The Decentralized Autonomous Organization (DAO) is a web3 idea that allows communities, corporations, or any type of collective organization to be administered and governed without centralized leadership, thanks to the ability of blockchain.
So, what exactly does that mean? Well, blockchains like Ethereum allow the creation of smart contracts – essentially sets of rules – to be implemented in a secure way, so no individual party can override the decisions of others when they don’t have authority. This is primarily achieved by leveraging two facets of blockchain technology – encryption and distributed storage. Advocates say that as well as removing the ability for network or infrastructure owners – or even central governments – to impose their will on the way the organization is run, it can also create efficiencies and give users greater control over how their data is used.
However, there have also been controversies – with hacks and cyberattacks raising questions about how secure the technology really is and concern over the energy usage and emissions created by the blockchain infrastructure underpinning it.
The core concept of the DAO is certainly fascinating, though, and it represents an area where technology trends such as artificial intelligence (AI), blockchain, and the internet of things (IoT) are intersecting to create new possibilities.
With that in mind, here’s a run-down of some of the most interesting projects I have come across so far. Some of them are no longer current or active, but I’ve included them because they were significant in some way, even if they weren’t necessarily successful, and their existence could inspire other DAOs that might emerge in the future.
Uniswap is one of the biggest and most popular DAOs and operates as a cryptocurrency exchange built on the Ethereum blockchain. Anyone can become a member by holding the UNI token, which gives voting rights on the way the organization is run and administered.
This one was not a huge success story – The DAO was one of the earliest attempts to build a decentralized financial (de-fi) network for crowdfunding venture capital. Unfortunately, it was hacked, resulting in the theft of $60 million worth of Ethereum token ether. This theft was controversially reversed, and the funds returned to their rightful owners through a process known as “forking.” This essentially split the blockchain into two separate chains – Ethereum and Ethereum Classic.
This is an online virtual world governed by a DAO, where administrative and governance decisions are taken by the stakeholders in a democratic fashion. Anyone who owns the platform’s token, known as MANA, can take part in the process, and the platform is quickly becoming popular with global brands including Morgan Stanley, Coca Cola, and Adidas as a way of reaching out to digital-native audiences.
American CryptoFed DAO
This DAO made news headlines by becoming the first to be recognized as a legal entity in the US, thanks to a law passed in the web3-friendly state of Wyoming. It positions itself as a kind of crypto-equivalent to the US Federal Reserve and aims to enable fee-free trading using its own token, known as the Ducat.
BitDAO is a decentralized investment fund backed by PayPal founder Peter Thiel, created to allow anyone to buy a stake in web3 and de-fi startups and initiatives. Token holders have the chance to vote on how managed capital is spread across the projects supported by the fund.
This DAO aims to create smart contracts capable of carrying out legal services. It is headquartered in the Cryptovoxels metaverse platform and is concerned with building blockchain tools that can automate aspects of legal services, including arbitration. With many DAOs existing in a grey area of legality, services like this may be essential in the future.
Friends With Benefits
A crypto club where owners of the FWB token can meet to network and collaborate on individual projects. There are individual hubs for different cities, so users can hook up with similarly web3-minded individuals in their own locality. The more FWB tokens a user holds, the more interaction and opportunities to connect become available.
This DAO was set up in 2021 as a decentralized, crowdfunded effort to win a rare edition of the US constitution, put up for auction by Sotheby’s. Ultimately, despite raising over $40 million from 15,000 contributors, it was not successful. However, the organizers stated that even though they did not win the auction, the project was a success in that it had educated many people on the potential of DAOs as a vehicle for raising crowdsourced funds.
A collective of artists and art lovers that invest in NFT artwork and other digital collectibles. It focuses on pieces that its members believe represent important ideas and causes, and experiments with the idea of “fractional” ownership of art, as all members have a share in the growing collection.
Basically, a fundraising DAO set up to collect and distribute donations to assist those affected by the war in Ukraine. Among its successes with the auctioning of an NFT image of the Ukrainian flag, which sold for 2,258 ETH, or $4.7 million as of writing. Initiated by UK-based Ukrainian activist Alona Shevchenko, the project has received support from activist group Pussy Riot.