What is Decentralized Autonomous Organization (DAO)?

Decentralized Autonomous Organization DAO

A Decentralized Autonomous Organization DAO is an organization that is simplified by computer software and program. Shareholders control it and the central government does not influence it anyway. DAO uses to maintain its financial transaction record and program rules on a blockchain. The precise legal status of this type of business organization is unclear.

Decentralized Autonomous Organization DAO

You might have heard a very well-known example of DAO. The DAO was intending for venture capital funding. It launched with $150 million in crowdfunding in June 2016. But eventually, That was hacked and drained of US$50 million in cryptocurrency to the hackers. Subsequently, this hacking took place again in the following weeks. Therefore, the money was restored via the hard work of the Ethereum blockchain. The Ethereum miners and clients switch to the new fork and make the bailout possible.

Historical Background

The idea behind decentralized autonomous organization (DAO) began moving around after Bitcoin became successful. The idea of eliminating middlemen and creating complete transparency drive out this concept. However, it was Daniel Larimer who first proposed the concept of a Decentralized Organized Company. DAO was published on September 7, 2013, In an article. Decentralized Autonomous Organization DAO

After the launching of DAO, Vitalik Buterin proposes that. Without human management, it can organize itself. Turing complete platform supports smart contracts. Therefore, it provides smart contracts. So, Ethereum has been described as meeting that Turing onset, thus enabling DAOs. The first DAOs were Dash and Bitshares. And others are The DAO and Digix.

How does a DAO work?

However, you may ask how it works. And all you got by going through this lesson. Decentralized Autonomous Organization DAO

Fully Automated Business Entity

A Decentralized Autonomous Organization (DAO) is sometimes referred to as a decentralized network. It also reffed to autonomous agents which perform an output-maximizing production function. It divides its labor into computationally intractable and tasks which it performs itself.

Incorruptible Set of Rules

Generally, it is an organization that is running without any human involvement. Because these systems run it under the control of an incorruptible set of business rules. These rules are typically applied to the publicly auditable. It is also open-source software. Where computers of their stakeholder calculate it throughout the whole world.

Algorithmically-governed Program

A DAO is an algorithmically governed program. Therefore, in using trustless decentralized computing. Because it can serve as a way to formalize multilateral relationships or transactions outside traditional legal architecture. Decentralized Autonomous Organization DAO

Issues with DAO

Lengthy Verification

Shareholder participation in DAOs can be problematic. Because it might take time and energy to consider proposals for full authentication. It goes with a process. So, it will take time.

Legal Liability

The precise legal status of this type of organization is unclear. Although, a DAO may functionally be an organization without legal status as an organization.


The code of a given DAO will be difficult to modify once the system is up and running. Hence, corrections for a DAO would require writing a new code and agreement to migrate all the funds.

DAO and the future of work

By the way, a decentralized autonomous organization (DAO) is a next-generation outgrowth of the blockchain technology underlying Bitcoin. Simple transactions between two parties are replaced by smart contracts. Which can involve any kind of engagement of third parties. DAOs are one of the fairest and most cost-effective business models ever invented.

They remove the middlemen which are often some of the biggest weaknesses in centralized projects. Additionally, it ensures the alignment of their stakeholder’s interests.

There’s no doubt that they have the potential to completely change the prospect of work. And there is seemingly a thousand ways to implement it to creatively solve some of our major problems.