Tag Archives: DAO

Decentralized autonomous organizations

Organizational operations is a delicate and complicated process. To get the work done, job are divided into bits for different parties. Through this process, a lot of energy is lost through man power and owing to human limitations, processes move a little bit slower. Consequently, there’s been a need for a system that is swift and accurate. This birthed the technology of Decentralized Autonomous Organizations, DAOs, they are simply digital entities that operate through the sole use of precoded rules. DAO is a unique concept that utilizes the bitcoin principle to enable a business operate without a defined management system.

What are DAOs?

DAO is an acronym for Decentralized Autonomous Organization. DAO is an organization that is run uniquely through encoded rules on a smart contract. All organisations have a structure that governs the way work is done and guides everyone to understand perfectly their individual functions. DAO make use of blockchain technology to enable organizational operation that require no hierarchy. Also, it utilizes blockchain technology to provide a secure online ledger that is capable of tracking financial operations across board. DAO can simply be described as a smart contract that self-runs an intelligent algorithm that makes decisions based on the rules encoded without the need for traditional management.

More so, DAO operates similarly to bitcoin by eliminating the presence of intermediaries and middlemen that exist in organization transactions process making it relatively slow and error prone. It is however important to note that the fate of the organization is governed by the encoded rules and the owners of the system that have a predefined look of how they want to run their affairs.

Traditional organizations and DAOs

In all traditional organisations  workers have a specified duty and relationship with the company. Their rights and obligations are put in check by legal contracts that is in accordance with the legal system of the country the company is operating. This guides operations and if anything goes wrong, the law comes in to settle the parties involved. On the other hand, DAO involves a number of people interacting with one and another through a self-run protocol. The people involved are charged with transaction confirmation, block security while being rewarded with a percent of the token involved in the network. It is a typical smart contract that reduces cost and takes off too much duty from the shoulders of involved personnel. All through, the aim of unmatched transparency is maintained in the system. Members of a DAO are not bound together by a legal entity but are instead kept on the network by the native incentive rewards which is enforced by blockchain consensus. Only the rules of the smart protocol governs the operations on the ledger system.

Furthermore, in traditional organizations, individuals up the hierarchy can take more risk than normal, naturally because of their position. This may alter a lot of things and lead to a greater effect negatively. DAOs, however, once deployed cannot be changed or controlled by one entity, but instead, a predefined majority of participants is needed to achieve blockchain consensus. Therefore, transactions are swifter and are sure to have met all the necessary requirements.


Due to it blockchain technology background, it is satisfactorily safe. But in cases where a flaw or vulnerability is detected; the whole system can easily be used to exploit.

Prominent use cases of DAO

  1. DASH
  2. UnionChain