Evolution of DAOs and why they are likely to gain a foothold in 2022

In the fintech environment, 2020 was declared the year of the DAO. Even so, even in 2022, even if most people have heard of the word, it will take significant effort to understand what it is and how to use it.

Blockchain technology opens up many opportunities to create projects that would not be possible in the traditional financial world. In recent years, creating DAOs has become popular. These are decentralized autonomous organizations with rules encoded in a smart contract and regulated by their members. This article focuses on the features of DAO and explains its main advantages and disadvantages.

DAO tools

Decentralized autonomous organizations differ from traditional ones not only in their location on a blockchain. DAO is a form of collective business behavior in which the rights and obligations of participants are programmed using smart contracts. You are also relieved of the need for paperwork or records. For a DAO to function properly, several mandatory tools must be in place:

  • A robust smart contract. This is a program through which DAO participants can propose ideas, vote, and manage the organization.
  • Some rules. These are set in the smart contract and can only be changed by voting of the DAO participants. The rules set out the terms of the vote, the timing of the vote, the required vote-to-profit ratio, and the distribution of the organization’s profits among the contestants.
  • organizational skills. Each DAO issues its own tokens. The participants use these to vote and influence the development of the project. Anyone wishing to join a DAO must redeem these tokens. Evolution of DAOs and why they are likely to gain a foothold in 2022

Caroline Bleakley

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