Blockchain is a part of a trustless digital solution. There are multiple sources and solutions to decentralize existing projects or build a DApp from scratch. One of them is DAO Governance, a notion of building projects under open governance where communities make all the decisions.
Why DAO?
In innovative business, there is no place for bureaucracy, and decision-making is lightning fast
- Traditional forms of governance usually assume numerous layers of management for the coordination and enforcement of processes
- This comes with a drawback: many operations can become a bottleneck or a source of corruption
- DAO (decentralized autonomous organization) is open-source or completely transparent and, in theory, uncorrupt
Key Advantages
Open tokenized governance gives a lot of opportunities for developers (DApps creators) and users (token holders)
- DAO assists developers and entrepreneurs with user communication, regular feature updates, and necessary funding
- It gives a clear understanding of the decision-making process
- Could reduce corruption since all decisions are made by the community and open for review by anyone
Cautionary Tale: Examples of DAO Governance Gone Wrong
In 2016, The DAO (Genesis DAO) was hacked leading to the loss of 3.6 million ETH (the equivalent of $70 million at the time).
- The Ethereum community reacted quickly and regained control: they froze the tokens leaving the hacker unable to finish his gateway.
- Since then, developers have learned to establish secure blockchain solutions and avoid mistakes in their code.
Open Internet Services Managed by Open Tokenized Governance Systems
Many DAO rely on a simple structure where every member can propose an idea and vote upon it democratically
- They use them for charity, investment, governance, and fundraising
- Communities get a powerful tool to organize themselves around capital assets, currency, or tokens
- The latter can increase in value as more people hold and use them
