DAO

What is DAO

  • stands for Decentralized Autonomous Organization
  • blockchain-based cooperative group with common goal
  • owned by members, rules are set & executed through code -> governed by code
  • remove management layer/ structure by using tech-democratic approach
  • decisions in DAO are voted by investors/ stakeholders

How DAO works

  • members are issued tokens -> represents the shares of DAO
  • token can be bought using other stable coins
  • tokens in DAO are used to vote for certain decision. transaction are made through smart contract -> digital papertrail
  • more token = more control in DAO
  • resolves principal-agent problem. revenue from investment is transparent.

DAO vs Traditional Venture Capital Fund

  • Traditional VC Fund: They have BOD, and BOD do what’s best for their interest. i,e. there’s still management layer
  • DAO: Votes are count based on the amount of tokens -> Flat structure