It’s encouraging to watch how far blockchain technology has progressed since bitcoin’s introduction over a decade ago. Banks were relied upon before bitcoin to safeguard our money’s safety and fungibility. Instead of going via a bank, different entities’ interests might be aligned.
Soon after, Ethereum extended the notion beyond money. Ether’s smart contracts and tokenization approach have disrupted intermediaries in practically every industry, much as bitcoin did for cross-border transactions. For example, tokens can be exchanged for unused hard drive space in cloud storage. In this way, cloud monopolies like Amazon Web Services and Google are eliminated.
DAOs are the next step in the evolution of distributed systems
Smart contracts may be tremendously helpful in automating transactional processes and decreasing the amount of human input required for relatively basic operations, such as signing contracts. Human inputs aren’t only reduced in a Decentralized Autonomous Organization—they’re eliminated. This idea is yet in its nascent stages, but the DAO is a firm that employs smart contracts to automate all of its critical and non-essential operations.
DAO-like models can be beneficial to any company. You can use smart contracts to automate the reordering of your novelty keychains if you keep your inventory on the blockchain and keep track of your customers’ past purchasing habits, such as we do here. The smart contract will automatically produce and submit an invoice to the store’s relevant supplier and delivery date.
An IoT device or scanner will notify an intelligent contract that a package has arrived, and the money will be released in bitcoin. It may retrieve client information from a CRM system and immediately print labels to expedite the shipping process.
As you can see, the keychain retailer stands to save money and effort by implementing this example. For example, employees must keep track of inventories, produce and pay invoices, scan arriving packages, and many other tasks. Using this example as a starting point, a DAO may automate the shipping and billing procedures and any process linked to a smart contract in a web of “if, then” statements. The ultimate objective is to create an organization that does not require any human intervention and can operate well and thoughtfully adjusts its form without being prompted.
Why is DAO not a legal entity? Why is Ethereum more suitable?
Here’s why a DAO isn’t a regular legal entity. Corporate law helped develop a system that made capital pooling simpler while restricting liability for shareholders. This invention transformed business. DAOs may be the future of company structure. Many in the crypto community see DAOs as a viable replacement for traditional legal companies, allowing for more transparency and efficiency than overly centralized institutions.
Unlike a regular legal corporation, a DAO is decentralized. A DAO’s members are anonymous and may efficiently raise funds for the DAO’s initial purpose. In the DAO, participants directed the fund rather than a central authority. In April 2016, the Ethereum blockchain community launched the first DAO. You can buy Ethereum from many sites across the web.
Unlike corporations or limited liability firms, a DAO is an amorphous organization constructed on computer code and residing on a blockchain. In the absence of official legal recognition, DAOs may struggle to:
In decentralized autonomous organizations, Ethereum remains the blockchain of choice, although there are alternative chains that may be better suited.
Many blockchain-based decentralized apps (DApps) rely on Ethereum. However, alternative chains may be better suited to manage the burden of decentralized autonomous organizations (DAOs).
The number of decentralized autonomous organizations (DAOs) on Ethereum and related chains is far more than on any other platform. As per the statistics from the blockchain voting platform Snapshot, they are home to more than 4,200 DAOs and protocols that need people to regulate their governance.
According to ecosystem tracker Cardano Cube, Cardano has 10 DAOs, but the Solana ecosystem has 140, whereas Polkadot Substrate claims only to have eight.
Despite this, it’s worth noting that three of the top 10 DAOs based on Solana have been tracked by DAO tracker DeepDAO in the last seven days.
In a nutshell, DAOs will benefit from advances in artificial intelligence that are becoming more widely available. An AI-based DAO may be preprogrammed in the future to take into account the preferences of millions of stakeholders at the same time, unlike organizations that are close to being DAOs. Though fully autonomous DAOs are still years away, competent firms may identify areas where inputs are excessive before implementing DAO-component technologies to simplify processes without fear of crumbling lives.