Many blockchain technology projects have been developed using the Bitcoin blockchain system as it is the first decentralized autonomous technology to implement a consensus system of governance.
This has also led to the deployment of several hybrid versions as the blockchain technology space has been attributed to be the most evolving in recent years.
The concept of decentralized autonomous organizations (DAO) requires an in-depth analysis to help enlighten users and intending users who would want to delve into the DAO ecosystem.
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The decentralized autonomous organizations enhance a completely new and revised dimension of the legitimacy of governance.
This can be viewed in the similitude to a political dichotomy where the form of governance requires an agent as the principal methodology, where the agents are referred to as those making decisions for the people, and the principals are regarded as the other set of people in the governance model.
There are different forms of governance, however, we should focus on a generalist approach for the explanation of a decentralized autonomous organization.
What is actually a DAO?
Decentralized autonomous organizations basically refer to groups of individuals centered on a specific mission that work in a coordinated manner according to a shared set of rules encoded by the use of blockchain in order to decide on the direction of the organization.
A simple benefit associated with a DAO blockchain is exemplified in its goal to improve transparency in comparison to traditional systems of governance in other companies.
This is a result of everyone’s ability to easily view all the activities and funding for the DAOs, making the transparency level very high.
At the same time, DAOs also present a favorable reduction in risks of censorship and corruption as attributed to the traditional form of governance in other companies.
What is governance in DAOs?
The interest in decentralized autonomous organizations as a broader group has continued to grow since it was conceived in 2016 as a result of the decentralization of cryptocurrencies.
However, the discussions about DAO are centered around crypto projects more often as it focuses on the theme of governance for such projects.
These organizations leverage the functionalities of blockchain by offering self-enforcing protocols or rules in a smart contract.
This involves the programmers’ intense review of what governing rules are expected to govern the organization.
They are also expected to take into account the possibilities of defaulters within the organization which would be captured in the rules governing the organization.
Subsequently, a ratified contract will be executed upon proper scrutiny of the reviewed contract to ensure that everything is captured to eliminate any form of breaches or notable highhandedness of any group of individuals within the decentralized autonomous organization.
How does the DAO work?
There are many types of contracts identifying how some DAO systems work as mentioned above, whereby DAO is basically implemented by the use of smart contracts for the rectification of such organizations.
It is becoming a common trend where project development would require some adjustments to meet the current needs or realities which enforces some level of transformation within the project.
What are the challenges with DAO?
In the gaming industry, there are instances where there needs to be a modification of certain parts of the project which is referred to as “feature creep”.
The “feature creep” is basically an organizational setback in the development of the project, such that the project continues adding new features beyond the original concept.
If this happens in the long run, it tends to disrupt the schedule and timelines around the project and its development.
There are likely cases of vulnerabilities associated with Ethereum in 2016 which also led to the hard forking of the Ether blockchain as a result of a hack.
The creation of DAO was likened to the sales of securities.
It ultimately led to long-standing challenges responsible for the way that the DAO would function in the real world.
However, Investors and contractors alike needed to convert ETH into fiat currencies, and this eventually impacted the value of either of the DAO team members.
Some benefits of DAO
In some cases, the members of the DAO will be responsible for voting on funds allocated to the project and as such, this would ensure that the project is transparent and completed according to the requirements as stipulated by the development team.
It is expected that decentralized autonomous organizations help in empowering the creation of new prospects for global integration and coordination among organization members.
In conclusion, a high level of research and development is expected by the organization’s development team to carve out the expected smart contract to enable them to achieve its goals and target as expected.
Likewise, anyone who is interested in joining the organization’s decision-making body should ensure they carry out their own due diligence before subscribing to join such a project.
The Klever project is another point of reference for upcoming projects who want to delve into the decentralized autonomous organization, as we also run our own DAO
