Cryptocurry
What is the importance of DAOs?
As we all know, ‘Decentralized Autonomous Organization’ (DAO) is the next crucial topic in the blockchain space. It is necessary to understand the need and importance of a DAO. Let take a deep dive into it,
What is the importance of DAOs?
1. No Single decision-making entity
Traditional organizations have CEO/Founders or Board of Directors who take importance decisions concerning financial strategies, short/long term goals, the vision, etc. The DAO, on the other hand, empowers all the members of the organization to vote on all the decisions, no matter what role they play. Let the member be a clerk or a manager, both have a say by casting their vote in the proposal. This makes DAO democratic, with borderless participation, high ease of interaction and equality.
Let’s consider an example, the Joystream DAO community comes up with a proposal, to ban videos under the category “hate crime”. The higher ranked community members just cannot simply ban them without the concern of the entire community. A proposal would be made, and the members would be given stipulated amount of time to cast their votes, once the time is up, the smart contract would pass the proposal which received the majority votes. This is how a DAO comes to a decision.
Here the advantage is, no particular individual or group of individuals could be pressurized (by legal entities) to ban the video. Whereas, if we directly compare it with ‘YouTube’, the government/any political group could intervene and influence the decision of the organization, with users and community member having no say on it.
2. Transparency, no manipulation
As the smart contract containing the proposal is on the blockchain, every member can view the smart contract, so it not possible for any individual to change the rules overnight. This makes the system tamper-proof.
3. Attracts like-minded individuals
While forming a DAO, the individuals coming together would have similar mindset and goals. Moreover, the members joining later would have to agree the pre-conditions and then join-in. Then, once in, any changes can only come through a majority consensus of all the members. So, it could be said that more and more like-minded individuals come together having same goals.
4. Not just Profit centric
DAO also concentrates on other factors such as ethics, integrity and trust. For example, some users are victims of a hack, because of which they lost their funds. In this case, the DAO community would make a proposal of compensating these funds from the DAO treasury. Of course, it need not pass all time but probability for an approval in a DAO is certainly higher as compared to a centralized organization, where it is more profit centric.
5. No involvement of third party
For a traditional organization, making sure the decision of the high level management is followed and documented, a third party is involved (legal entity), as in case of DAO it would be managed by a smart contract. Thus, saving costs, avoiding miscommunication and no chances of manipulation.
6. Anonymity
The vote casting in proposals is anonymous and thus the integrity of the members is maintained. Furthermore, no fingers could be pointed out on a particular member for a vote leading to personal enmity.