DAO is a short form for Decentralized Autonomous Organization. In simple terms, a DAO is an organization with no central authority or leadership, where everyone equally makes decisions in consensus; power is decentralized, and everyone has a say.

If you’ve been in the crypto space for a minute, then “Decentralization” will no longer be alien to you. Decentralization is one of the major buzzwords in cryptocurrency and blockchain, being a principal constituent of the blockchain trilemma (alongside scalability and security). In other words, Decentralization is one of the basic building blocks on which blockchain technology is established.

When Satoshi Nakamoto developed the blockchain and bitcoin, the goal was to take away financial power from a few people and spread it wide to all participants in a network.

Hence, Bitcoin revolutionized the world’s financial system, giving everyone banking access without being at the mercy of governments, central banks, and centralized authorities.

Blockchain technology has developed massively and has now transcended financial applications. The blockchain is set to revolutionize the internet via web 3.0 and introduce virtuality into the human social experience via the Metaverse. Similarly, blockchain technology is set to change the outlook of organizations via DAOs, bringing a revolution to how organizations are run.

In traditional organizations, there is a hierarchy to rank members based on several criteria; there could be a CEO, a board of directors, senior partners, and several others who determines the fate of several other shareholders or members of the organization. As a result, a few people in charge decide the organization’s aims, objectives, plans, roadmaps, and other critical decisions. This centralization breeds corruption, bureaucracy, and a dearth of creative ideas, among other drawbacks.

It works differently with a DAO. Unlike many traditional organizations, Decentralized Organizations do not stifle entry to prospective participants; as long as entry requirements are met, anyone interested would be automatically accepted because any individual doesn’t gatekeep the process.

DAOs are powered by smart contracts that contain predetermined instructions based on the agreement of existing members; of course, new members can always propose changes to the contract, which will be put to the vote. This highlights that everyone is equal in a DAO, and no single person’s opinion weighs more value than another’s.

Below is a side-by-side comparison summary between DAOs and Traditional Institutions

What Are Some Applications of DAOs today?

The DAO industry is a fast-growing one. According to DeepDAO, over 4,800 decentralized autonomous organizations exist today, having a total treasury of $9.7 billion. Below are the major industries where DAOs are currently being applied.

1.      Investments: Investment DAOs (also called Venture DAOs) are created to replace traditional Venture Capitals. Hence, these DAOs pool funds to invest in startups or other existing companies with promising potential. Since DAOs are not exclusive and entry access is not restricted to elites, anybody from anywhere in the world can join an investment DAO and make handsome returns. An example of this is the SubDAO Ventures DAO

2.      Collectibles: DAOs are also created to acquire high-value digital assets for their members. They can also be categorized as Investment DAOs since they aim to sell the collected joint item for a profit. PleasrDAO is one good example of this; the community pooled $ 4 million to purchase a high-value NFT for $4m. Individually, it may have been unachievable. However, the community can decide to sell the NFT to a high-net-worth individual or group of people in the future for massive profits.

3.      Fundraising/Grants: DAOs are used to organize fundraising events into a pool to fund new DeFi projects. Innovative projects must submit applications, and the DAO decides on which one to fund. An example is the Aave Community Grants Program

4.      DeFi Protocols: Many Automated Market Makers (AMMs) across DeFi platforms utilize DAOs to function effectively. The decision-making on percentages, fees, and rewards in the DeFi ecosystem is made by participants who have staked tokens to participate in network governance. Some common examples are Uniswap and SushiSwap.

5.      On-Chain Governance: DAOs govern decision-making in many blockchain projects. Since the blockchain must maintain decentralization, decision-making on protocol upgrades and other governance decisions are made by voting. This is common in many Proof-of-Stake ecosystems, where DAO participants must stake a certain amount of the protocol’s native token.

6.      Media and Social Media: Media and social media DAOs aim to create a community where content creators can directly communicate with their audience, removing the middle man and eliminating advertisements, enabling the content creators to fully own their revenue. Some examples are Forefront, bankless DAO, blockster, etc.

7.      Social: DAOs are also created to unify people with similar interests in a community via Social DAOs. These DAOs usually require participants to hold a minimum amount of a particular token to be accepted into the community. An example is the “Friends With Benefits” (FWB) DAO, a community of arts and culture where members use Web 3.0 tools to foster creativity. To be a member of “Friends With Benefits,” you must hold some FWB tokens.

Similarly, CCTIP enables the creation of exclusive DAO communities where rules are governed by members. With CCTIP DAO, a group of people can set their target audience by setting a minimum amount of tokens required to join a telegram/discord group. It is a beneficial tool for crypto startups and tokenized communities to engage with their target audience and grow their community.

For example, if a community is interested in creating an exclusive Bitcoin community, they can simply set a minimum threshold of their choice, say (0.01 BTC). Hence, with a few clicks, an exclusive group of the Bitcoin community can be created. See details on creating a DAO on Telegram via CCTIP

Final Takeaway

The reality of decentralization has made it evident that blockchain applications will continue to break ground into more industries. Hence, DAOs are here to stay, and many decentralized organizations will spring out, enabling equality and taking away power from a select few.

We hope you have gained insights into what DAOs are, the problems they aim to solve, and how DAOs provide an upgrade to traditional organizations.

You can experiment with a simple DAO via the CCTIP wallet; all you need to do is create a simple account in one click and enjoy many other benefits of the CCTIP wallet, including tips, giveaways, and airdrops.

Remember to stay updated with the CCTIP blog and join our community for frequent updates and information.