What are DAOs and how do they fit into the Gear Network?

Gear Protocol
4 min readMay 19, 2022


A decentralized autonomous organization, or a DAO for short, is a new type of way to run organizations or institutions that enable individuals to work together for a specific cause in transparent, fair and honest ways.

DAOs are great ways to safely contribute to specific causes with peers, who you may or may not know, around the world. On top of being great ways to collaborate with strangers, DAOs are also safe places to commit funds to a specific cause no matter what that might be.

To simplify things, DAOs can be thought of as online groups of like-minded individuals that are also collectively owned and managed by the members themselves in equitable ways.

As previously stated, DAOs offer safe alternatives to pooling together money for a particular cause. This is because DAOs have built-in treasuries that no one individual actor has authority to access without the majority approval of the entire group. But this isn’t just money that can be ordinarily managed by members. Decisions are instead governed by proposals and votes to ensure that everyone within a decentralized autonomous organization has a voice. This is significant because it means that no central entity can manipulate anything for personal gain or based on personal beliefs. Instead, with DAOs everything is out in the open and the rules of said organization can even be examined without the need of permissions by anyone.

So if there isn’t a singular entity that can control how a DAO works, then what does? Well a DAO’s most important feature is its smart contract. This is essentially just lines of code that define the rules of the organization and its treasury. The benefit of using smart contracts to define the rules and govern a DAO is that once the contract is live, no one can alter any of the rules unless the group’s majority vote on doing so. This also means that treasuries cannot be spent without the group’s majority approval too.

Something else that is essential to DAOs are their membership principles. These principles determine how voting works, as well as some other significantly important aspects of the organization, including how ownership is measured.

Rights to DAOs are often governed by cryptographic tokens and they usually have to be staked to actually receive access to the group. Staking tokens essentially means locking them up for a period of time to show commitment to the organization and to keep it secure.

DAOs are useful because they offer unique ways to collaborate on projects that were not possible before. Traditionally, starting a project, group or organization was a very difficult and complex process. This is even more true when other people, money and legal documents are involved. However with DAOs, due to their transparent rules and principles you do not need to trust or have faith in any one individual to stay true to their word. Instead, as long as you have inspected the code and you agree to adhere to the rules, then you can truly verify that everyone within the organization will be on the same page.

This concept and its intricacies might seem novel now, but rest assured the concept of decentralized autonomous organizations will be very significant for how institutions and organizations are run going forward.

As DAOs do not require central authorities for successful operation, disintermediation across some of the world’s leading institutions will likely soon come into effect. This will enable groups of individuals, and their stakeholders, to make important decisions that can be scrutinized as everything is public.

The mass introduction of DAOs is something that’s extremely exciting, especially to those who work with blockchain technology on a daily basis. DAOs not only solve a multitude of problems surrounding how modern day organizations are run, but they also present the opportunity to improve institutional transparency going forward.

DAOs are currently being used in various different ways, across various different industries. For instance, a group could set up a DAO to govern a charity to begin accepting donations and distributing aid accordingly. However, by far the biggest use cases for DAOs at the moment have been decentralized investment funds. This is where a group of investors create a venture fund that pools capital together and votes transparently on where to allocate the capital.

Creating a DAO is as simple as creating a smart contract. Of course, the complexity of the contract might increase, due to the multifaceted nature of DAOs. However fundamentally when it comes to creating the DNA of a DAO there isn’t much more that an actor needs to do other than create the contract.

To help the Gear community learn more about how DAOs can benefit them specifically, we created an in-depth video that breaks down exactly how you can create a DAO by using the Gear network! You can find the video here: https://www.youtube.com/watch?v=6lxr7eojADw

We hope that this post has helped introduce you to the concept of decentralized autonomous organizations and how they can be utilized within the Gear network. To stay up to date with our latest news and announcements, follow us on Twitter.

The Gear Team



Gear Protocol

A new advanced smart-contract engine allowing anyone to launch any dApp. Easiest and cost-effective way to run WebAssembly