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September 27, 2023
Decentralized Autonomous Organizations: The Rise of DAOs
At least, that's one of the key principles behind DAOs, otherwise known as Decentralized Autonomous Organizations.
It's one reason why DAOs are making a splash across crypto and metaverse communities. Many see decentralized autonomous organizations as the future of business, governance, and collaboration as a whole across the world.
If you're thinking, "Dang, that's a pretty heavy statement. But what are DAOs?" then keep reading. It'll all make sense soon.
The basics behind decentralized autonomous organizations
A DAO is an internet-based business or group organized around rules that exist on a blockchain. Members own, manage, and make decisions collectively; in other words, it's an organization run without a government body or group hierarchy, and all members have an equal say.
So how are objectives met in these decentralized autonomous organizations? It's pretty straightforward: to become a member of a DAO, users must buy or own a token or cryptocurrency of that particular decentralized organization. Each member of the DAO must follow a set of open-source rules that exist in the organization's code.
When it comes to proposals, direction, and rule changes of a DAO, members will vote to reach a final decision, and smart contracts record and establish the new rules.
The way Ethereum puts it, "With DAOs you don't need to trust anyone else in the group, just the DAO's code, which is 100% transparent and verifiable by anyone. This opens up so many new opportunities for global collaboration and coordination."
With this model of transparency and rejection of bureaucracy, DAOs are quickly growing in popularity.
Who's down with DAOs
DAOs haven't reached frenzy levels just yet, but plenty of people are setting up DAOs with creative angles. More specifically, people set up DAOs for charities, organized investment groups, fundraising communities, and even DAOs dedicated to buying and sharing NFTs.
While there are plenty of DAOs out there, here's a shortlist of some of the more notable ones that have recently made headlines.
UltraDAO for the artists
Billed as a DAO "for the arts, by the artists", UltraDAO's members are supporters of finding new ways to create and experience art. Founded by Chris Wallace – the Project lead behind the popular NFT collection, Woodies – the group is made up of top artists and NFT collectors.
UltraDAO is a group of artists and art collectors.
From choosing NFTs for the UltraDAO Collection, to creating networks for digital creators and collectors, the goals of this DAO are mainly centered around digital art initiatives. Plus, using their collective voting and decision powers, the members are aiming to have a expansive collection of historical digital artifacts.
DAOs and American history
One prime example of the diversity of DAOs comes from a squad of internet buddies who decided to form a group under the name ConstitutionDAO. They began this organization with one initial goal in mind: to pool funds together to collectively buy the original U.S. constitution that was being auctioned by Sotheby's.
What started as a joke ballooned into an organization of 15,000 members that raised over $45 million in Ethereum. While they failed to win the final bid for the constitution after the price soared well over $45 million in Ethereum, the power and potential of DAOs were on full display for the world to see.
Since they came up short, the founding members decided to disband the group and offer refunds to those who participated in the groundbreaking project.
Elon has a brother, and he's all about DAOs
Did you know that Elon Musk has a brother?
When I first started researching this article, I was wholly unaware that the tech mogul had any family. It turns out Elon's brother, Kimbal, is another member of the Musks who is both tremendously wealthy and intensely ambitious.
Kimbal's Big Green DAO.
With a name like Big Green DAO, it's clear that Kimbal has lofty expectations for this new crypto-based web3 charity. According to Kimbal and the members backing this project, the Big Green DAO is the first non-profit-led philanthropic DAO that aims to democratize and decentralize grant making while also using its organization to create food justice worldwide.
By leveraging blockchain solutions, engaging in communal decision making, and utilizing ERC-20 tokens that members own upon joining, Big Green DAO is fully prepared to reshape how the world thinks of philanthropy.
Wu-Tang albums ain't nothin' to F#*% with!
The genuinely despicable Martin Shkreli solidified himself as a bonafide villain when he purchased Wu-Tang Clan's one-off album Once Upon a Time in Shaolin. Thanks to the Rap Gods and the American legal system, Shrekli ran into legal trouble and ultimately the law and forfeited the album to the United States Federal Government.
It wasn't until PleasrDAO – a collective of DeFi leaders and NFT collectors – purchased the album from the feds for $4 million. PleasrDAO's Cheif Pleasing Officer, Jamis Johnson, said, "The album itself is kind of the O.G. NFT," making it a fitting piece to the organization's culturally iconic portfolio.
PleasrDAO to the rap rescue.
While the album still hasn't been released or heard by the public, PleasrDAO is deciding on making an agreement to release the exclusive 31 tracks to the public or giving an exclusive listening session to its members (a nice little perk for members of the collective).
However they choose to enjoy the benefits of their collaborative investment, PleasrDAO is a case study of the opportunities and possibilities that come with these member-controlled organizations.
Is there a catch with DAOs?
There's a lot of positive things to say about DAOs and the potential they can bring to the physical and digital world. Of course, plenty of shady things go down in the metaverse, and DAOs have seen a fair share of problems.
One of the issues plaguing DAOs is hackers and security. Imagine being a part of a DAO, and some internet-based crypto thieves break into your organization's treasury. While the hackers are funneling money out of the collective treasury, DAO members must vote on the code change that will stop the current attack.
This exact situation happened to The DAO – an early adopter of DAO-style organizations – when hackers stole $60 million in Ether as the community scrambled to fix the security breach.
Plus, things can get a little messy when it comes to legal issues with DAOs. Since anyone can hypothetically join a DAO, there is no overarching legal framework to settle matters that cover multiple jurisdictions. A legal battle over an issue with a DAO is almost guaranteed to be long,
complicated, and costly.
Despite these and other concerns that surround the speculation of DAOs, the fact remains that people are still enthusiastic about decentralized autonomous organizations and
Are DAOs the future?
Will DAOs fully take over? Will organizations as we knew them cease to exist?
Probably not.
Still in all, a quick Google search plainly reveals that there are plenty of people who believe in the potential of DAOs.
While 2021 was the year of NFTs, there's no telling whether DAOs are going to take center stage in 2022.
