Decentralized Autonomous Organization (DAO) is a Blockchain Technology term to manage any cryptocurrency in a democratic way.
It is a virtual group where group members vote on proposals and projects related to a particular cryptocurrency.
The DAOs are computer programming codings by which virtual organizations are created to collect opinions of members to make automated decisions.
The main feature of it, it is decentralized, means the organizations are not governed by any government or private entity.
DAO is for managing virtual capital funds like venture capital. It manages crypto capital funds.
The Development process of DEOs is very similar to cripto and to understand DEOs better you first need to get how Cryptocurrency works.
Who Can Create DAO’s?
Anyone owned cryptocurrency can develop DAOs. Developers need to pay DAO Creation Fee so they make sure they have enough currency.
First thing to understand is that these are not ordinary organizations but made for a purpose which is its main body.
Developers also need an Ethereum Name Services (ENS) which works as DNS in the website development.
Developers use DAO hosting plataforma to create Voting Mechanism which is a technical platform to maintain votes and proposals.
There are many Voting Mechanism services providers. Some of them work as open source software. Along with voting mechanism services they also provide different kinds of DEOs creation services like On-chain polling, Off-chain polling, ENS domain, Inbuilt organization structure etc.
Who Can Join DAO’s?
Anyone having that particular cryptocurrency can join its DAO group. Being a part is not a big thing but to have enough voting power which members need to earn by holding a good proportion of currency.
Voting power at DAO called voting tokens members earn by maintaining regular productive activities.
How Do DAOs Work?
Cryptocurrency holders trust only in codings and to maintain integrity and trust among members DAOs use Smart Contracts.
Smart Contracts are sets of rules and regulations made of coding, which runs along with the blockchain coding to help DAOs make automated decisions.
Smart Contracts codings being created according to recognized activities in the blockchain industry. These codings make automated decisions like increasing or decreasing voting tokens or members, Supply and Burn reserves tokens etc.
Is DAO Useful or Not?
Yes in many ways, first it is a decentralized organization. We do not depend on any one central authority or group of members for taking decisions. Secondly, its best thing is that it gives all the members, whether they have currency in small amounts, a chance to participate in the group.
In addition to increasing the community, we can also make the DAO available for public viewing, which can also advertise cryptocurrency.
Along with these utilities of DAO there are also some challenges such as the members may not have the initial knowledge of using DAO, and sometimes if there are a large number of group members then it takes time to decide which is useful for a project. would not be correct.