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Distributed governance: the promise of DAO technology

Blockchain offers new opportunities in finance, traceability and governance. Decentralized autonomous organizations (DAO) offer an approach to corporate financial and legal performance that sidesteps intervention by centralized institutions.
Distributed governance: the promise of DAO technology
Distributed governance: the promise of DAO technology
Blockchain enables democratic management of companies
Blockchain enables democratic management of companies
The trend toward transparency and openness will make DAOs a sought-after tool
The trend toward transparency and openness will make DAOs a sought-after tool
DAO architectures and communities will shape the corporate cultures of the future
DAO architectures and communities will shape the corporate cultures of the future
Blockchain used to be firmly associated with bitcoin, but today’s users and investors recognize that there are different areas of the industry, including cryptocurrencies, DeFi applications, distributed computing platforms, and NFTs. Each has its own specialists, projects, trends, and characteristics.

One promising application of blockchain is decentralized autonomous organizations, or DAO, where decisions are made by project users rather than a board of directors. The capitalization of all DAOs now amounts to $10 billion, and the tokens of eight projects are already among the hundred largest cryptocurrencies.
What is a DAO?
Experts say the main features of a DAO are:

  • Group members are independent parties;

  • The availability of open-source smart contracts on the blockchain;

  • Open membership;

  • A token is used to manage the community, which allocates funds based on priorities, incentivizes participation, and penalizes rule violations;

  • The group has internal capital to automate the marketplace, prevent collusion, and incentivize the creation of upwardly mobile communities.


  • Smart contract technology has the potential to reduce companies' reliance on banks, courts, and lending institutions. Administrative automation can eliminate the need for huge staffs of managers, lawyers, and bureaucrats and minimize human error, corruption, and abuse of power. Most of us will work for a DAO at some point, claims Messari CEO Ryan Selkis.

    Some DAO projects run crypto startups or support community initiatives, artists, or ideas. There’s already a meta-universe that allows these projects to open virtual offices.
    Blockchain enables democratic management of companies
    Blockchain enables democratic management of companies
    The trend toward transparency and openness will make DAOs a sought-after tool
    The trend toward transparency and openness will make DAOs a sought-after tool
    DAO architectures and communities will shape the corporate cultures of the future
    DAO architectures and communities will shape the corporate cultures of the future
    How DAO works
    Basically, a DAO is a kind of online community, club, or organization, and the key to it is a token. All DAOs are based on smart contracts (action algorithms written on a blockchain). In those algorithms, dozens of tasks can be accommodated, such as a scheme for withdrawing money or automating salary payments. Theoretically, with its help, an entire bureaucracy can be replaced by a single algorithm.

    Classic DAOs democratize decision-making. All token holders have the right to vote. If we transfer this principle to the company, each employee can make a proposal that cannot be ignored. Often, the foundations of a DAO are developed in collaboration with the community, and many of them are open source. Anyone can review the technical documents and suggest improvements.

    DAOs are characterized by their transparency and openness. Not all companies and enterprises are ready to disclose details of their documents and financial flows, but there’s a clear trend towards more transparency.

    Different DAO communities exist, and they have varying degrees of openness and centralization. DAO is just a technology that can be adapted.
    DAO and the law
    Legally, DAOs are still a controversial technology, but in the U.S. state of Wyoming, they have already been equated with limited liability companies (LLCs). Australian authorities, meanwhile, have been preparing a program to regulate DAOs. The British government has announced a similar initiative.

    As cryptocurrencies grow in popularity, their adoption is also likely to increase. The adoption of cryptocurrencies is one of the most important topics of discussion in the world today. Sooner or later, all nations will be split between "for" and "against" them. After that, we can expect an increase in crypto literacy. People will understand how to use the technology. Eventually, they’ll learn about DAO.

    The number of people voting on DAO is only a few million today, and the answers to their questions will determine whether their number will increase.
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