An introduction to the world of DAOs!

Let us explore decentralised organisations!

Igor MD

Published in

Coinmonks

5 min readMay 24, 2022

Introduction

Someone new to the world of blockchain might be intimidated by all the new terms, jargon and just the vast amount of information that is available. When I first started learning about Blockchain, DeFi and cryptocurrency, I too was overwhelmed by all the new and exciting technology that existed. Every article or page I would read would result in me discovering yet another handful of terms that I had no idea of. Searching how what and why these terms existed has resulted in me learning a lot about the crypto space in general and has allowed me to gain an edge over other investors in finding “the next big thing”.

One of these new things are DAOs, and in this article, I would like to introduce you to the concept of DAOs, how they work, how you can contribute to them and what the future of DAOs will be!

So What are DAOs?

The term DAO is an abbreviation of the words Decentralised Autonomous Organisation. DAOs are completely hosted on the blockchain and are managed by using web3 technology. The organisation governs a community treasury, which they use to incentivize tasks and jobs that help them achieve that goal. This way, using the power of a decentralised blockchain, communities can achieve new things that were previously thought to be impossible! The closest one might be able to compare a DOA to a real-world institution might be LCC, but the big difference is that the community decides what route the DAO takes, instead of a board of directors. The founders of the DAO usually still have a large influence on this route, but the community can slowly take these rolls on as time progresses.

How does a DAO work?

This brings us to the next question; How does a DAO function? A DAO is founded by someone with an idea or a vision. This person starts a DAO and finds people who are also passionate about this vision. This idea can be anything from starting an investing club to trying to change the climate to buying properties, any idea or vision would suffice to start a DAO! Once the DAO is set up with a website or (at least) a communication channel, you can start the funding round where tokens are sold to fill the initial treasury of the organisation. These tokens are then used to vote on proposals which help achieve the goal of the DAO, and the treasury then functions as a way to complete the proposal once it is passed. If you want to increase your influence on the course of the DAO, you might want to contribute or buy more of the tokens!

What does it mean to be a contributor?

So the next logical thought is; How can I contribute to a DAO? Good question! First off, you will need to find a DAO that shares a vision or idea you support. DAOs are always in need of people who can perform tasks for them, so just join one and immerse yourself with the available information and people. Once you’ve found a DAO, you can start to do bounties or tasks for them. These can range from writing articles to programming a website to manage the community. You can reach out to an admin of the organisation or use websites like layer3 or dework to find bounties that help propel the DAO to new levels. The fun part about doing these bounties? Performing these tasks or bounties usually are rewarded with voting power (in the form of tokens) or are rewarded in crypto. This way you are supporting a goal you stand by whilst also earning!

A brief history on DAOs.

The first-ever DAO was called “The Decentralised Autonomous Organisation. (The DAO)” It tried to become a Kickstarter, where anyone could pitch an idea and receive money from The DAO. It was a big success, reaching a treasury that was filled for almost $250M when Ethereum traded only at 20$. Sadly, the smart contract that was used contained multiple flaws, one of which was exploited by a hacker who withdrew almost $70M in Ether before eventually stopping. The impact of this hack was so big that the chain decided on a fork, reverting the hack and returning the money to all its investors. Not everyone agreed to this fork as some pressed on the fact a blockchain should be immutable, even after such a big hack. The result was the creation of the Ethereum Classic chain, which still carries the hackers’ funds and the Ethereum chain which had the hack reverted. Although The DAO itself understandably died after the hack, the idea persisted and has been the basis of which every DAO currently exists!

The future of DAOs.

Although most DAOs are still in their infantry, some have already achieved great things! One of the more recent examples is the Constitution DAO, where the goal was to buy the American constitution with cryptocurrency. Although they lost the auction, this is a great example of what a (one-time) DAO can achieve. Current decentralised organisations still mostly live on the blockchain and cryptocurrency space, but as many of them start growing larger and larger, they will start to protrude into the real world, impacting the real world as well! I think that DAOs will achieve amazing things, and I am super excited to see what they will bring to the (crypto) world!

Conclusion

DAOs are a super interesting concept and will revolutionise how organisations are built and managed. They can change the crypto-space for the better and can encourage everyone to start building on something they believe in. I would invite everyone to start joining a DAO that piques their interest and immerse themselves in the information and people around the DAO. Because maybe, just maybe, you’ll be leading the next big blockchain and internet organisation!

Note; This piece was originally written as a bounty submission for Aragon and opencurnnt. Both are DAOs that want to educate people by following courses or gaining real experience with creating and governing your own DAO. Take a look at both if you have some spare time!

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