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DAO stands for Decentralized Autonomous Organization. DAO is a special form of organization in which the coordination of actions between participants is carried out without centralized control, but with the help of automatic algorithms.
The idea of DAO is much more radical than the idea of cryptocurrencies — here we are talking not only about a decentralized issue of money, but also about a decentralized system of management. Smart contracts technology has the potential to get rid of the need for banks, courts and credit institutions.
Since the DAO model does not assume a centralized hierarchy, it relies on alternative approaches, such as token-based membership. Typically, these management tokens can be freely bought and pitched on decentralized exchanges, or earned by providing liquidity or computing power for mining or stacking. Either way, by holding management tokens you gain access to voting, which determines the organization’s development strategy.
To explain briefly, I will quote from the DOMANI Protocol account article
The concept of a DAO is to allow multiple parties to come together (usually by providing funds and assets to the DAO) in a trustless manner to achieve democratically agreed upon goals.
In theory, the idea of a DAO has many strengths. Automation of management allows you to get rid of a huge staff of managers, lawyers and bureaucrats, minimizing the human factor, corruption and abuse of power.
If we break it down on a point-by-point basis:
Decentralization. Due to decentralization, no one has complete control over the organization. This helps to increase the involvement of participants and make all decisions made in DAO the most fair and honest.
Everything is in the hands of the community. In DAO decision makers are each person who has a token of this organization, of course the more tokens a member of the community, the more its decision is powerful, but it still does not have a huge advantage as an outdated organization in the type of controlling stake (51%).
But in practice, the complete rejection of centralization, despite the technical feasibility, is still a rather utopian idea. However, the DOMANI team is determined to make it happen, and according to my predictions, they have a good chance.
According to them, DOMANI is interested in creating sponsored indices and funds, which means that the creation of a DAO is necessary as an organization supporting the creation of these flagship indices and funds. Thus, the creation of the DOMANI DAO will provide further decentralization and more community initiatives. Giving more power to those who help build the community and encouraging more interaction with the protocol.
In DOMANI DAO, anyone in the community can propose an idea in Discord and start implementing it. How this happens is described below:
Proposing an idea in Discord and discussing it
Once an idea has been adequately formulated in Discord, it is posted on the forum, where it is reviewed and worked through in more detail.
Once a proposal has been adequately discussed on the Forum, we will hold a community-wide off-chain vote on Snapshot to determine whether or not the proposal will go into effect.
You can try this mechanism right now by joining DOMANI. Follow them on Twitter, Telegram and Discord and take part in the creation of the organs of the future!