Why do we need DAOs?

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Why do we need DAOs?

5 min read

Why do we need DAOs?

Starting any kind of organization with a person that includes investment and cash requires trusting the humans you are running it with. DAOs make it possible for you to build and collaborate with people who you have never met before.

DAOs are regulated by smart contracts and their treasury and treasury movements are permanently recorded in the blockchain. This makes transparent and trustless organizations possible.

DAOs also help prevent human error and manipulative processes by giving back the decision-making power to the stakeholders of the community or enterprise while using web3 technology, such as the blockchain, to guarantee the integrity of the process. So, especially fueled via the Ethereum blockchain, DAOs allow participation from all over the world and even anonymity. DAOs can also offer contributors tokens, allowing them to vote and put forward proposals.

DAOs can function without a hierarchical structure. This makes for a more open and democratic structure which allows any stakeholder to come up with proposals and also vote to decide the future of their DAO using a governance token. More complex DAOs can also make use of delegates or even full-time employees just like a traditional organization.

Being able to pool resources allows members to reach previously impossible goals such as bidding large amounts of money on an auction or embarking upon big projects. It also allows to mitigate the risks that might arise in such enterprises.

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