A game changer of traditional mechanism — How exactly does DAO work?
DAO is an organization composed of members with common goals and jointly governed by the members. With the improvement and diversification of the DAO ecology system, DAO has been widely used in investment, media, social and protocols and many other fields, which is becoming an important trend in the crypto market this year.
In the last article, we listed several types of DAOs. But in order to understand DAOs in depth and participate in DAOs, we also need to know how DAO works.
Generally, a DAO consists of the following elements: organization members, token distribution mechanisms, smart contracts, communication channels, and governance/voting mechanisms.
DAO follows clear rules for governance, incentives, etc. Each DAO has its own set of economic systems and will issue its own tokens. Tokens are the threshold for participating in DAO. Holders of the token have the right to vote, propose, and other privileges of benefits.
DAO members initiate the proposals and vote. After voting, DAO will automatically execute corresponding instructions through smart contracts. A smart contract is a set of computer programs written on the blockchain. When the smart contract is released, the DAO will run without human intervention. Changes to smart contract rules require consensus through voting as well.
Compared to traditional organizations, DAO has the characteristics of democracy, openness and transparency. DAO has no hierarchical structure, which everyone can propose solutions for the organization or participate in the decision-making of DAO. Relying on smart contracts, DAO’s operating rules, reward and punishment mechanisms are all open and transparent.
In GoodData’s upcoming DAO, GoodData also aims to provide a platform for everyone to release greater social value through decentralized management. If you don’t want to miss this opportunity, please follow us and join our official twitter or telegram channels!