DAO is a popular term used in the space of blockchain and cryptocurrency.
What is DAO?
In a simple form, it is a self governed community of people with no central authority.
It has no central authority and thereby rely on smart contracts, so rules or governance of every.
DAO are coded in smart contracts. This rules can only be change if the community members decide to vote for a change.
Let’s note that DAO’s have a similar goals and interest.
Features of a DAO
● It is always transparent
● You can always verify every activity on the Blockchain
3. Publicly auditable
● It is visible and accessible to everyone in the community
Types of DAO
● Grant DAO – This acts as a venture capital fund
● DAO Operating system – This acts as the layer 1 Blockchain (i.e the Blockchain other crypto’s are built on e.g Ethereum)
● Protocol DAO – Tokens for changes
● Service DAO
● Investment DAO
● Collector DAO
● Media DAO
● Social DAO
They all sound according to their meanings. That’s a topic for another day.
Also we have…
● Governance token: Coins/Token that was built for a particular project/Blockchain.This is what allows users to make vote on changing key decisions to inside that DAO.
Advantages of DAO
● No central authority
● It is Transparent
● It is easily accessible
● Votes are counted transparently.
Disadvantages of DAO
● Software Bug – a common error among computer programs, but can be fixed.
● Cyber attacks can be carried out on tokens if security is not well tightened.
● Speed – Members are needed to be gathered to vote.
● Needs more clarification, educating users/members unlike the traditional system where CEOs or stakeholders make decision in absence of all users.
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