DAO, The Corporation of Tomorrow

Decentralized Autonomous Organizations are the future. Are you prepared?

What are corporations? They are the vessels that sail through the waters of commerce that cover and connect the globe. They are the entity that preside over the manufacture of goods and services. They are the lenders and the collectors. They are the signers and the arbitrators. They are the hirers and the contractors.

Corporations knit together our world, taking the sand from our shores and turning it into the glass of our windows. Governance of these entities usually occurs from the top, with a figurehead calling all the shots. These figureheads communicate with subordinates, who communicate with others, all doing tasks that ensure the proper function of the organization.

The corporate process of organization is one that has seen lots of change over the years, but it has managed to maintain its core structure. While corporations have been the modem of transactional processes throughout the past many years, they are still plagued with issues that prior to now had no real solution. These issues come from the core of the corporate structure, so bandaid patches have been the only real solutions offered thus far.

Some of the issues of corporations come in the form of the people who ensure their operation. While the people in it seem to be among the greatest assets of a corporation, they can also be some of the biggest liabilities. They are great because they can offer things like empathy; a feeling only properly conveyed by humans. However, they can also make mistakes or succumb to corruption. In corporations, the enforcement of contracts and laws comes down to the oversight of individuals. And individuals are often biased, or make mistakes leading to repercussions that — especially when coming from hierarchy — can proliferate.

Until recently, there were no options for substitution, but now…

Ta-”DAO”

DAO stands for decentralized autonomous organization. This new corporate structure is a self-operating and self maintaining organization that lives on the blockchain (For more information on blockchain, check out this post). They are a revolution, because of their method of operation — no people to oversee processes and no bosses to hold individuals accountable.

People don’t oversee the processes of the organization, which are handled through the use of smart contracts. These smart contracts are programs to oversee all the operations of the organization, effectively removing the human error and replacing it with programs that self-execute according to rules defined during the creation of the contract.

DAOs are organizations without employees. The employees are replaced by smart contracts that are always listening. DAOs run 24 hours a day and they don’t succumb to corruption.

People, or other smart contracts, can maintain ownership stakes in DAOs, and they can vote on any decisions that need to be made in regards to the DAO. If someone sees a need in the DAO, they can submit a proposal to address it, called a contribution contract. The members receive the contribution contract and can vote to approve or deny. If the proposal is accepted, a smart contract is created with the parameters of the proposal, and a timeframe within which to complete the proposal. Upon successful completion, the smart contract completes its execution and some predefined compensation is awarded.

DAOs offer a new way of doing things, not beholden to the rules of yesterday. They are the future of organization, and will bring about efficiencies that both corporations and individuals have been yearning for.