How Many Times Can I Say 'DAO'?
For a long time if you said the
word "DAO" - it's not a word - what would come to mind for most is "The DAO", one of the first and most famous. Perhaps because of the experience with the DAO, DAO's have been slower to develop, even though the idea has been around for a long time, as well as the technology. The DAO is a good case study of DAO's, a warning, but perhaps modern working DAO's hold more value for someone new and less interested in history.
A DAO is ideal to bring together a group of people who have a common purpose. Size is dependent on the purpose. I think of it like a company or corporation where all members are shareholders, and where ideally all members really want to be there. 'Really' is a subjective term, but the idea is that in a company many are there to simply earn a wage. A DAO feels to me different in that at least at this stage in the life cycle of DAO's, membership in a DAO is more voluntary.
D for Decentralized
There is no centralized leadership in a DAO, although there is often leadership. I think of "decentralized" in that these DAO's are not fixed in their structure. The roles members can occupy change, who is a part of the DAO changes, there is a dynamism and an adaptability to changing circumstances. Merely being opposite to "Centralisation" doesn't capture all that "Decentralisation" hopes to achieve in the context of a DAO. A DAO is dynamic in it's structure, so Decentralized/Dynamic for the D in DAO.
A for Autonomy
The autonomy of a DAO is based on the removal of control by one or a few parties. The person who began the DAO may leave and the DAO continues. This makes the DAO stronger, less open to attack, less reliant on an individual or group of individuals. The idea or purpose of a DAO is what is important, is what lives and gives the DAO life. If the idea fails, if the idea is uninspiring, the DAO becomes weak and may die. A DAO is like that famous Greek? ship that had all it's parts replaced, new mast, new hull, new sail. So is it still the same ship? In the case of a DAO you can replace everything and if the idea - the destination - remains the same then the DAO is the same DAO, it lives on.
O for Organisation
There is the common purpose that the members of the DAO come together to seek. The key thing is that the form that organisations take has evolved as a result of the internet. The most obvious is the removal of many spatial contraints on cooperation between members of an organisation. Members of an organisation were always distributed to an extent. There were representatives that operated in another country. There were pilgrims and recruiters who traveled far and wide to promote their organisation and influence others. The internet deepened and extended the potential for members to cooperate in disparate locations.
Modern organisations still rely heavily on space, on the location of their office, on the location of their employees, on the fact that the organisation can force people to come together in one locale, the city they all live in and the building they all meet in each day to operate. But of course the internet and the recent pandemic have undermined the perceived necessity for this. The organisation is that large ship that takes years to turn around
The need for DAO's become obvious in a globalised, networked world where physical location no longer has such a major influence on the work you can do. A DAO is in many ways an evolution of github, social networks, bitcoin any kind of networked group that acts with a common purpose. Like the base entity or structure that will utilize github and discord to operate, as so many companies do today. DAO's are a new organisational structure that will encompass current ad-hoc organisations and provide the mental model and 'legal'/legitimised platform on which new organisations/tribes can form.
The best example of a DAO is the OG, bitcoin. When you think of bitcoin you don't necessarily think of an owner or intermediaries. There are members of this DAO, for example miners, traders, developers, but none of them control bitcoin, none of them have the power to bring it down or turn it into a specific direction. People hold, mine, trade, develop bitcoin and the network are members of the bitcoin DAO. They have incentives to act on behalf of the DAO. They have a common purpose which could be stated as the decentralised transfer of value between members. Some of the members of the DAO have been there for years. Others have dropped out. It is open to new members and the easiest way to join is to acquire some bitcoin. There are rules to the operation of the DAO, including among miners and developers. Some could be described as smart contracts, encoded rules of operation.
The rules of a DAO are encoded in smart contracts which are published to the blockchain and thereby become immutable. This is how DAO's achieve their unique qualities. The rules, all the rules potentially, are blockchain based, rather than residing with a person or a piece of paper or the precedents in a legal system enforced by police and prisons - or corruption. Smart contracts 'hold' the rules and they function to carry out these rules. So there are many smart contracts that together organize a group of people, the resources of the DAO, and the relations between members and resources.
Tokens go to DAO members. The rules of how the DAO functions, how proposals are put forward and decided upon, any kind of action that contributes to the DAO's purpose is potentially encoded, well defined, essentially bureaucratic processes on rails.
bitcoin is perhaps the first DAO, however as the technology has developed beyond the capabilities of bitcoin and into Turing complete blockchains like Ethereum, so too have DAO's evolved in their scope and range. What can be done with DAO's today grows exponentially.