The Rise and Landscape of DAOs
What is a DAO?
A DAO is a contract that you enter into with the rest of the Ethereum community that controls a fund of ETH. You can join or leave at any time, but you have to be approved by 51% of token holders, usually through voting.
DAOs are democratized autonomous organizations, independent of any central parties. Instead, DAOs work via smart contracts that allow people to vote on proposals and issues.
The Age of the DAO begins.
There are at least 10 groups that say they’re launching an online venture on top of Ethereum. There is:
- Digix, which wants to make a gold token
- Maker, a “decentralized autonomous organization” for ether traders
- Augur, an application for financial forecasting built by some of the most respected minds in the space
The DAO is a decentralized autonomous organization, and it’s the first of its kind. As such, there are a lot of questions about how it will work and what value it will bring to the world. But before we get into that, let’s take a look at what DAOs are and how they came to be.
DAOs empower people to form a new type of organization. The traditional model is for individuals to come together and work towards a unified goal, often through democratic processes. These groups are popular as corporations or companies.
In contrast, DAOs are more fluid groups that allow participants from all over the world to vote on issues related to their mission without having to go through a central authority.
DAOs are not new, but they have only recently come into the spotlight because of the Ethereum blockchain. The first DAO was created in early 2014 by Slock.it, a German startup that builds Blockchain-based IoT applications.
Slock.it’s DAO was called the Universal Sharing Network (USN,) designed to automatically secure connected cars, homes, and other IoT devices.
The USN had some problems early on. Slock.it held the keys to the DAO’s funds for the first several months, so many people didn’t see it as a true decentralized autonomous organization. DAOs are supposed to be autonomous, after all.
Fortunately, the DAO model has continued to evolve and improve. In April 2016, a group of developers launched The DAO. It was the first truly decentralized autonomous organization. The DAO was funded by a record-breaking crowd sale that raised over $150 million in ether.
The DAO’s goal was to act as a venture capital fund without the need for venture capitalists. It would allow participants to vote on which companies and projects got funding. Meanwhile, contract developers could submit their proposals and be voted in by DAO token holders, who were the only people with voting power.
The DAO functions like an unstoppable Kickstarter. It would send money to projects that people voted for, funded by ether contributions from people who believed in those projects.
Unfortunately, The DAO was hacked in June 2016, and $50 million worth of ether was stolen. This event led to a split in the Ethereum community and the creation of the Ethereum Classic.
Despite this setback, The DAO proved that DAOs were feasible for the first time, and it ushered in a new era of decentralized autonomous organizations. It also demonstrated that these organizations make crowdfunding more democratic and secure.
Today, the dollar value of all DAOs is estimated to be in the billions of dollars. This number is sure to grow as more people become aware of the power of DAOs, and the Ethereum blockchain.
So, what value do DAOs bring to the world?
There are a few key benefits that DAOs offer over traditional organizations:
DAOs are not centralized, which means they are less likely to be hacked or shut down. Decentralization powers the democratic processes, as decisions are made by the collective rather than a small group.
DAOs are autonomous, meaning they are self-governing and do not need a central authority to make decisions. It allows for quicker and more agile decision-making.
Since DAOs are decentralized and autonomous, all actions and decisions are transparent and can be viewed by anyone. It creates a level of trust and accountability that is not possible in traditional organizations.
DAOs offer a new way to crowdfund projects. Participants can vote on which projects get funding, they are not limited to projects approved by venture capitalists the way they are in traditional forms of crowdfunding.
The Different Types of DAOs
Several different types of DAOs are useful in different contexts. Let’s take a look at each type individually:
1. DAO Operating Systems
The first type of DAO is an operating system, which enables the creation of smart contracts that can be used to perform certain tasks according to predefined conditions. These DAOs are used to create, also to manage decentralized applications (DApps).
2. Grant DAOs
Grant DAOs distribute money or resources to projects or individuals that meet particular criteria. They are often used to fund scientific research, charity work, or other social initiatives good.
3. Protocol DAOs
Protocol DAOs are responsible for maintaining the blockchain and ensuring that all transactions are valid. They also manage the network’s resources.
