This article describes everything you need to know of Decentralized Autonomous Organization. We will read about Decentralized Autonomous Organization- starting with understanding a traditional organization, how is DAO different to a traditional organization, how to join a DAO and some FAQs related to DAO.

Let’s start.

What is an Organization?

Humans from the very ancient times have worked in groups like teams, gangs, family, etc. One such form of a formalized and regulated group of humans having a common goal and following some set principles or protocols is -an organization. For instance, consider the company for which you might be working for. You and your colleagues are working with a common goal of may be selling the company’s products and booking profits. You all follow a set principles and guidelines which are mostly dictated by the company owner and also the Government of the country where the company is located. This is an example of an organization.

How normally Organizations work vs the new age concept of Decentralized Autonomous Organization(DAO)

Normally in organizations they follow a hierarchical structure, where members work by following the protocols laid down by the top people in the hierarchy and also by the regulations set by the Government of the country in which the organization operates. The people in the top make the decisions. People in the bottom have seldom their opinions heard or accounted for.

Now consider an organization where the protocols are defined by a computer code (Smart Contract) rather than been set by the management and/or the Government of the country. This is where the concept of DAO seeps in. In a DAO the protocols are defined by pre-approved and pre-verified computer codes called Smart Contracts. These codes reside in a blockchain such as Ethereum, Cardano, Polkadot, Cosmos and EOS.  Hence there is no ownership of such and organization and the protocols which reside on a blockchain are decentralized, open to be seen to everyone but immutable without consensus. Let us explore DAOs further.

Decentralized Autonomous Organization (DAO)

Hence by now we know that DAO is a term that refers to an internet community or an internet-based organization in which the rules or protocols on which the organization runs are defined by computer codes called Smart Contracts which reside in a blockchain.

There is no hierarchy in the system, and anyone can join a DAO using internet. The rules or protocols in the form of Smart Contracts reside in a blockchain such as Ethereum, Cardano, EOS, Polkadot and Cosmos. Since the code resides in a blockchain they can be seen by anyone though immutable without consensus. This means the code can be verified but for any change or modifications all the members of the DAO need to come to agreement or consensus.

Examples: Some DAOs are groups of developers or investors, others are pressure groups, companies, charities, local initiatives, etc.* In fact, almost any existing organizational form can be reimagined as a DAO. So far, so familiar.

DAOs vs Traditional Organizations

• Nature:
  
  Traditional Organizations: Generally hierarchical. There is a Central or Prime Authority. When it ceases the organization ends.
  DAO: Fully decentralized, democratic. This means there is no Central or Prime Authority. Hence there is no single point of failure. For example, in traditional organizations if the management or owners are no more functioning, the organization ceases. Contrary to this, DAO will run till the last member. It will run till the platform that supports it like Ethereum will run (which is practically incessant).
  
• Protocols, rules and regulations:
  
  Traditional Organizations: Depending on the structure the protocols are defined by the management and also are regulated by the Government of the country in which the organization is operating.
  DAO: Protocols and regulations are defined and locked in the Smart Contract which resides in the blockchain platform on which DAO is built upon. These are pre-defined, verified by all members and immutable. Changes to the code can only be made via proposals or voting and members reaching to a consensus.
  
• Changes or decisions to be implemented:
  
  Traditional Organizations: Generally, the changes are suggested from the owners and people in the top hierarchy. In rare cases where voting happens, votes are tallied internally, and outcomes are implemented manually.
  DAO: Changes are made based on voting and proposals. Any member can submit a proposal for a change/idea which can follow a voting to implement of reject the idea.

How to join a DAO?

Joining a DAO is easy. There are no formal interviews or background checks to join a DAO. Practically speaking you need to connect to the purpose of a DAO to connect, contribute and prosper.

Step 1: You can find a list of DAOs at DeepDAO and DAOLIST. Visit these portals to find a DAO or community of your interest. You can find out the purpose of these DAOs and select one of your interest or relevance. For example, there are DAOs for developers who develop DeFI applications, there is a Friends with Benefits (FWB) DAO which is a social community and there are more.

Once you have joined a DAO you can join the conversations which usually happen over platforms like Telegram, or some specific apps dedicated to that DAO. You can propose new ideas over here and solicit feedbacks and questions.

Step 2: You can earn a voting right. To get to the next level where you have the right to vote for new ideas, you need to buy the DAO token. Most DAOs issue their own tokens which you can buy to unlock your voting rights on DAO.

Most of the DAOs are hosted on the Ethereum blockchain. Hence, if your selected DAO is hosted in the Ethereum blockchain, you first need to buy Ether. Then you can exchange Ether to the DAO token on Decentralized Exchanges like Uniswap or 1inch.

FAQs about DAOs