What exactly is Web3? 8 DAO
What is DAO？DAO :Decentralized Autonomous Organization .
A decentralized autonomous organization (DAO) is an emerging form of legal structure that has no central governing body and whose members share a common goal to act in the best interest of the entity. Popularized through cryptocurrency enthusiasts and blockchain technology, DAOs are used to make decisions in a bottoms-up management approach.
- A decentralized autonomous organization is an entity structure in which tokenholders participate in the management and decision-making of an entity.
- There is no central authority of a DAO; instead, power is distributed across tokenholders who collectively cast votes.
- All votes and activity through the DAO are posted on a blockchain, making all actions of users publicly viewable.
- One of the first DAOs named The DAO was an organization created by developers to automate decisions and facilitate cryptocurrency transactions.
- A DAO must ensure security is prioritized, as exploits can leave a DAO drained of millions of dollars of its treasury savings.
Understanding Decentralized Autonomous Organizations (DAOs)
One of the major features of digital currencies is that they are decentralized. This means they are not controlled by a single institution like a government or central bank, but instead are divided among a variety of computers, networks, and nodes. In many cases, virtual currencies make use of this decentralized status to attain levels of privacy and security that are typically unavailable to standard currencies and their transactions.
Inspired by the decentralization of cryptocurrencies, a group of developers came up with the idea for a decentralized autonomous organization, or DAO, in 2016.
The concept of a DAO is to promote oversight and management of an entity similar to a corporation. However, the key to a DAO is the lack of central authority; the collective group of leaders and participants act as the governing body.
How DAOs Work
DAOs rely heavily on smart contracts. These logically coded agreements dictate decision-making based on underlying activity on a blockchain. For example, based on the outcome of a decision, certain code may be implemented to increase the circulating supply, burn of a select amount of reserve tokens, or issue select rewards to existing tokenholders.
One case of DAO ：Constitution DAO (PEOPLE)
What Is Constitution DAO (PEOPLE)?
Constitution DAO was an experiment that has now been dissolved. In November 2021, a group web3-enthusiasts gathered as a decentralized autonomous organization with the shared objective of buying a copy of the U.S. Constitution at a Sotheby’s Auction. There are only 13 original physical copies of the U.S Constitution in existence, which meant that this auction sparked a competitive bidding battle. Even though the group managed to raise well over $40 million in ETH, it ultimately fell short and was outbid by Ken Griffin, a billionaire hedge fund manager and CEO of Citadel.
Constitution DAO announced that it would disband after its unsuccessful grassroots attempt to buy one of the most valuable and iconic documents in U.S. history. All donations are being refunded.
To be continued
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