Do you know how a company like Apple or Google makes decisions and policies for their company to work on?
Yes, they will have these board meetings where the board members will come together to vote for these changes.
and then then the CEO of the company will have to make sure these changes happen across all levels of the company.
That is a lot of work for humans to do. Is there a way to make it less hectic?
Decentralized Autonomous Organizations (DAOs) achieve just that.
DAO is a blockchain-based organization that is collectively controlled and organized by its members.
It runs on codes approved by the people who started the DAO or the investors.
This reduces human intervention to a greater extent by putting decision-making power in the hands of automated technologies.
They have resources built-in in the organization that no one from outside can access without the group’s permission.
They use voting processes to make decisions on all the rules and policies.
This unlike the traditional board meetings ensures that everyone in the organization gets a say on these policies and their implementation.
Let me show you how exactly this works.
Before we start we need to understand what a blockchain is. Luckily we have covered that already in this article “What is blockchain?”
Smart contracts are the backbone of DAO. These are mainly run on the Ethereum blockchain.
Smart contracts are codes that act as a contract that runs when certain conditions are met. They are stored in the blockchain.
Firstly, a group of people writes these smart contracts for administering the organization. This then goes live on the Ethereum network.
Once it is on the network changes to the contracts can only be made with voting procedures.
Then, the people of the organizations and the investors can give money to the organization.
In return, they will get tokens that signify their membership in the organization and voting powers.
Then, the implementation of DAO takes place.
Now people can make proposals to the DAO on various functions of the organization and various members can vote to approve them.
And that is the basics of DAO and how it works.