What is a DAO in the Crypto world?

What is a DAO in the Crypto world?
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Can you envision a way to collaborate with individuals worldwide without knowing who they are, defining your own rules, and making your judgments all while using Blockchain technology? DAOs, on the other hand, are making this a reality. DAOs provide the opportunity for more people to participate directly in projects they care about while also receiving pay. Passion turns into a job, which turns into a source of income. All this information must have created a desire to learn more about DAOs and how they work? So, what are you waiting for? Let’s have a look at it.

What is DAO?

DAO stands for the decentralized autonomous organization, which means that instead of doing everything on your own, you can now use a piece of code that will work in the same way and reduce human effort. It is a blockchain-based application that provides users with a built-in mechanism for shared code management.

Traditional companies with boards, committees, and executives are dependent on each other for example, companies like Apple, Netflix, Walmart will have board meetings to decide something. Then that information will be delivered to the CEOs and from CEOs to the Employees working in these companies. But DAOs do not work like that here; there are no CEOS, and things are governed by a set of rules defined in code and enforced by a network of computers running a shared software rather than by a small number of people.

How DAOs work?

DAOs are designed to resemble a company structure in which rules and regulations are created with open-source code and enforced with smart contracts. Smart contracts, which are mainly bits of code that execute automatically when a set of criteria is met, are used by DAOs. Smart contracts are now used on various blockchains, while Ethereum was the first to do so. If you want to participate in it, you will need to buy cryptocurrency. Then you will have the right to decide and influence how the organization operates by choosing on or creating new governance proposals.

DAOs typically enter a fundraising phase after the initial set of rules has been developed and encoded into smart contracts, which anyone interested in participating can do.

DAO and Crypto

DAOs can continuously improve and grow just like people because their shareholders can give their opinion and vote to make changes for its betterment. In cryptocurrency, every DAO will launch 1 million tokens. Every token holder will have one vote, so the number of votes directly depends on the number of tokens a person holds.

Benefits of using DAOs

There are many benefits of holding a DAO token or becoming a part of it; some of them are as follows:

  • Trustless: DAOs biggest benefit is that they are trustless. You don’t need to trust any CEO or Manager or leader with your decision-making skills. The code will not keep working even if the major developer stops working or the funding goes away.
  • Cannot be shut down In the case of Major Corporation, any government service or CIA or FBI can come and tell you to shut it down or will ask for someone’s information, but it’s different when it comes to DAOs. If you need information from a DAO, the only fair way is to have more tokens and then submit a proposal, win a vote, and get that thing done.
  • Open Source DAOs are also open source, which means that anyone can access the code and try to use it, learn from it, and improve it. Being open-source allows other developers to help find bugs in the code, which will eventually help the main Developers.

How are DAOs being used?

DAOs have been utilized for various reasons thus far, including investment, charity, fundraising, borrowing, and buying NFTs, all without the involvement of intermediaries. So that you may get a better picture, a DAO, for example, can receive donations from anyone in the world, and its members can select how the money is spent.

Another example that will help you understand the functionality and use of DAOs would be a vending machine. A vending machine is used to reduce the workforce, but it still needs humans to check the electricity, to refill, to take the cash out and other stuff so if we make a system a change all these things to a piece of code that if the machine is empty, a message will be sent to the system.

Real-Life Example

Can you imagine being a co-owner of a song written by an artist simply by using cryptocurrency on an internet-based platform? Jenny DAO obtained its first NFT, an original song by Steve Aoki and 3LAU, in May 2021. This DAO is a Metaverse organization that allows users to own NFTs infractions. The purchase of NFTs will be overseen by its members, and the Unicly protocol’s smart contracts will manage the vault where these NFTs will be added.

The connection between Ethereum and DAOs

For a variety of reasons, Ethereum is the ideal platform for DAOs:

  • Organizations may trust Ethereum since its consensus is distributed and well-established.
  • Even the owners of smart contracts can’t change the code once it’s online. This enables the DAO to follow the rules that were programmed into it.
  • Smart contracts can transmit and receive money. You’d need a trustworthy middleman to manage group funds if you didn’t have this.
  • The Ethereum community has shown to be more collaborative than competitive, enabling the rapid development of best practices and support mechanisms.


DAOs are making a big change by promoting a more secure and trustless system, and it will grow more over time. As everyone likes to be their own boss and people enjoy that they have the ability to vote and their votes can make a difference. So, have a look at the above-mentioned information about DAOs and start your journey today before it’s too late.