A COMPANY WITH NO CEO?

Have you ever heard of a company I organization with no CEO?

Well then, welcome to the world of DAOs.

What is DAO?

A decentralized autonomous organization (DAO) is a collective entity owned & operated by its community members. Decisions are made based on a specific set of rules enforced on a blockchain, known as smart contracts. Smart Contracts are essentially chunks of code that are automatically executed whenever a set of criteria are met. Those with a stake in a DAO get voting rights and can influence how the organization operates by deciding on or creating new governance proposals.

How do they work?

Smart contract creation: First, developers create the smart contract behind the DAO. The rules cannot be changed unless voted upon by the DAO's members. They need to extensively test the contracts to ensure they don't overlook important details. Funding: After the smart contracts have been created, the DAO needs to figure out a way to receive funding.

More often than not, tokens are sold to raise funds; these tokens give holders voting rights.

Deployment: At the end of the funding phase, the DAO is considered life, and all key decisions are made by users reaching a consensus on proposals.

A charity: You can accept membership and donations from anyone in the world and the group can decide how they want to spend donations.

Ventures and grants: You could create a venture fund that pools capital and votes on ventures to invest in. Repaid money could later be redistributed amongst DAO members.

Advantages of DAO

Eliminates the third party

All transactions and rules are recorded on a blockchain. This eliminates the need to involve a 3rd party in a financial transaction.

Flat organization

In comparison to traditional companies, DAOs is democratized. All the members of a DAO need to vote for any changes to be implemented (depending on the company's structure).

Democratized governance

The governance of DAOs is based on community, while traditional companies' governance is mostly based on executives, Board of Directors, etc.

Transparent

DAOS' operations are fully transparent and global, meanwhile, traditional companies' operations are private, only the organization know what is happening, and they are not always global

Issues with DAO

One potential problem with the voting system is that even if a security hole was spotted in its initial code, it can't be corrected until the majority votes on it. While the voting process takes place, hackers can make use of a bug in the hole of the code.

DAOS can be distributed across multiple jurisdictions, and there's no legal framework for them. Any legal issues that may arise will likely require those involved to deal with numerous regional laws in a complicated legal battle.