DAOs Are Powerful And Its Technology Is Disruptive To New Startups.

A Tesla without Elon Musk.

A Facebook without Mark Zuckerberg.

An Amazon without Jeff Bezos.

Can you imagine these companies without their iconic leaders?

I DAO(t) it 😂

What's a DAO?

A DAO is a decentralized autonomous organization. It's like a regular organization but instead of being run by a central leader, it's run by its community of users.

Decisions are made through proposals that the community votes on.
No more selfish CEOs that act recklessly or CFOs that manipulate the books.

How do DAOs work?

DAOs work because of "smart contracts".
These are programs that are written into code on the blockchain. They are automatically executed based on rules and logic.

Once these go live, no one can change them change them unless by voting.
For example, smart contracts determine how money is spent. So even treasury is decided by the community. No central leader.

How does membership work?

By owning tokens or shares in the organization, you gain voting powers.

1. Token-based membership: More open. Tokens can be purchased or earned. It aligns their incentives with the DAO's because they hold the tokens which power it.
2. Share-based membership: More restrictive. Potential members must submit a proposal to join the DAO. The more shares you own, the more power you have in the organization.

3 Disadvantages of DAOs

1. Voting Governance: Because voting powers are based on shares, the person who buys up the most shares can end up making the decisions.
2. Legalities: There is a lot of uncertainty around legal liability. When things go wrong, there's no CEO to blame.
3. Slow Decisions: DAOs can be slower to operate. DAO members need to wait for proposals to be submitted, discussed, and voted on.

One DAO was hacked and $60 million was stolen because of an error in their code. They were slow to fix it because they needed the community to discuss and vote.

Companies to Watch:

Dash - Instant payment and private transactions

MakerDAO - Decentralized lending network

Uniswap - Decentralized finance protocol

The DAO - Famous decentralized autonomous organization that was hacked

We Predict That:

1. There will be more organizations implementing DAOs: companies, charities, or even governments.
2. Companies will experiment having a hybrid model, using both centralized and decentralized systems.
3. Fundraising will change as companies experiment offering tokens to their organization instead of equity.

3 Startup Opportunities with DAOs

Services/Tools for DAOs:

What do DAOs need to operate better? Token-based fundraising. Voting infrastructure. Smart contract code auditing. We are in the early stages of decentralized organizations and they will evolve.

Create a DAO:

There are opportunities for startups or non-profits to try using the decentralized model. There may be advantages in fundraising using a token-based system.

Use Elements of DAOs:

You don't have to make your entire company decentralized. There may be certain elements you want to use. Smart contracts may be a good way to execute actions automatically. Or maybe some people are given voting power through tokens/shares.

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