4. Investment DAOs
Investment DAOs help users to invest in various projects, often through a voting system. This type of DAO is useful for funding startups and other ventures.
5. Service DAOs
Service DAOs provide services to the community, such as software development, marketing, or legal services. They are often used by smaller DAOs that don’t have the resources to provide these services themselves.
6. Social DAOs
Social DAOs are designed to facilitate communication and collaboration among community members. They can be used for everything, from managing a wiki to establishing a social network.
7. Collector DAOs
Collector DAOs manage resources that are not yet scarce but will be in the future. They work by encouraging people to save these resources now by making them scarcer and valuable later.
8. Media DAOs
Media DAOs are responsible for creating and distributing media, such as books, music, or movies. Anyone who contributes to the project is paid according to their contributions.
So, How Do DAOs Evolve?
DAOs are constantly evolving as new tools, and features are added to the ecosystem. Evolving allows them to stay current and keep up with the ever-changing landscape of blockchain technology.
Some of the more notable DAO development tools include Gnosis Safe, ColabLand, RabitHole, and Github integration. These tools allow users to develop and manage their DAOs in a more efficient and streamlined manner. As more tools become available, the DAO ecosystem will continue to grow and flourish.
What Are DAO Tools?
There are several DAO tools available. These tools help users create and manage DAOs, which mostly run on the Ethereum platform.
Some of these include:
Etherpad is a collaborative document editing tool that allows users to work together on documents in real-time. It doesn’t have any central servers or administrators, making it more secure than traditional collaborative editing tools.
2. Proposal System
The proposal system is used to make formal requests of the network, whether budgetary in nature or an official voting procedure for members of the DAO. Anyone who holds at least one token in the DAO can submit and vote on both kinds of proposals.
3. Voting System
The voting system is used to make decisions about the direction of the DAO. It allows for both direct and weighted voting, depending on how important the decision is.
4. Token Manager
The token manager is responsible for managing the tokens in a DAO, allowing the creation and destruction of tokens. It also empowers users to change various token properties.
5. Reputation System
The reputation system is designed to assign a reputation score to each participant based on their activity within the DAO. This system incentivizes good behaviour, allowing more privileges to those with higher scores. Low scores attract restrictions.
6. Account Manager
This tool helps manage the accounts in a DAO, allowing the creation and destruction of accounts. It also supports making changes in various account properties.
The registry is a database that stores information about all the participants in a DAO. It includes things such as: their name, address, and reputation score.
8. Contract Manager
The contract manager is used to manage the contracts in a DAO. It allows for the creation and destruction of agreements and changes in various contract properties.
The Explorer is a tool that allows users to explore the blockchain, and see all the transactions that have taken place. It also allows users to view the contents of individual contracts and also track the progress of proposals.
10. Gnosis Safe
The Gnosis Safe is a decentralized application for creating, testing, and deploying smart contracts. Users access two keys: a public key visible to anyone, and a private key only visible to the user.
11. Snapshot and Seed Proposal
The snapshot and seed proposal allows users to pull all the information they will need from the Ethereum blockchain for a DAO. It includes: token balances, reputation scores etc. It is also able to create new accounts and wallets with these properties.
12. Github Integration
Github integration allows users to integrate their Github profiles with their DAO accounts. It can accurately record the amount of work someone has done on a project, it determines how much they should receive in payment for their contribution.
ColabLand is a DAO development tool with tools for the Dapp, including features like token management and voting. It also entails access to a virtual machine, with all the software one needs to work on a DAO project.
RabitHole is a tool that allows users to deploy contracts and manage their DAO on the go. It includes features like account creation, token management, and voting.
DAO Mercenaries is a company that provides services to DAOs. Some of the services they offer include:
- Contract Development
- Legal Consultation
They are one of the first companies to provide services specifically for DAOs, and are quickly becoming a leading authority in the industry.
The DAO and its derivatives free us from the stagnation of bureaucracy and centralized leadership. It is a system where people come together to accomplish great things without needing oversight. If done right, this could radically transform humanity as we know it, paving the way for a new paradigm in civilization.