Decentralized Autonomous Organizations (DAOs) aren’t quite as popular as some other concepts in the blockchain sphere. But, it appears that the guard might be changing and DAOs are about to take over.
With the year now getting into full swing, investors are definitely looking for the next big trend. Could it be that we are in the age of DAO?
Understanding the Concept of DAOs
To be fair, DAOs are still a very new concept for companies. Essentially, a DAO is a company that runs on its own.
Humans can manage some parts of it and ensure that it runs as it should, but the company itself operates autonomously.
Today, most DAOs run on the blockchain. They are seen as the next phase of company organizations, with their activities entirely different from those of normal companies.
So, why make your company a DAO? The vision is simple - by removing the human element in a company, you’re essentially setting it free to run as it should.
DAO developers believe that they can eliminate human manipulation or error from how companies work. This way, decisions are geared towards profitability alone.
Investors can send money to companies autonomously, and owners simply get tokens that allow them to vote in company decisions or possible projects. Everything is run free from human components, and efficiency can be optimized.
Interestingly, the concept of the DAO has grown significantly over the past year. According to
Now, we have companies like
BLOCKS is paving the way for DAOs as the first-ever legally registered Wyoming DAO, LLC. BLOCKS is committed to connecting industries and enterprise-grade technologies to blockchain, with an industry and blockchain agnostic approach. The BLOCKS Token is at the heart of the BLOCKS DAO and Builder Program, stewarding everything from on-chain governance to enterprise transactions in our BLOCKS Builders’ partnerships. The foundation of BLOCKS is the goal to connect the world, regardless of industry application, through decentralization; at BLOCKS, Decentralization Connects Us All.
What Opportunities Lay Ahead
Going into 2022, companies really should consider switching to decentralization. Some of the benefits include:
Profit Focus
Of course, the primary benefit of becoming a DAO is the fact that your company will become a fully functional profit-generating machine.
DAOs remove human error and allow companies to work as they should. There are no power struggles or squabbles, and a company is free to pursue whatever interests it sees fit.
All it takes is a few people who moderate the company’s activities, and optimization can be assured.
Reduced Company Friction
The ability of a company to also run seamlessly in perpetuity is attractive to many business owners. While DAOs will need some governance, the core of their activities will remain autonomous. This means that the company will be able to keep its focus while also eliminating any distractions.
In a world where distractions are all around, being able to maintain your course will play to your advantage. This, and much more, is what a DAO offers.
Harnessing the Power of the Blockchain
Businesses will also be able to tap into one of the building blocks of the next generation of technology - blockchain technology.
By becoming a DAO, you’re allowing your company to run on the blockchain. This means process efficiency, equity, and better security - among so many other benefits.
Blockchain technology has already proven to be able to help companies be better across the board. By becoming a DAO, you’re essentially making your company more resilient - thanks to blockchain technology.
Still Some Challenges to Solve
While DAOs seem like an interesting prospect, it is worth noting that they’re not all gravy. To scale effectively, a DAO will need to solve some challenges, including:
Legal Hiccups
By definition, a DAO is decentralized. However, it will still need to incorporate somewhere to protect its members and investors from liability.
This isn’t much of a problem when you think about it. A company can still operate as a DAO but have some features of traditional organizations - principal officers, attorneys, and more.
At the end of the day, the fact that you operate as a DAO doesn’t mean that you can’t be sued. As long as you’re domiciled somewhere, you have full access to the law.
Regulation
This can be seen as the major challenge faced by DAOs. To operate, most DAOs offer digital tokens to investors and shareholders.
Some of these tokens offer voting rights to investors, allowing them to have a say in the company’s direction. Other tokens simply act as proof of investment and shareholder tags, although they can always be redeemed or traded.
If you live in a country that doesn’t have favorable crypto regulations, moving to become a DAO might not be possible. Financial regulators will easily crack down on your operations, and you might not have smooth sailing for long.
Much to Look Forward to
Regardless of the challenges, 2022 is truly looking like a big year for DAOs. More companies are set to understand the benefit of this business structure, and they will troop in to become DAOs as well.
There are definitely challenges to be solved, but they will. Over the past two years, trends like DeFi and non-fungible tokens (NFTs) became worldwide phenomena even without having their challenges fully solved. While no one advocates for solving problems on the fly, it has become obvious that the current business climate needs something better. DAOs are that solution.
