The definition of a DAO , or decentralized autonomous organization , is an organizational model based on blockchain , which makes it possible to manage governance, decisions and resources in a transparent and decentralized manner. In a DAO, there is no centralized hierarchy; Instead, Tokens play an active role in management and decision -making. These organizations work thanks to smart contract contracts , which automatically perform the decisions taken by the members, under predefined conditions thanks to the oracles .
Table of contents
The characteristics of a DAO and its definition
Decentralized governance
In a DAO, decisions are not taken by centralized authority, but by all members. However, there is a key question: how are the proposals to be subject to the vote?
In general, any member with sufficient governance tokens can submit a proposal. Then, the tokens holders decide by vote which proposals deserve to be examined in more detail. This selection process is therefore purely democratic and transparent, but can be influenced by users or groups with a large part of tokens.
Transparency thanks to the blockchain
One of the major assets of the DAO is their transparency. All transactions, decisions and votes are registered publicly on the blockchain , making fraud or manipulation of results impossible. This transparency establishes a climate of trust within the organization.
Smart contractS and Oracles: DAO Motors
Smart smart contract are autonomous IT programs that run actions automatically when certain conditions are met. These conditions are often provided by oracles , which make it possible to connect the blockchain to external data (such as asset prices or events in the real world). For example, a DAO that manages investments can use an oracle to receive information on the financial markets and trigger specific actions according to the results obtained.
How does a DAO work?
Determination of proposals to vote
As mentioned, in a DAO, any member can offer an idea or a change, but there are generally specific criteria for this proposal to be subject to the vote. For example, some DAOs require the member to have a number of tokens to offer an initiative.
Benefits of DAO
Increased transparency
The DAOs guarantee total transparency, because all the actions are registered publicly on the blockchain. This prevents any internal handling and ensures that members can check each decision or transaction.
Democratic participation
In a DAO, each member has a right to vote based on their participation (via governance tokens). This participative model allows each voice to be heard, and avoids an excessive concentration of power.
Cost efficiency and reduction
DAOs automatize many tasks via smart contract , thereby reducing the costs associated with human management and increasing the effectiveness of decision -making processes.
DAO risks and challenges
smart contractS safety problems
Safety of smart contract s is one of the main challenges of the DAO. These programs must be perfectly coded and audited to avoid any usable flaw. Many specialized platforms, such as Certik or Quantstamp , offer security audits to test and validate smart contract before their deployment.
Centralization disguised
Although the DAOs advocate decentralization, there is sometimes a disguised centralization . This happens when members or entities hold a large quantity of tokens, giving them disproportionate control over decisions.
Legal uncertainty
DAOs often operate in a legal vacuum. However, some countries are starting to legislate on this type of organization. For example, in the state of Wyoming in the United States, DAOs have been recognized as legal entities since 2021 , offering a clearer framework for their operation. On the other hand, other countries have not yet ruled on the issue, which can slow down the adoption of these models.
The future of DAO
The DAOs are booming, especially on blockchains like Ethereum , but also on emerging blockchains such as Solana , Toncoin et Suis .
The flexibility of Ethereum , which allows the creation of smart contract s complex and modular, allowed this blockchain to become the leader in the accommodation of Dao. However, the new blockchains quickly gain ground, thanks to faster and less expensive solutions.
FAQ on Dao
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How are the proposals to vote in a DAO chosen?
- The proposals are submitted by members and approved for the vote according to the support received or the criteria of the DAO.
What roles do developers and founders play in a DAO?
- The developers create the smart contractS and oversee the technical aspects, while the founders help guide the global vision.
How are smart contractS security tested?
- Safety audits made by specialized companies such as Certik make it possible to check the potential flaws before their deployment
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Noah
Training engineer, I quickly became interested in the field of finance. Convinced that decentralized finance has a bright future ahead of it, I participate in its democratization by developing Crypternon.
