# DAO Shalt Not Steal

**Published by:** [0xDanki ( Tin Erispe )](https://paragraph.com/@tinerispe/)
**Published on:** 2023-04-15
**URL:** https://paragraph.com/@tinerispe/dao-shalt-not-steal

## Content

Almost everyone I know in Web3 wants to build a DAO (Decentralized Autonomous Organization). And I can’t blame them, DAO makes it sound like you can run an organization in automation. Like you just have to build a DAO and the crowd will magically take care of itself. Ahh, the wonders of ✨blockchain✨ technology. But fren, das not how it works. If anything, a DAO can be more confusing and more complex to run than your typical brick-and-mortar organization. A DAO is simply a means to distribute and verify membership, privileges, and authority within an organization. It makes things systematized and it makes operations rigid, but no, it doesn’t make things any easier. Quite the opposite. To better grasp what da donkey iz saying, let’s be clear what a DAO can and cannot do.What DAOs Can DoDAOs are interesting. They allow for full transparency on how the organization operates. This enables collaboration between people and entities who would have otherwise not trusted each other. In centralized organizations, you would have gone through painstaking legal work to define how the body and its members should operate. And even then you really couldn’t prevent anyone from breaking the agreement. But there’s none of that in DAOs. The rules and architecture of your organization is laid out in code. And it can be designed in such a way that no one can do a critical action without the permission of the DAO. So how did they do it? Most of DAOs have these components in common:Membership token - An NFT or native token that gives you membership and voting rights in the DAOGovernance - A voting system where the members can make proposals and vote on matters regarding the DAO. Voting can be offchain or onchainTreasury/ Safe - Usually a multi-signatory wallet that can only be opened if the leaders of the DAO reached a consensusExecution Layer - A smart contract or an assigned core group that enacts the outcome of passed proposals in the Governance.This is a bird’s eyeview and we could talk more about designing these components and making them secure, but the gist is that DAOs are structured in a way that is so transparent it’s hard for any member to steal from the organization. “Ok this looks cool! We should turn every organization into a DAO” Ahh.. we haven’t talked about the downsides yet.A Case Against Building a DAOPutting your organization’s funds in a treasury wallet is a double-edged sword. It makes stealing difficult for normal DAO members, but it also makes your organization a target for hackers. Hundreds of millions of dollars have been lost on DAO hacks, and since they aren’t automatically made legal entities, it is harder to take legal action when this happens. As of the moment, there is still no better way to protect your members but to do the papers and turn the DAO into a legal organization. Right now, DAOs are mostly viewed like cooperatives. But from a strictly legal perspective, the organization is not defined. Its decentralized nature puts the liabilities and duties of the DAO and its members in murky waters. So… if you are very particular about the partnership structure of your organization, then better just go and create a formal one. It might just save your ass when things go south. Lastly, DAOs with many members also tend to have a diluted sense of responsibility. Majority of the time people acquire DAO memberships and collect its tokens like they’re tickets but when it comes to voting, participating, and updating themselves about the state of the DAO, there is a very low turnout. That makes it so hard to reach consensus when critical decisions need to be made for the organization.Decentralized… but not AutomatedThe thing is there is no foolproof, effortless way to build an organization. Ultimately your DAO is still made of people so you will have no way around the task of orienting, winning their confidence, and constantly engaging them. If you just want a quick, no-fuss way to collab with strangerz for a common mission, then by all means make a DAO. But if you want something more defined and will weather all sorts of battles, you will need lawyers for that. As a staunch advocate of decentralization I can’t believe I’m saying this, but forming DAOs is one of those few aspects of blockchain technology where we actually need some help from our lawmakers. Danki thinks that if we want Web3 native organizations to thrive, they should be able to stop treading legal grey areas and have their DAOs classified and considered as an entity of its own sort.Anyway I’m giving out a free-to-mint nft for my first few subscribers. Catch it while u can mah frens: https://opensea.io/assets/ethereum/0x7674b264817b17BBCf6D983ee39391D4C851ED62/0

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