Newsletter  #6 - DAOs

Newsletter #6 - DAOs


Decentralized Autonomous Organizations (DAOs) are one of the most exciting developments emerging in the crypto world. Rapidly moving towards becoming a vital part of the blockchain and crypto ecosystem, DAOs have many areas of application. We will examine DAOs closer in this newsletter.

What is DAO?

DAO is an acronym that stands for Decentralized Autonomous Organization. A DAO is a collectively owned, blockchain-governed organization working toward a common mission. It can also be described as an online community with a shared crypto wallet.

DAO is basically a Web3 structure that allows communities, companies, or organizations of all types to be managed without centralized leadership, thanks to what blockchain technology provides.

You can re-examine the second newsletter here where we examine the development of the web and remember the concepts of Web1, Web2 and Web3.

Most decentralized applications (DApps) use Ethereum, but there are also DAOs on other blockchain networks like Solana and Cardano.

According to DAOs are defined as:

  • Communities without central leadership, owned by members.
  • A secure way to collaborate with unknown individuals online. A safe place to invest money for a specific purpose.

DAOs provide an effective and secure way to collaborate with like-minded individuals globally. DAOs are collectively owned and managed organizations, similar to internet-based businesses. Decisions are made through proposals and voting to ensure everyone has a say. Rules regarding expenses are embedded in the DAO using code called smart contracts.

How do DAOs work?

The backbone of a DAO is its smart contract. The contract sets the organization's rules and holds its treasury. Once the contract is published on Ethereum, nobody can change the rules without a vote. If someone tries to do something that doesn't comply with the code's rules or logic, they will fail. The smart contract ensures that the treasury cannot be spent without the group's approval. This eliminates the need for a central authority in DAOs. Instead, group decisions are made collectively, and once voting is complete, payments are automatically authorized.

Neden DAO’lara ihtiyacımız var?


With DAOs, you don't need to trust anyone in the group; you just need to trust the DAO's transparent and verifiable code. This provides many new opportunities for global collaboration and coordination.

In DAOs:

  • There is usually a non-hierarchical and fully democratic structure.
  • Members must vote to implement any changes.
  • Votes are collected, and the results are automatically executed without the need for a trusted intermediary.
  • All activities are transparent and publicly accessible.

Strengths of DAOs:

Easy participation/joining and exiting Speed

  • Adaptation
  • Transparency
  • Decentralized governance Automation through smart contracts-
  • Flexibility to create experimental spaces Token-based incentives

Areas of Improvement for DAOs:

  • Legal uncertainty
  • Possible security vulnerabilities
  • Free-riding
  • Tax uncertainty
  • Lack of clearly defined roles
  • Challenges in informal coordination

Examples of DAO Usage:

DAOs can serve various purposes. For example:

Charitable organization: You can accept membership and donations from anyone globally, and the group can decide how to spend the donations.

Freelancer network: A contractor network can pool funds for office spaces and software subscriptions.

Ventures and grants: A venture fund can be created to pool investment capital and vote on which ventures to support. Repaid funds can be redistributed among DAO members

Social DAOs: Social DAOs can be thought of as exclusive clubs where membership is gained by purchasing a certain amount of DAO tokens.

Social Impact DAOs: They can focus on social impact and lead the creation of new building blocks, economies, and organizations to address unmet needs.

While DAOs are still in their early stages, they have already achieved significant accomplishments and possess unlimited potential for impact. The nature of DAOs as open, decentralized, community-based organizations emphasizes the importance of bottom-based and community-level decision-making, contrasting with traditional hierarchical structures of non-profit organizations. Therefore, they can make an excellent contribution to the social impact sector.

In the near future, DAOs could become a vital part of the social impact ecosystem!

Examples of Impact DAOs:

  • KlimaDAO: It takes an innovative approach to climate change by creating a "carbon-backed, algorithmic digital currency" where each token is supported by one ton of verified, tokenized carbon reduction.
  • SeedClub: It is a social token incubator that helps developers create successful social tokens.
  • ReFi DAO: A startup community on a mission to accelerate impact on people and the planet.
  • HerStory DAO: It acts as a collective, helping to incubate the work of marginal crypto creators, especially in the field of NFT, and helps to bring equality to the field of art.
  • Climate DAO: Like many social impact DAOs, ClimateDAO focuses on combating climate change. However, they take a very different approach, focusing on activist investment as a means of bringing about social change.
  • Protein DAO: A collaborative community for the culturally interested, helping people and ideas grow.
  • Earthist DAO: A community that believes in regenerative, non-toxic agriculture and productive power.

İleri Okuma

You can read the white paper titled "Decentralized Autonomous Organizations: Beyond the Hyper’’ published by the World Economic Forum in June 2022 here.

You can read the "Blockchain and the emergence of Decentralized Autonomous Organizations (DAOs): An integrative model and research agenda" article here.

References: 123456

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