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- 1 Decentralized Autonomous Organizations (DAOs) bring new governance to the organization.
- 2 Not only does it redress the problems of centralized systems, but it also brings new possibilities that are far better.
- 3 Due to its many advantages, the adoption of DAO is increasing in many industries.
Cryptocurrency has introduced the world with the concept of decentralization. It goes dead against the system that has been living for centuries. In a decentralized environment, everyone calls the shots. Every member of the network has a say in everything. As it happens, every technology evolves and with that, new solutions can be seen as well.
Introducing DAO
Decentralized Autonomous Organizations (DAOs) are self-governed groups that have no centralized authority. They keep their actions completely transparent and autonomous. Supported by communities, these groups share common interests and incentives. They safe-keep all the rules of governance in smart contracts.
Smart contracts play a pivotal role in determining all the decisions of the group. They manage proposals, inventory, pricing, asset management, and hiring as well. Some brilliant examples of such a structure are shared economies or community-driven entities. These distinct models work on peer-to-peer architecture. However, they still have a centralized authority for coordination and mediation.
As a result, the authorities rake in all the profits and shared economies become a sham. That’s when DAOs come into the picture. They focus on keeping the decentralized structure unaffected. To get this done, they shifted focus to the community for profits.
Focus on Community
By now, it’s clear that DAOs focus on the community is for the good of everyone. It keeps all the oddities of the centralized structure at bay. It doesn’t recognize any sort of hierarchy for decision making giving everyone equal power. On top of that, it allows the organization to operate independently on its own. It takes automation to a whole new level. It directly acts in contrast with the system only a select individuals make decisions for the rest. Due to its distinctive structure, DAOs encourage the focus on community growth rather than individuals.
Benefits of DAO Users Must Know:
Automation
As mentioned above, the community-driven groups make automation veritable. It does away with so many other processes that slow down the operations. At the same time, they bring chances of corruption and mistakes.
Better Functionality
While bringing automation, this structure improves the whole operation. It makes the coordination better and eliminates the chances of errors. Moreover, it rids the system of any chances of biases or favoritism.
Native Tokens
Native tokens enable users to do a lot more. Using these assets, the members of the network can engage in various financial endeavors. Everyone becomes a holder and they can earn revenues from them.
Support to Community Causes
Many times, communities have a common cause to tend to but they’re unable to do it. The centralized structure gives a few people to veto the wishes of a larger group. The DAO structure sets things right and enables them to collect money for common causes.
Upshot
DAOs have emerged as the best solution for small and growing businesses too. It allows them to thrive while maintaining a healthy environment. While simplifying and speeding up the operations, they widen the scope of betterment as well. In simple words, they work like a miracle for various entities.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
