Moving towards a more decentralized world with DAOs

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avatar of @pravesh0
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4 months ago - 2 minutes read

Decentralized Autonomous Organizations (DAO) is an organisational structure where all the community members make decisions rather than some centralised governance body. It is a highly transparent, versatile, verifiable and decentralised form of governance that makes use of smart contracts and blockchain technology.

They are designed to run without requiring any centralized authority or institution, such as a few executive members or CEO. Rather, they are managed by a decentralized network of computers that are connected to the internet.

Typically, there is a form of consensus mechanism in place to make all future decisions and this is achieved by voting. Every member who owns the governance token can vote on proposals.

But what is Governance Token?

A governance token is a type of digital asset that is used to incentivize and reward users who participate in the governance of a Decentralized Autonomous Organization (DAO).


There are so many examples we have Hive Power that works as a governance token and the more HP you have the more influence you have over the network. You can vote on proposals and for participating in governance you get more rewards.

Most of us are familiar with Splinterlands, they have $SPS as their governance token.

But why DAOs?

There are various benefits of using DAOs over traditional structures where only the top executives take all the decisions but in DAOs, each member is actively involved in governance and decision-making.

So, decentralisation, transparency and better governance are some of the benefits of having a DAO. Also, every activity is recorded on a secured ledger and can be verified easily. This helps in reducing shady or behind-the-back deals.

Still a long way to go

There are some limitations as well like

  • Education:- The vast majority of people still have no idea that something like DAOs exists. So, people need to educate themselves on these new organisational structures.

  • Regulation:- Lack of legal framework and regulatory policies will take much time to develop.

  • Exploits in code:- Sometimes a programming error can result in a big attack and loss of funds, we have seen a few such attacks in the past as well. But like every new technology it will need some tuning before saying we perfected it.

Working towards a more decentralized future

DAOs are still in their infancy but are quickly gaining more support in the tech world. Already, many organizations and startups are using DAOs for managing themselves. This will continue in the future as we move towards a more decentralized world.

The future of DAOs is looking bright and it will lead to an ideal, more decentralized, secure future. We have just started to tap into the powers of a community and how self-governance is the future. DAOs will play their part in the transition from Web2 to Web3.

Thanks for reading...

Until next time...


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