Decentralized Community Autonomy - DAO

DAO, short for Decentralized Autonomous Organization, is a new form of human organizational collaboration based on the core principles of blockchain (the spontaneous creation of collaborative behaviors such as creation, construction, governance, and sharing by a group that reaches consensus). It is a derivative of the blockchain's solution to the trust problem between individuals.

DAO is an organizational form in which the management and operational rules of an organization are encoded in smart contracts on the blockchain, enabling autonomous operation without centralized control or third-party intervention. DAO is expected to become an effective new form of organization to deal with uncertain, diverse, and complex environments. Unlike traditional organizational phenomena, DAO is not limited by the physical space of the real world. It is characterized by openness, autonomous interaction, decentralized control, complexity, diversity, and emergence. Its evolution is driven by events or objectives, rapidly forming, spreading, and highly interactive, and automatically dissolving with the disappearance of goals.

Previously, the Internet empowered large-scale coordination of human resources, and now DAO tools based on Web3 help us design and manage incentive measures to maintain "positive-sum" relationships among stakeholders. With the continuous development of products and communities, it ensures that stakeholders always share a consistent vision and goals.

DAO has distinct advantages and core features, including:

1. Distributed and Decentralized

DAO does not have central nodes or hierarchical management structures. It achieves organizational goals through interaction, competition, and collaboration among network nodes from the bottom up. Therefore, in DAO, the business transactions between nodes, as well as between nodes and the organization, are not determined by administrative affiliations but follow the principles of equality, voluntarism, reciprocity, and mutual benefit, driven by resource endowments, complementary advantages, and win-win outcomes. Each organizational node collaborates effectively based on its resource advantages and qualifications, under the incentive mechanism of tokens, resulting in strong synergistic effects.

2. Autonomous and Automated

In an ideal DAO state, management is code-based, programmatic, and automated. "Code is law." The organization is no longer a pyramid but a distributed network. Power is decentralized rather than centralized. Management is not based on hierarchical systems but community self-governance. The organization's operation no longer requires a company but is replaced by highly autonomous communities. Additionally, because DAO operates based on jointly determined operational standards and collaborative models among stakeholders, consensus and trust within the organization are easier to achieve, minimizing trust costs, communication costs, and transaction costs.

3. Organized and Ordered

DAO operates with transparent rules governing its operations, the responsibilities and rights of participants, and mechanisms for rewards and penalties, all of which are publicly accessible. Furthermore, through a series of efficient self-governance principles, the interests of relevant participants are accurately differentiated and reduced. Individuals who contribute labor, make contributions, and bear responsibilities are matched with corresponding rights and benefits, promoting division of labor, equity in rights, responsibilities, and interests, and making the organization operate more coherently and orderly.

4. Intelligence and Tokenization

DAO is supported by underlying infrastructure that encompasses internet protocols, blockchain technology, artificial intelligence, big data, and the Internet of Things. It achieves intelligent management of organizations through digitalization, intelligence, and on-chain/off-chain collaborative governance, changing traditional hierarchical and manual management methods, and realizing the efficient functioning and value circulation of organizations. Tokens play an important role in the governance process of DAO. They digitalize and tokenize various elements within the organization, such as individuals, organizations, knowledge, events, and products, integrating monetary capital, human capital, and other factor capital, thereby better stimulating organizational efficiency and value realization.

DAO frameworks are sets of smart contracts and data interfaces that allow users to launch and operate on-chain organizations with just a few clicks of the mouse. They provide a range of "out-of-the-box" core functionalities such as fund management, membership management, and voting capabilities. With the assistance of these frameworks, DAO creators can configure parameters themselves, such as the length of voting periods, the required majority for proposal approval, and the existing number of members and their stakes. Here are some examples of frameworks and the DAOs that use them:

• DAOStack (dxDAO, dOrg)

• Colony (ShapeShift)

• Aragon (BrightID, PieDAO)

• Moloch (LAO, MetaCartel)

Since the demands and visions of DAOs vary, there is no universal governance solution. Early DAOs had to adapt to template frameworks due to limited options, rather than flexibly combining various tools to suit their specific needs. Although new toolkits are emerging, their compatibility with existing frameworks is limited. Therefore, communities either tolerate the inconvenience or make efforts to coordinate and migrate to new systems. Considering these limitations, the goal of the next generation of DAO frameworks (including updated versions of early frameworks) is to focus on enhancing modularity, flexibility, and scalability of tools.

In the future, we will see more people actively participating in multiple DAOs, utilizing their skills and expertise to handle the matters they care about. For example, a strategic technologist in a DeFi protocol can leverage her skills to predict the value of portfolios in an NFT collector's DAO and provide funding to entry-level creators through a DAO. New governance models will be provided for the metaverse, allowing users to transfer their virtual identities and reputations to different applications to showcase the value they create throughout the ecosystem.

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