A decentralized Autonomous Organization or DAO is an organization that is not run by a central governing board, meaning that no single authority can decide what happens. The decisions are made by members of the platform, meaning that if a funding decision or investment strategy is necessary, holders of the native tokens of the platform can vote. People can submit proposals of changes they want to implement in the platform and initiate a voting session to determine if the feature is incorporated. A smart contract automates the platform’s activities based on the tenets integrated into its code.
DAOs are not designed only for non-profit purposes, as many people think. They can also make profit for their community members. Some Decentralized Autonomous Organizations buy valuable digital assets like BAYC NFTs, major cryptocurrencies, Play-to-Earn collectibles, and much more. In some cases, they get involved in funding decentralized finance and even NFT projects as a form of Venture Capitalism. Some DAOs float new platforms with creative solutions. The opportunities available to this type of organization are numerous.
Benefits of a DAO?
- Decentralized decision
No single person decides what happens in the ecosystem. Decisions are made by the members, meaning that everyone can pitch in where necessary. Everybody has a say, from those that created the DAO to the new members that joined a second ago. As long as one possesses the token required or digital asset, one can air their voice.
- Brings like-minded people together
A DAO acts as a haven for people with similar thoughts and principles to interact. These organizations have what they stand for and want to achieve. It may be an investment DAO that targets new and innovative DeFi platforms.
- Gaining access to newer markets
DAOs allow people to achieve more than they would have ever attained if they had ventured into something alone. Here, members can access a new market that they may not have thought of if not in the group.