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Crypto Comics – What is DAO

I tried to explain what DAO is in comic strips.

TL;DR

I explained what DAO is and how DAO works.

Some Takeaway

DAO or Decentralized Autonomous Organization is an entity without central leadership. There is leadership in the DAO, but it is very different compared to traditional organizations. In traditional organizations, leaders make decisions through a centralized, hierarchical process with only a few members in the decision-making process. On the contrary, DAO encourages every member in the entity to make a collective decision through a consensus process. It is a bottom-up process to make sure everyone participates, and the decision is a collective effort to determine the entity’s future.

Human Rules vs. Machine Rules

In traditional organizations, leaders make rules. However, such rules may not apply to leaders themselves because there are no balance and check groups to enforce such rules compliance. Regulations can only reach a certain distance while leaders of the organizations enjoy special treatments. Such organizations will create biases and favoritism in the long term. Compared to machine rules, no one can change solely without a collective consensus. Everyone will obey the rules in the entity. It is a fair way to operate an entity in the long term.

Decentralization vs. Centralization Leadership

DAO is a decentralized organization that ensures everyone has an equal and fair share in the community. While centralized organizations have efficiency, decentralized entities focus on long-term goals of fairness and equality. However, it does not mean there will not be leadership within the decentralized entity. Decentralized leadership will have more perspectives compared to centralized leadership.

Proposals

Instead of offering compliance from the centralized leadership, participants offer proposals to help the entity grow. Such proposals will pass if most stakeholders approve them to exclude them from being spammed with proposals. 

Creation

Everyone can create their own DAOs compared to a company where only founders can achieve the goal. It is a transparent and open-source process for DAO to establish and grow. Information can be seen in the blockchain as one of the most significant features for DAO to attract more people to join.

Downside

Of course, not to fantasize about DAOs, there are always some drawbacks. How to fairly compensate members and what can DAOs do to foster collaboration are among of many questions that each DAO will have to discover and resolve. It is an experience that people try to test and find a better solution. 

In conclusion

DAO is one possible organizational structure in the future. It gives people a goal and hopes to work with their own passion. 

Check out my another article

Crypto Comics – What is PoS

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