DAO can be thought of as corporations that run without any human intervention and surrender all forms of control to an incorruptible set of business rules that are defined in a smart contract.
Although DAOs are still in their nascent stage, they hold immense potential for the future due to their decentralized nature, which makes them much more resistant to corruption and abuse compared to traditional organizations. Moreover, they ensure democratic processes where all members have a say in how they operate.
Despite being of various types, all DAOs have some common features. They are autonomous, decentralized, and powered by smart contracts, which help them run on decentralized networks like Ethereum. Additionally, DAOs can adapt to changing circumstances rapidly, are highly resilient to external attacks, and can function worldwide without geographical limitations.
DAOs can democratize decision-making, giving every member an equal say in running the organization. Many DAOs are already operational, with more emerging frequently. If you're curious about DAOs, you can find plenty of resources online to learn more or even establish one yourself.
In May 2014, Vitalik Buterin introduced the idea of a DAO in his guide on Terminology for DAOs, DACs, and DAs. It wasn't until 2016 that the first DAO was established on the Ethereum blockchain. Buterin's proposal was centered on using smart contracts to form a decentralized autonomous organization.. Since then, a plethora of other DAOs have emerged, each with its distinctive approach to governance. However, not all DAOs are alike and they cater to a diverse range of objectives.
Determining the most suitable organizational structure for a given scenario relies on the organization's specific objectives and circumstances. Therefore, when designing a decentralized autonomous organization, it is crucial to weigh the advantages and disadvantages of each model carefully, to ensure that the most appropriate one is selected for the intended purpose.
Read more about DAOs in our blogpost about this topic: DAO 101 - Introduction to Decentralized Autonomous Organizations
