If you ask ten organizers on the frontlines of DAOs ‘what is a DAO?’ you’ll get ten varying explanations.
Broadly speaking, a DAO is a blockchain-based organization. While not all DAOs operate in the same way, at their core, they share certain fundamental principles and features.
Transparency is the lifeblood of DAOs
DAOs operate on the blockchain. Operating principles and policies - such as reward systems and how much power a person has - are established in advance, in code. Decisions are made and recorded on the blockchain, and are visible to anyone. The movement of funds is recorded on the blockchain and is visible to anyone.
What does this mean in lay people speak?
Imagine you’re joining a DAO that aims to accomplish xyz.
Everyone contributes between $100 - $10,000 towards the cause.
You know in advance if decision-making power is proportionate to one’s contribution or if it’s one person / one vote, or if it’s centralized to a small group. Therefore, you know in advance how much power you and everyone else has.
You can see individual contributions, individual votes, and the transfer of funds on the blockchain, without having to request an audit or trust that the information is being reported accurately.
Transparency aims to eliminate the soft wrangling of power. Putting everything on the blockchain isn’t due to a lack of trust, but rather, it’s a proactive effort towards accountability and inclusion.
Autonomy incentivizes the collective good
A fundamental right in early DAO structures - though one that will become more challenging as DAOs serve more complex purposes - is the ability to easily and fairly opt out. (In DAO terms this is called rage quitting.) Because ownership stake and DAO treasuries are tracked on the blockchain, it can be a straightforward process for someone to leave the group and take their share of the treasury with them. The purpose of this is not to facilitate quitting, but to incentivize decisions that are in the best interest of the collective.
At their core, DAOs were born out of a desire for a fairer, more empowered world.
DAOs allow people to organize in a way that preserves individual agency, rewards accountability, and prevents majority interests from capturing control. Imagine the world we would be living in if more organizations operated under these principles.
Recommended reading on this topic:
Defining Real and Fake DAOs by Gabriel Shapiro
What do you think are the most fundamental elements of DAOs? Share in the comments or contact hello@logos.xyz to guest author a piece.