Decentralized Autonomous Organizations have a decentralized element that allows community members to determine what happens on the platform. It is different from traditional organizations because the latter is controlled by only a few people.
People create DAOs for different reasons and they have varying benefits.
DAOs rely on smart contracts. A smart contract is a technology that automates the functionality of a platform. Developers add the tenets of the code in the smart contract and it automates the process.
Smart contracts control the operation of a DAO, thereby making it less reliant on human input. This reduces the chance of errors occurring.
DAOs are decentralized, meaning that votes are not determined by a few people. Organizations that are looking for ways to allow people to determine what happens or have adopted community-centric style usually create DAOs. The style of the organization adds efficiency and transparency, as everyone knows what is happening at every point in time. Governance falls in the hands of everyone.
Creating a DAO is considered as being a cheaper option for a centralized organization because everyone pools their funds together. The governance is determined by every community member instead of a few people. People, from different parts of the world and professions, can pool ideas, money, and experience together to create innovative features.
It is important to note that if you want to create a DAO, you have to be accountable to every community member. It is different from traditional organizations where a decision is made by one person or a few people.
By decentralization, you will not have total control over the project to decide what happens. Before decisions can be made, a voting session has to be done. Everything has to be transparent, as people have to know what is happening in a DAO at all times.
