1 Definition The full name of DAO is decentralized autonomous organization, meaning that everyone in the community has a right to make a proposal and vote for themselves according to the voting power. And the voting power depends on the token share they have.
2 Difference Between DAO & Traditional Corporation
2.1 Any relevant parties get rewards As for the DAO, it sets rules to give the bonus toward anyone who are in this society regardless of roles, including users, members, token-holders, core team and so on. But in traditional ways, participants cannot gain the shares, their activities could not be compensated even though they actually make contributions to improve the corporation. For example, recently X2Y2 launched its token and published the incentive mechanism. Users can get rewards by listing the NFT and transactions. But in traditional ways, like OpenSea or other marketplace such as auction firms, they will not reward the users and collectors. Because they think the platform is much more important than the trivial individuals. However, this will change in Web3 and DAO is one of tools to make it. (X2Y2 is not a DAO, but this behavior is very similar to DAO’s motivation system toward the members.)
2.2 DAO’s members are equal. Everyone has a say according to their token shares like the shareholders in traditional finance. DAO is a kind of corporation with a structure of community. The token empowers everyone to have a right to make proposals and vote for themselves. But in tradition, only big shareholders can make a proposal and the small ones will be ignored. There is a balance between the fairness and effectiveness. Until now, DAO is more beneficial for individuals rather than the platform. And most DAOs come up with the idea of Multisig to make sure the safety of treasury, so it could try to find the balance point.
3 DAO’s Examples
3.1 People DAO
3.1.1 History & Background People DAO first was going to raise a lot of money to purchase the “ U.S. Constitution” in the auction. However, it failed and was open to refund. But members in DAO are going to build this DAO for other activities. There are some leaders to call on members to focus on future of DAO, which empowers members to participant in anything they are interested in.
3.1.2 Creativity People is the first DAO that raises money and try to make an impact toward the real life. It means that web3 could change the way of functioning. It is very difficult to think about raising money like this. Because in the past, when you donate your money, you just wish your money could be used in the right place and there is nothing you can do after the donation. But in DAO, you could have the right to discuss with others, and you even could start a project within the DAO and help it grow. The token just combines everyone together and this business model is a new era for crypto. In the end, you could inspire every member in the DAO to contribute themselves to do something they are good at and receive the profits by token. It just changed the tradition that only core team have a say toward the management and only them could get profits from development. That’s why it gets stronger and approval from members.
3.2 AssangeDAO
3.2.1 History & Background AssangeDao raised 16000 eth to buy a NFT, and the artist agree to donate all the money toward the official foundation to support Assange lawsuit. This is the first successful DAO to influence the real life. The amount of money is huge and unprecedented. It illustrates the potential of DAO.
3.2.2 Creativity AssangeDAO use this IP to raise much more money globally, and it proves that DAO could cash out its influence and impact. Every member could get the reward of token, in the future they may form different teams to continue new projects under this DAO such as Bankless DAO. And this new DAO demonstrate that any good IP could have chance to begin with a DAO and launch its own token. If the DAO can convince others this DAO could manage to make it, then it will be powerful and full of potential.
4 Reflection & Conclusion There are thousands of DAO appearing recently, but they have different management structure. Some of them use the snapshot to govern the community, meaning that every token holder could make a proposal if they want. It is very fair but also time-consuming. Hence, other DAOs believe it is better to find some representatives to make the proposal so that we only need to select meaningful proposals. However, it increases the suspicious rumors and misleads members to fight with core team. DAO needs to decide which path is the best way to grow and develop. In conclusion, DAO has to make the rule before and make sure that every members totally understand the rule of DAO, because there is no fixed model for any DAOs to follow, and they should choose by themselves.
Besides, DAO could make every investor regard himself as an insider and a builder in the DAO. In the past, the shareholders won’t work for the company, nevertheless, members in DAO usually work for the DAO in various aspects. This new governing encourages everyone devoting themselves, leading to concentration on projects rather than the price of token. The identity changes, and the perspective will change too. Once there are more and more people who decide to make an effort on the projects, the token price would also reveal an upward trend so that members get rewards. On the other hand, DAO inspires members and relevant parties to get involved in DAO development, because all the benefits will be divided by the token share.
In the end, DAO will be the future of web3 and I insist that most of web3 projects are going to adopt this new community structure to operate, because it is more convenient and friendly to users and individual, exploring the unlimited power of web3 participants who gain much more profits by DAO than traditional business model.
