<aside> ✨ If you’re in our Community or hanging out on the internet you might have been hearing the term DAO around. You’ve read a couple of definitions and tried to wrap your head around what a DAO really is, and ultimately what it means for you. 🧠 Let's get into it...
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The term 'DAO' describes a type of organisation that uses blockchain technology to give greater control and ownership to its members. DAOs are so powerful because they allow for the individual and the collective to be socially and financially aligned through concepts like decentralised governance and social tokens 🌱
Whether you’re a business, not-for-profit charity, or just a group of people in a telegram chat, DAOs could change the way you operate.
While not all communities will be DAOs, for Protein, DAOs and Communities are deeply connected. This is because we believe that true Community is one which creates fair and distributed equity and control, social capital through authentic action and a safer space for conversation and collaboration.
We believe that DAOs have the ability to empower millions of smart, authentic, curious people working on projects they care about, together.🤝
To help understand what a DAO is, we can compare them to how the structures of 'traditional' organisations work.
In an example of a 'traditional' corporate company for example Airbnb, decision making is mostly centralised with a clear hierarchy, normally with a CEO or founders, and key stakeholders with a financial investment. Often the deals, key growth mechanics and decisions of the company happens behind close doors. Here the first users of the company don't have a true say in how it is run or any real ownership.
However in a DAO, the structure, transparency and fluidity of the organisation creates the ability for a far flatter hierarchy, with no centralised authority like a CEO making decisions. Imagine it more like a cooperative, but with Web3 technologies built in.
So imagine if from day one the users and host of Airbnb had a seat at the table to decide how the platform was run, and received equity in it for their contributions. 📈
As we saw in our exploration of Web3 and the example above, decentralisation means that no central authority has control over decision making, and control is distributed to a network, in this case, members.
Autonomous here means that the organisation can create rules (which can be coded using smart contracts) that can be actioned automatically without human intervention. This removes the potential for bad actors and allows for DAO members to trust the organisation to follow through on the decisions it makes.
<aside> ✨ *While we’re seeing more and more organisations calling themselves DAOs, different DAOs will have varying degrees of decentralisation and automation when they use the term.
Some DAOs will progressively decentralise, meaning they start with a clear and controlled hierarchy but slowly give up control to the community over a set period of time.*
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It sounds great to imagine a world where the users and hosts of Airbnb are all enjoying the growth and adoption of the platform, but how does it actually work practically?
For a DAO to operate successfully and challenge traditional companies, there are some emerging standards used to create momentum, ensure security, build organisational structure and take action. These include;
<aside> 💲 Social Tokens Social Tokens are a type of cryptocurrency which create and capture financial value through social interactions and social reputation. Social Tokens can be used for Communities to create alignment between members, as well as act as equity and ownership within the overall Community.
While not all DAOs will or should have a token, it's up to the purpose of the DAO to really define whether they have a token and what it does.
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<aside> 🔑 Safer spaces e.g. Discord / Telegram DAOs can live and operate anywhere groups of people can come together, however currently a DAO standard is to live within a gated community which creates an inclusive/exclusive environment for its members.
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