Benefits of Decentralized Autonomous Organizations
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The term DAO gives out a lot about the reasons for which it came into existence. You have “decentralized” and “autonomous” as the clearly evident answers for your doubts. DAOs are not affiliated with any country to ensure complete decentralization. Basically, the developers of the first DAO aimed at shifting the decision-making power towards the members of the organization with a crowdsourced pool of funds.
DAOs leverage blockchain for defining the voting powers for members in proposals for shaping up the future of the organization or project. At the same time, decentralized autonomous organization advantages also present critical components for the web3 landscape. Therefore, DAO is a compelling choice for anyone interested in developing solutions in the present consumer-centric environments.
DAOs don’t allocate control of a business or entity to one individual or group. On the contrary, the control of the business and entity is vested in the group of supporters or members of the organization. In addition, the DAO benefits have also made a mark by introducing tokens, which serve as vital tools for voting on different improvement and protocol proposals. Multiple DAOs with popular examples such as Curve DAO, MakerDAO, and others have encouraged many developers and business owners to opt for DAOs.
Decentralization
The foremost highlight of the advantages of DAO focuses on decentralization, an essential trait of decentralized autonomous organizations. DAOs focus on achieving the maximum extent of decentralization according to their basic design principles. The concept of complete decentralization generally loses value in other endeavors. However, the equation changes in the case of DAOs which rely on collective participation rather than depending on one individual.
In the case of a traditional publicly-traded company, the CEO and the board of directors have the final say in decision making and other initiatives by the company. As a result, employees, users, and customers don’t come into the picture when thinking about the future direction of an organization.
For example, many customers may have issues with a new product by a company. In such cases, the manufacturers may present one perspective while employees may offer one, with none being anywhere close to the views of customers. Now, imagine the same company as a DAO, where users can vote for the ideal traits they want in products.
With the pros of DAO in decentralization, members of an organization can express their voice for the organization’s future. Many of you may point out that DAOs are not completely decentralized due to the DAO tokens. How? Well, members with more DAO tokens are likely to have more voting privileges. However, the voting power is distributed significantly more in comparison to traditional organizations with centralized leadership.
Community Engagement
Another significant answer for “what are the advantages of a DAO?” would refer to the scope for community involvement. Decentralized Autonomous Organizations or DAOs introduce the facility for communities all over the world to connect with each other and work on productive goals together. Anyone can enter the world of web3 with just an internet connection and governance tokens of a DAO.
Participation in DAO delivers the unique value advantage of contributing to new projects such as creating new domains like the Ethereum Name Service (ENS) or new play-to-earn cryptocurrencies. In addition, decentralized autonomous organization advantages also reflect how DAO participants can have a sense of ownership. As a result, they can drive members for innovation and set new precedents for financial rewards in return for participation.
Every member of a DAO has unique privileges for shaping the future of the organization. Stakeholders in a DAO can submit proposals for improvement and changes in protocols. The most important thing here is that DAOs don’t restrict the decision-making privileges to the boardroom. With promising inputs from multiple members of the DAO, the organization can introduce innovative developments.
International Workforce
Traditional organisations and the regulations that govern them often limit an individuals’ ability to join businesses outside of the country of their location. On the other hand, DAOs come with ease of global access and a lower barrier to entry. DAOs are designed for access for anyone from anywhere in the world and they support anonymous operations. As such, DAOs might be the only option for a community which is spread all around the world especially for those operating in jurisdictions where privacy is important.