# Decentralized Autonomous Organization

**Published by:** [vvv](https://paragraph.com/@buydig/)
**Published on:** 2022-05-29
**URL:** https://paragraph.com/@buydig/decentralized-autonomous-organization

## Content

What is DAO? One of the characteristics of DAOs is to provide a secure digital ledger by using blockchain technology to track financial interactions across the Internet, resist forgery through trusted timestamps and propagate a distributed database. This approach simplifies transactions by eliminating the need for a mutually acceptable and trusted third party to be involved in financial transactions. [4] The benefits of replacing a trusted third party and avoiding duplicate records of contract exchanges of different versions can basically offset the high transaction costs and corresponding data reporting problems based on blockchain. The birth of a DAO must have three basic elements: Have organizational goals and organizational culture (organization's mission, vision, values) that can reach consensus with strangers. It has a rule system including creation, governance, incentives, etc. that can reach consensus with strangers, and this rule is placed on the chain through blockchain technology. There are Tokens that can form interest associations with all participants to achieve full incentives. The governance rights of DAOs are usually expressed by governance tokens, and participants can obtain tokens by purchasing or making contributions and become the governance of the organization. The governor can use the token as the credential to participate in the decision-making and operation of the organization, and enjoy the corresponding rights and interests. DAO usually adopts the method of community democratic voting to govern. Whether it is the adjustment of governance rules or major business decisions, it generally needs to be implemented by the governor in the form of governance token voting. Stakeholders change the rules described in smart contracts in cooperation and competition to achieve decentralized governance. DAO has the characteristics of full openness, autonomous interaction, decentralized control, complexity and diversity, and emergence. Different from traditional organizational phenomena, DAO is not limited by the space of the real physical world, and its evolution process is driven by events or goals, forming rapidly, spreading and highly interactive, and automatically disbanding with the disappearance of goals. There is no central node and hierarchical management structure in DAO. It achieves organizational goals through the interaction, competition and cooperation between bottom-up network nodes. Therefore, the business transactions between nodes and nodes and between nodes and organizations in DAO are no longer determined by administrative affiliation, but follow the principles of equality, voluntariness, reciprocity, and mutual benefit, and are determined by each other's resource endowments, complementary advantages and interests Driven by win-win. Each organizational node will cooperate effectively under the incentive mechanism of the token according to its own resource advantages and talents, thereby generating a strong synergistic effect. Relying on smart contracts, the operation rules in DAO, the responsibilities and rights of participants, and the reward and punishment mechanism are all open and transparent. In addition, through a series of efficient autonomy principles, the rights and interests of relevant participants are precisely differentiated and dimensionally reduced, that is, those individuals who work, make contributions, and assume responsibilities are matched with corresponding rights and benefits, so as to promote industrial division of labor and rights, Responsibilities and interests are equal, making the organization run more coordinated and orderly. One of the risks of DAOs is code bugs,If an attacker finds a vulnerability in the running DAO code, he can launch an attack based on the vulnerability, steal the organization's property, or destroy the governance order, which may cause serious losses or even fatal blows to the DAO. Others believe that there is already a lot of artificial intelligence in smart contracts, and many human tasks have become automated execution, but DAO lacks supervision in this process. As the product of the development of the blockchain industry to a certain stage, the exploration of DAO will take time.As with noteworthy technological advancements, DAOs will continue to grow and diversify. As crypto projects continue to grow, the importance of DAOs will continue to grow.

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