Everything You Need to Know about Decentralized Autonomous Organizations

Everything You Need to Know about Decentralized Autonomous Organizations

The concept of Decentralized Autonomous Organizations (DAOs) has been circulating among crypto lovers since blockchain was created. Those who use cryptocurrencies dream of having decentralized entities without hierarchy and power-related issues. Visit (https://yuan-paygroup.com/) for more information on bitcoin trading.

Many people have tried to achieve this utopic dream, but the history of DAOs has been quite tumultuous. In this article, you’re going to learn everything about DAOs and how they operate nowadays. Keep reading to find out.

What Are DAOs?

A DAO is essentially a programmed organization that’s entirely blockchain-based. It is controlled by its users, not any government or external entity as it would in the real world.

Some people consider Bitcoin as the best example of a successful DAO, as it is a blockchain-based community with its own set of rules, and it can function entirely on its own.

However, some DAOs haven’t had the same luck as Bitcoin, as a single error in the code can destroy the entire system.

How Do DAOs Work?

In order for DAOs to work, they need to meet specific requirements. The first one is to have a clear set of rules that everyone should follow. These rules must be programmed in a smart contract, which can be created through Ethereum’s platform.

Once all the rules are settled, the DAO must be financed. During this step, each person who invests in the DAO is going to automatically gain voting rights and can actively speak their mind on the future decisions made within the DAO.

After the financing stage, the DAO becomes public and can operate normally. Nonetheless, all decisions made must be approved by all voting members of the DAO.

How to Become a DAO Investor?

If you own any cryptocurrency, you can invest in a DAO. All you need to do is buy DAO tokens the same way you would buy a company’s shares. However, don’t jump into the first DAO you find online. It is essential to do extensive research before investing and ensure the code is strong enough to avoid future problems.

History of DAOs

The name “DAO” was first created back in 2016 by a group of people who tried to create a “decentralized Airbnb.” However, its creators made a terrible mistake in the code, which caused them to lose more than $50,000,000 worth of Ether in a theft.

Nonetheless, that theft brought to light all the flaws that DAOs could have, and programmers have been improving the way of creating more safely-coded DAOs.

DAOs Pros and Cons

DAOs seem like a fantastic alternative to real-world organizations, as they allow people to freely collaborate with anyone without restrictions or regulations, aside from the ones set by themselves. Nonetheless, it is important to dive deeper into the characteristics of these organizations.


  • It beats all types of hierarchies, which allows people to freely cooperate and make decisions
  • The pre-written rules make sure everything is under control at all times
  • DAOs are blockchain-based, which means all transactions are 100% public and transparent


  • The technology that’s used is relatively new, which can cause issues that haven’t been explored yet
  • If DAOs aren’t coded properly, people could hack into them and steal a lot of money
  • There’s no law that regulates any crimes that may happen within these organizations

Bottom Line

DAOs seem to be the future of organizations, as they solve many problems we see in the real world. However, they’re far from perfect and still need to be upgraded until they’re completely safe.

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