The Decentralized Autonomous Organization (DAO)

The DAO, a project built on the Ethereum blockchain, has raised an impressive $24 million (USD) in crowdfunding for DAO tokens in just over a week, amounting to slightly over 3% of the current supply of Ethereum.

What is The DAO and why are people so interested and excited about it?

In a typical company any decision would be ultimately made by whoever has the authority to do so (whether it is a CEO, board of directors, etc.). By owning shares of a company you may be able to influence this decision making process.

The DAO operates in a similar way but with one crucial difference:

it is decentralized and has no central authority figures

Anyone who wants to can own a DAO token and by doing so, can be part of The DAO.

Owning DAO tokens functions in a similar way to having shareholder rights in an actual company.

By owning DAO tokens…

You are given voting rights to decide which proposals are funded by The DAO, with the number of votes being proportional to the amount of tokens owned. If the funded project proves to be profitable, profits will go back to the DAO token holders.

The funds raised during the crowdfund will be used to fund future projects for The DAO.

The only centralized aspect of The DAO are the Curators. Curators play an escrow role for The DAO by ensuring that the source code for funded projects matches the original proposal for the project. They also validate that proposals come from an identified person or organization. If any problems arise with any Curators, token holders can vote to change Curators.

The DAO already has a list of exciting projects looking to submit proposals…

Creation of DAO tokens will end on May 28th, 2016 with a current rate of 100 DAO tokens being created for every 1 ether in funding (will start decreasing over time in 6 days). There is no limit on amount of DAO tokens created.

For legal purposes, they have stated that

DAO tokens do not represent or constitute an equity ownership stake, share, or equivalent in ANY public or private company, corporation, or other entity in any jurisdiction; DAO tokens are only for use in connection with The DAO under the terms of The DAO’s smart contract code and do not entitle any holder of DAO tokens to any additional rights with respect to any other corporation, company, or entity in any jurisdiction.

The future of The DAO looks bright and I look forward to seeing it disrupt traditional models of organization, structure, and investing.

Edit: DAO token holders are able to vote to change curators but not necessarily choose the Curator.


Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store