Today in this article, we want to talk about Decentralized Autonomous organizations or DAO. One of the most compelling examples of blockchain application in management is the Decentralized Autonomous Organization (DAO).

Blockchain can enable new versions of organizations that can operate independently without the need for coordination by a central entity.

Introduction: What is DAO?

A Decentralized Autonomous Organization (DAO) is an organization that is run by computer code and programs instead of human resources.

For this reason, blockchain developers use this organization to manage their finances and network.

The Decentralized Autonomous Organization (DAO) can, through smart contracts, execute work and orders based on external information.

So that the entire process from the execution stage to the end of the work is done without human resources intervention.

In other words, Decentralized Autonomous Organization (DAO) enables decentralized ownership and management.

Any formal or informal contract does not bind the members of this organization.

Why do we need DAO?

One of the main advantages of a decentralized Autonomous organization is that a Central authority or third party will not govern the decentralized Autonomous organization.

Because this organization is a decentralized financial system that manages the transaction process by network nodes and simplifies them significantly.

The Decentralized Autonomous Organization (DAO) uses a blockchain-based distributed ledger to securely track financial transaction information across the Internet through reliable timing.

This organization also eliminates the need to repeatedly record interactions between parties in various transaction records, thereby reducing operational and transaction costs.

How does a Decentralized Autonomous Organization (DAO) work?

DAO can help decentralized organizations by using smart contracts. Unlike traditional companies, The DAO is run by its community through open-source code.

Therefore, as an independent organization, it relies on smart contracts for an organization’s uninterrupted and automated functioning.

The concept of decentralized organization in itself is not a new term.

Smart contracts always have the potential to automate some of the work mechanisms and functions of decentralized organizations and make the DAO an exciting and instrumental concept on paper.

Examples of DAOs

A Decentralized Autonomous Organization (DAO) is a way of structuring companies where the rules of operation are digitally encoded on the blockchain through published intelligent contracts.

They can be helpful in various peer-to-peer interactions and scenarios, including decentralized investment funds and Internet of Things (IoT) connected devices.

The best example here is driverless taxis that controlling by DAO.

This system has instructions for the movement of passengers, how to determine the fare, and how to distribute the profit from the network between the relevant stakeholders.

The exact time of refueling or recharging the vehicle is integrating with peer-to-peer.

Dex exchanges are among the clear examples of peer-to-peer systems and decentralized Autonomous organizations (DAO).

We want to introduce to you some Digital currencies that are based on DAO:

• Dash
• The DAO
• Anger
• Steem
• MakerDAO

Disadvantages of DAO

Challenges in social affairs

Stakeholder participation in decentralized autonomous organizations (DAOs) can be complex and problematic.

Unclear rules

The legal aspect of this organization is not as clear and straightforward as traditional organizations.

Security

Fixing network bugs and problems in the structure of DAO codes is very difficult. When this happens, it leaves security holes open for hackers to correct the problem.

Conclusion

In general, buying and selling digital currencies is always dependent on the performance of the decentralized blockchain system.

For this reason, you should be aware that you will lose your asset if you send the wrong address to the network.

And it is impossible to restore them even for the network developers.

We hope you enjoy this article and would like you to share your thoughts with us in the comments.