What is a DAO and How to Develop One?

Sandeep Baghel

Jun 1, 2023

In blockchain-led innovation, a new player is making waves - the Decentralized Autonomous Organization, or DAO. But what exactly are DAOs? How do they operate, and why are they causing such a stir in technology, the Process of Building DAOs, and beyond? Let's dive in and demystify DAOs.

What is a DAO in Crypto?

DAO in crypto is a community-owned organizational structure not controlled or run by any central authority. They are governed through a pre-approved set of rules, with decisions made through a consensus voting process on the blockchain.

DAOs self-function through rules encoded and enforced via smart contracts. They are:

Decentralized: There is no central authority. Decisions are made collectively by the community.
Autonomous: Once deployed, a DAO operates on its own. Human intervention is minimal.
Transparent: DAOs are a new form of organization, offering a democratic and transparent form of governance.

The entire process is typically facilitated through tokens, which members can use to vote on proposals. DAOs can be built on any blockchain platform that supports smart contracts, although Ethereum is the most common choice.

The Genesis and Evolution of DAOs

A group of developers first proposed the idea behind DAOs in 2016. The core concept behind DAOs is to run organizations like corporations without central authority supervising or controlling the decision-making process. Instead, a group of leaders known as the delegates and users act as the governing body in a DAO.

The story of DAOs is a story of the internet itself. As we transition from Web2 - the era of social media and data aggregators - to Web3, DAOs have emerged as key players. They represent resistance against centralized platforms, championing a more open and democratic digital space.

The Inner Workings of a DAO

DAO is essentially an internet community with shared interests who are working on joint projects. DAOs don’t have any physical offices or hired employees or managers. Alternatively, At the heart of all DAOs is the blockchain - a decentralized digital ledger that records transactions across a network of computers.

Here's how a DAO operates:

Governance Mechanism: DAOs operate through a governance mechanism where decisions are made via token-based voting. Every token holder can have a say in the organization's direction.
Smart Contracts: They are self-executing contracts with the parameters, rules, and agreement terms directly written into code. They govern the rules of the DAO.
Transparency: All transactions and decisions within a DAO are immutably recorded on the blockchain and are visible to everyone.

The Potential & Scope of DAOs

DAOs are not just a technological innovation but also social one. DAOs are already functional with missions ranging from raising money for charity, seed funding startups, funding open source projects, and social causes to coming together to acquire traditional businesses in distress.

DAOs have the potential to redefine global collaboration and coordination, breaking down geographical and political barriers. They are commonly regarded as the potential disruptors of traditional sectors such as real estate, banking & finance, insurance, etc.

Here are a few potential applications of DAOs:

Public Goods: DAOs can fund and manage global public goods projects, such as building open-source software platforms or funding renewable energy projects.
Automating Intermediaries: By utilizing blockchain technology and smart contracts, DAOs can automate many functions traditionally performed by intermediaries, such as centralized banks and governments.

DAO Development

Our team of experienced developers at Auroblocks offers various services to assist businesses in integrating DAO protocols into their platforms. These services include —

DAO Platform Development: Tailored platforms with built-in DAO protocols.
DAO DApps Development: DApps with DAO functionality for hardcore decentralization.
DAO Blockchain Development: Blockchains with DAO protocols for community-driven decentralization.
DAO-enabled NFT Platform Development: Platforms where DAOs implement changes after careful consideration.
Dynamic DAO Solutions