM system when orders come in, automatically print labels and help accelerate shipping.
Why do we need DAOs?
Being internet-native organizations, DAOs enjoy a few upper hands over conventional associations. One huge benefit of DAOs is the absence of trust required between two gatherings. While a conventional association requires a great deal of confidence in individuals behind it — particularly for financial backers — with DAOs, just the code should be trusted.
Believing that code is simpler to do as it’s openly accessible and can be widely tried before dispatch. Each move a DAO makes in the wake of being dispatched must be endorsed by the local area and is totally straightforward and evident.
Such an association has no progressive construction. However, it can in any case achieve errands and develop while being constrained by partners by means of its local token. The absence of an order implies any partner can advance a creative thought that the whole gathering will consider and develop. Inward debates are regularly effortlessly addressed through the democratic framework, in accordance with the pre-composed standards in the brilliant agreement.
By permitting financial backers to pool reserves, DAOs likewise allow them an opportunity to put resources into beginning phase new businesses and decentralized undertakings while sharing the danger or any benefits that might emerge from them.
On the flip side, the smart contracts may lack legal enforceability. The DAO itself may not own assets as there is no specific individual or entity to do so. However, meticulous smart contract structuring may appease concerns associated with traditional contracts.
Furthermore, DAOs pose great implications for blockchain-based gaming and eSports. Gamers and developers can now collaborate as the DAO facilitates communication and community gathering via rewards in NFTs and cryptocurrency payouts.
Stay tuned as we continue to explore the intricacies of creating a DAO, case studies of successful DAOs, securities issues implicated by DAOs (especially those with their own tokens), and implications for how we may do business in the future, from clubs, for-profit organizations, the metaverse, and beyond.
Learn More about DAO: What is DAO?
