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Decentralised Autonomous Organisations (DAOs) - History And Possible Future

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Cryptocurrency have flooded the financial sector, and decentralised autonomous organisations (DAOs) are one of the most prominent players in the field. So what are DAOs and their possible role in the financial world of 2022 and beyond?

DAO Defined

DAO stands for Decentralised Autonomous Organisation.

  • Decentralised means there is no sole regulator in any decision-making process.
  • Autonomous means something governs itself.
  • An organisation is a community of individuals joined together by a common goal.

In other words, a DAO is a community of members who can propose, vote and govern its structure, as well as the future of any project within the organisation. Note that such entities operate on smart contracts.

COPYRIGHT_WI: Published on https://washingtonindependent.com/decentralised-autonomous-organisations/ by Kenzo Norman on 2022-08-29T14:14:35.751Z

The History of DAOs

It was in 2016 when a few Ethereum members created The DAO, also referred to as Genesis DAO. People could send Ether in exchange for DAO tokens, which became one of the top ICOs ever. DAO tokens would allow people to participate, pitch ideas and receive funding for projects.

Smart-contracts
Smart-contracts

This promising project was terminated when $70 million worth of ETH got stolen by a hacker. This put the whole Ethereum community into confusion and resulted in DAOs failing to progress within the next few years.

DeFi and DAOs’ Second Chance

With the boost of the DeFi movement, DAOs have a second chance to prove their importance. That’s right! DAOs found a way to gain re-entry.

When DeFi began to gain momentum in 2020, there was also an increase in the interest in governance tokens. Different tokens were launched that permitted users to collaborate across projects, including Aave (AAVE), Uniswap (UNI), and Compound (COMP). If you are interested in investing in some of these projects, we have got good news: crypto trading platforms can help you enter the market. Coinbase and Bitcoin Profit are some of the best examples that can connect you with a broker at the click of a button. However, always trade due diligence!

Despite the failed attempts of the earliest DAOs to achieve their goals, now DAOs are making a comeback and even becoming viral among mainstream news outlets. This surge in popularity of DAOs could be attributed to the growing number of non-fungible tokens (NFTs). One of the popular DAOs today, for example, is “Friends with Benefits” that connects artists, crypto enthusiasts, and NFT collectors.

Investment DAOs are the next emerging trend in the financial markets. There are experts who believe that traditional Venture Capital (VC) models will be disrupted by DAOs. Moreover, Web3 enthusiasts can benefit from DAOs to group together and rival conventional financial institutions.

Challenges to Adopting DAOs

Despite the boost in popularity, DAOs have to undergo many challenges on their journey. Even with the positive response from the crypto community, DAOs still need to streamline and upgrade their processes. User-friendly interfaces and tools are also required. Regulations set by regulatory agencies will be another hurdle that DAOs need to overcome as they flip over into mass adoption.

Challenges
Challenges

In the end, decentralisation is a complex principle, and many claim that despite the participation and collaboration of users, there is still a degree of centralisation across the sector. Let’s not forget that some wealthy whales may want to obtain dominance by purchasing the majority of the tokens. Tech and safety issues and fail-safes also need to be targeted.

Conclusion

DAOs are complex structures. However, with the increasing use of DeFi solutions, NFTs, and crypto among investors, it would be natural for DAOs to abound.

So we can just wait and see what DAOs will achieve!

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About The Authors

Kenzo Norman

Kenzo Norman - Kenzo is a journalist-turned-marketer who is fascinated by how storytelling and targeted marketing can result in content that changes businesses. He is responsible for implementing inbound marketing strategies that help his clients raise brand awareness, generate leads, and gain new customers as an Account Executive. Jason enjoys reading on the beach, tracking down mono records, and playing guitar when he is not working.

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