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Understanding basics of DAO😵‍💫

Understanding basics of DAO😵‍💫

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Monkey D Luffy
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3 min read

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DAO! DAO! DAO! 🧐

Hi all, we all have been hearing about the jargons like DAO, WEB3.0, Blockchain, Bitcoin, DEX, NFT, Tokens and so on. Everyone around the world is discussing about:

  • How it will shape the world ?
  • What things can be built around it ?
  • What are it’s impact and so on.

Out of all this huge terms we will be discussing about the DAO today. You might have heard about it at some point. So let’s dive into WHAT & HOW's of DAO.

What is DAO ? 🤔

  • DAO also known as Decentralised Autonomous Organisation.
  • As the name suggests it is an emerging organisation which is decentralised in nature unlike the current centralised system. It is not owned or governed by any single entity. The member’s in the DAO are the TOKEN or NFT holders, who have a specific goal to achieve through the course of DAO.

How DAO functions ? 👷‍♂️

  • Each DAO highly relies on the smart-contract on which it is built on. Smart-Contracts are like the legal binding or contracts the only difference they have is they are open to all and once deployed they cannot be modified.
  • This contract gives the member holding the token or NFT, the ability to create a proposal regarding anything. Then proposal’s are voted by the rest of the members and based on outcome of the proposal, it is either executed or rejected.
  • For Example:
    • There are some DAO's that collects the fund by selling the NFT’s and then donating the funds to charity. Here members can create the proposal on which Charity they should donate.

Why move towards DAO ?💨

  • In current world we all have experienced being cheated on with our money, data and many things. People get cheated on because contracts in current era are mutable, they can be changed as per the will of one party. Not only that but most of the contracts of the governments are not even known to common people. There is no transparency for common man.
  • The solution to this is smart-contracts deployed on blockchain. They solve most of the problems like transparency, trust and all. Once smart contracts are built and deployed by the developers, no can change them. This way people can read the contracts on which the DAO is built and decide whether to join the DAO or not.

Why is it hard to move towards DAO ?😓

  • Even though the WEB3 is few years old, half of the population in world is unaware of it.
  • It has not yet become the subconscious part of the human life.
  • There are still many flaws that needs to be changed. Also, the gas price for transactions is high.
  • It is hard for people to believe that a system where you don’t need to trust other human can exist.

Live Examples of DAO’s and where to find them :🙌

Note:

  • I will soon be dropping an article on how to create and manage your own DAO. Stay tuned.
DAOsdao-governanceGovernanceWeb3web3.0