The Hype about DAOs

A short comparison between regular communities & DAOs

Zainab Balogun O.
Coinmonks
Published in
3 min readSep 13, 2023

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beautiful illustration by Bombos

DAO (pronounced as either Day-ho or Dow, depending on one's mood) is a short form for the word Decentralized Autonomous Organizations.

An unnecessarily long name if you ask me, something simpler like “Oga-less Organizations” might’ve been better to drive the point home faster but then “OO” doesn’t quite sound like a good enough acronym so… probably not.

What are Day-hos/Dows/DAOs?

Short story

It is an organization without a central authority, without a particular Oga/Boss.

Semi-short story

DAO is a Web3-related community where a group of people from all over the world come together & share a common goal. Just how a regular community on WhatsApp or Slack runs but it comes with added/distinct features.

Features like;

  • Members of the DAO are familiar (even if it’s a little) with the web3/blockchain/crypto space & so they want to contribute in one way or the other towards related matters like raising funds for a cause or collection of digital assets.
  • There is no central authority like in a regular community e.g. a Director, Admin, etc. In a DAO, every member has equal rights & equal say over a subject matter.
  • Verified members of the DAO own tokens.
  • Tokens are a form of digital currency issued by the DAO & they represent a form of ownership. As a token holder, you have the right to make contributions that have to do with the DAO’s governance.
  • In a case where there is no consensus about a particular matter, or something needs to be added/removed, a proposal is put forward so that members/token holders can vote.
  • Smart contracts — are a set of rules in the form of code that ensures that the winning decision/proposal is implemented. No human intervention is involved as it’s set to be automatic & transparent.
  • Transparency because the voting process & the smart contract itself are posted on the blockchain where anyone can see. The transparency of a DAO forms the basis for trust among its members.
  • DAOs have treasuries — the “bank” where the DAO funds or excess tokens are kept.

Based on these features, the value of a DAO in comparison to a non-DAO can be weighed. It all depends on the purpose & direction of what its needed for.

The Cons

As much as DAOs are centered around decentralization & “equal rights” of its members, they also come with their own hiccups such as:

  • Complexity — regarding the blockchain space in general. There’s often more burden to educate diverse users on the new terminologies & processes involved with DAOs.
  • DAOs aren’t yet fully recognized or accounted for in a legal sense. Because of its decentralized & anonymous nature (DAO activities are not restrained by anonymity), the majority of existing DAOs are unregistered & can be viewed as “alegal” rather than illegal.
  • It takes longer for decisions to be made due to the fact that everyone has to be involved & decisions are not left to the “admin” alone.
  • Exploits like treasury theft are possible if the DAO’s & smart contracts security is not properly established & maintained.

Wrapping up…

In summary, while DAOs and regular communities differ in their organizational structure, decision-making process, & level of transparency, they both serve as means for people to gather, collaborate, and face a common goal.

DAOs are a more recent development enabled by blockchain technology, while traditional communities have been part of the regular society for a really long time.

And so, the choice between them depends on the specific goals, values, and contexts of the participants.

Do you need a DAO or do you need a Whatsapp group?

These are the questions…

And the answer is, it depends.

✌ Until the next #WeWe (Web3-Wednesdays) episode

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Zainab Balogun O.
Coinmonks

advocate 4 humanity, quality TV shows & 💤. subscribe to my newsletter, some say it's fun https://zigzagzee.substack.com/