Are DAOs The Next Big Thing After Defi and NFTs?
The world was learning to adapt to being digital-first just two years ago. Markets all over the world were fast-selling off in the aftermath of the outbreak. And among the crypto world, there was a sour aftertaste and a lingering recollection of “Black Thursday,” a day when all crypto prices plummeted at the same time, bringing crypto infrastructure to a halt.
Institutions, small firms, and individuals all lost value when assets were measured. DAOs, or decentralized autonomous organizations, are another type of organization that has experienced this agony. What resulted from it? In the coming year, the story establishes the case that these mystical and somewhat theoretical organizations may one day prove to be the ideal arrangement for all institutions and corporations.
In brief, a DAO is a collection of crypto wallets managed by individuals and other organizations that executes all of its operations through code, allowing for the safe management of assets and votes without the use of underlying legal or traditional banking structures. DAOs have been used to manage assets, develop protocols, vote on community issues, and form specialty factions for interests such as digital art collecting.
Let’s go back to 2020 and construct a picture of where we’re headed. DAOs scarcely made a mark in the financial world at a time when $ETH was trading at $230, with the long tail of them holding only a few thousand dollars worth of assets:
Let’s just say things are different today, after a year of a crypto bull market, millions of new users introduced to crypto, and thousands of projects launched and producing fees:
The term “decentralised autonomous organisation” is often misunderstood.
Let’s take a look at it from the other side:
Organization: This part is well-known, and it may be readily referred to as a group of humans and, if desired, other organizations.
Autonomous: in this context, it refers to the ability to persevere without outside help. Similar to a self-governing “autonomous” zone within a country (i.e., Hong Kong).
Decentralized: refers to the technology upon which these autonomous organizations are built. Organizations established on legal papers ratified by a central authority, meaning government, maybe the polar opposite of this.
In short, a DAO is comprised of a collection of crypto wallets managed by individuals and other organisations that executes all of its operations via code, enabling the management of assets and votes to be conducted safely without the use of underlying legal or traditional banking structures.