As of right now, DAOs are becoming even more mainstream and evolving into an integral part of the future. Here are 7 quick fun facts about how DAOs work:
In general, DAOs either act more like Limited Liability Companies (LLCs) or investment firms. For example, some DAOs operate open source projects based on the blockchain, while others help people make investments together.
DAOs allow members to cast votes through tokens and make organizational decisions. If you’ve seen one of Elon Musk’s Twitter polls, he allows customers to voice their opinion and vote on product features.
Instead of serving the demands of a few large shareholders, DAOs are designed to factor in the opinion of every member. Plus, profits are distributed to every member, and all shareholders enjoy the benefit of owning the DAO token. Everything, from the voting rights and potential profit, makes holding DAO tokens much more valuable.
Even though many DAO processes are automated through code and the blockchain, the system is constantly improving. Because the code is open-source, members can collaborate and help improve the technology. Shareholders can also submit suggestions and vote on changes, which include hiring, training developers, and new products. This allows constant innovation to take place and makes the DAO better for all members.
From gaming to investment and media to Defi, the categories and possibilities of DAOs are endless. Some of the top trending DAOs include Maple Finance, Diamond DAO, Alethea AI, and Portion. You can learn more about top trending DAOs and invest in them here.
Because DAOs are trustless and mainly automated through code, managers and even CEOs are not needed for operation. The organization can still run smoothly — and in many cases, run with fewer errors, increased transparency, and faster operation due to the automation element. That being said, many DAOs have a democratic process for elevating core contributors to community leadership roles.
Unlike traditional organizations that are susceptible to strict government regulation and the FTC, DAOs are more challenging to shut down. Since they are run on the blockchain and voted on through tokens, the government would need to purchase a large number of tokens first to shut down a DAO (in most cases). There are a variety of legal structures DAOs take on. It’s important to understand what type of DAO you’re joining before you invest.
At DAOHQ, we are on a mission to make DAOs more accessible — so anyone can easily own DAO tokens, learn, and become an insider on the future of decentralization.
Remember: Before investing, it’s important to understand the type of DAO you’re joining. There are many risks and rewards of investing in DAOs, and it’s important to carefully evaluate those you want to invest in. Note that this information is not financial advice, and it’s important to do your own research.
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Thanks to Jojo Mach, Emmet Halm, and the DAOHQ team for reading drafts of this.
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