Decentralized Autonomous Organization (DAO)

Let’s think of a vending machine, not only takes money from us and gives the requested product, but also orders the products that are missing with money by taking into account the demands of the customers and pays its own rent. At the same time, users have a say in how often the machine is cleaned. It does all its own management and doesn’t need any admins because all its functions are coded. With the right software, so to speak, you can be an employee of both the buffet and the buffet.
The Decentralized Autonomous Organization (DAO), which is the “decentralized autonomous organization” in Turkish,  works in a simple way. Bitcoin, the first cryptocurrency in the DAO governance model,  is an idea that has been on the agenda since it eliminated the intermediary in financial transactions. Basically, the goal is to be able to establish companies or organizations that can function without any hierarchical management.

DAO Operating Logic

Today, Bitcoin is considered the first and error-free DAO to operate autonomously with pre-programmed rules that function unanimously. Since Bitcoin, smart contracts have been used on the Ethereum platform, and DAO studies have become widespread and become what they are today.

DAO autonomists need a set of rules and smart contracts that they will fundamentally follow in order to function functionally. Even if smart contracts are autonomously available on the internet, they need humans for tasks they can’t do on their own. When these conditions are met, the DAO enters the funding process. In the funding process, two issues are important. First, it should be the internal property of the DAO because it requires tokens that can be spent by the organization or given as rewards for activities. Second, DAO investors should have the right to vote and influence the operation. When the funding process is over, it becomes completely autonomously independent. They are open source, like Bitcoin, and all its rules and financial transactions are recorded on the blockchain. Thanks to this, it becomes completely irreplaceable, transparent and reliable. Anyone who is a DAO investor can make a bid on their future. A deposit may be enforced to avoid offer congestion. Thus, the vote is made by the investors and if the majority is achieved, the proposal is realized.

Benefits of the DAO

There is no doubt that the DAO is very exciting when it comes to solving the potential problems of modern organizations. When designed perfectly, it allows investors to shape the organization. Since there is no hierarchy, all kinds of opinions and suggestions are evaluated. There is also no disagreement because the participants have learned the rules beforehand. In addition, both bidding and voting cause a certain expense for investors, making bidders think twice. Finally, since the transactions take place on the blockchain, it is possible for anyone to observe. The important thing to note about DAO is that if there is a possible vulnerability in the software, it can be an abuse because it requires voting and time to fix. It is important to remember that in the event of any attack, damages cannot be intervened in any way without unanimity.