Pay your DAO! How DAOs work and what they represent

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There is no doubt that ADOs (decentralized autonomous organizations) are changing the way people work, organize and participate in their communities.

While these groups may be a bit difficult for the average person to engage with (for now), they represent an upcoming paradigm shift for everything from work to politics to culture and more. There are thousands of technologists working to create tools that make these incredible entities more accessible, easier to organize, clearer to navigate, and more integrated into existing social infrastructure, so it’s only a matter of time before they gain widespread adoption. widespread and massive.

Here’s what you need to know about how DAOs work, what they stand for, and how you can start seeing them in your everyday life.

What is a DAO?

DAOs are basically groups of people who organize around a specific project, goal, organization, cause, or anything else. Its most common use cases today exist in the crypto community, where people interested in participating in blockchain projects can organize, communicate, and vote on what they want the community to do.

For example, most web3 projects have DAOs that vote on community-generated proposals on what that project should do, like what features it should have, who it should pay for software development, or how it should spend reserves to attract users. . From hiring team members to issuing grants, DAOs give entire communities around projects the opportunity to play an active role in determining how those projects grow and change.

We’re still in the early days, but we’re also starting to see DAOs with sole purposes outside of developing and growing technical projects. Examples include collectives like the Constitution DAO that attempted to buy a copy of the original US Constitution, the Assange DAO that organized to buy an NFT from Julian Assange to help finance his legal battle, to reach a thriving ecosystem of climate and collective action. good dao.

To gain voting power in these groups, members typically earn crypto tokens, and those tokens represent the size of their government influence within the DAO, with their voting power commensurate with the percentage of the total token supply. But other mechanisms are also being used to determine DAO membership.

NFTs, for example, can act as membership cards, and all holders of certain NFTs can gain access to private communication channels, view protected documents, and have the right to vote on governance proposals submitted to the DAO. These different tools to enable DAOs to function give these organizations the flexibility to experiment with different democratic approaches. Some may take a shareholder-type model and make voting power dependent on the financial stake each member has in the DAO. Others may take a one person, one vote approach. The possibilities are open.

How will DAOs be implemented in the real world?

In the future, I hope to see DAOs work to serve everything from corporations, political action committees, and even cities or homeowners associations (HOAs). Imagine if your HOA dues gave you access to private communication channels within your housing development and allowed the community to vote on which flowers to plant or how to allocate resources to maintenance projects.

Instead of centralizing power in the HOA’s board of directors, there could be a more democratic solution. Community members could be empowered to take an active role in shaping their environment. For example, when HOA dues are paid, owners would be issued an NFT that would unlock voting, communications, and other materials needed to participate. These would remain off limits to non-members, so only people with rights in the particular group would be able to participate.

This could also extend to the non-profit space, where people donate and in exchange for their donations a cryptocurrency is issued that correlates to voting power. High donors would have additional voting power over low donors, allowing them greater influence over which causes are funded and which are not.

The D in DAO also stands for democracy

The applications of this technology are truly endless and represent a potentially massive change for democracy and society in general. Theoretically, this could go as far as voting for politicians, where each citizen receives an NFT for life that would allow them to vote in elections and participate in a more direct form of democracy.

In the corporate sense, shareholders of public companies could be issued a company crypto currency that correlates to the number of shares they own. Through governance proposals, shareholders could take an increasingly active role in what corporations do. Imagine if Chevron’s shareholder community could vote on how the company discloses environmental impact data.

In an era where many people feel ignored and powerless, DAOs could bring about significant change in the way organizations of all sizes operate and how they hold themselves accountable to their users, shareholders, and communities. Apps like these are already being tested in countries like Taiwan with great positive effect.

It’s only a matter of time before user experience catches up with technology, driving mass adoption and bringing this new and better way of organizing people into the mainstream.

Julien Genestoux is founder and CEO of unlock protocol.


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