2. 2
Historically, we have seen new business models emerge every 40-50 years. We are fortunate to
be in the midst of another transition. Decentralized Autonomous Organizations (DAOs) are
fundamentally reshaping how people coordinate and deliver solutions to problems. While many
large institutions have forgotten that we are humans first and that they were incorporated for
noble missions, DAOs are the ones who are bringing people and humanity to the forefront of its
missions. As of March 2022, there are around 216 DAOs with a cumulative valuation of close to
USD $10 billion.
Decentralized Autonomous Organizations typically have the following features :
A) Has a truly horizontal structure by design – no management hierarchy
B) Allows everyone from its community to participate in organization-wide decisions through
governance processes and voting
C) Has decentralized ownership – founders or CTOs share ownership along with community
members
D) Is open-source
3. What is a DAO crypto?
DAOs are similar to co-operative societies, but more effective with a democratic set up of
protocols and tools at their disposal. DAOs need no managers or hierarchy – every member
has a say in decisions that impact the organization through protocols, forum discussions and
voting with tokens. Minor decisions within workstreams can be taken without getting
everyone involved which makes DAOs agile and decentralized at the same time.
Standard operating protocols are embedded into a software code via smart contracts
rendering the need for man-managers unnecessary. Bureaucratic or hierarchical hurdles
are also removed thereby. Most DAOs have their workflows built on Notion and other office
discussion portals openly on Discord and the likes. While the decentralized structure brings
about higher ownership in contributors, the elimination of bureaucracy and management
reduces overheads/bottlenecks which makes DAOs efficient. By being open-source, DAOs
have higher scalability and virtually no barrier to entry for average community members.
4. History of DAO – Ethereum’s First Hard Fork
Let’s take a quick peek into DAO’s history leading up to its first famous, or rather,
infamous incident. The term “Decentralized Autonomous Organization” was coined in
1997 by Werner Dilger, a German professor of computer science. He published a paper
titled “Decentralized Autonomous Organization of the intelligent home according to the
principle of the immune system”.
The word Decentralized Autonomous Company (DAC) was mentioned again following the
launch of Bitcoin. The first real DAO was launched in 2016 by a German startup called
Slock.it on the Ethereum Block #1428757, which was known as the “Genesis DAO” or “The
DAO“. It was regarded as a revolutionary initiative, raising $150 million USD in ETH and
being one of the initial crowdfunding efforts launched on the Ethereum blockchain. In its
early days, DAOs were mostly created to automate decisions and facilitate
cryptocurrency transactions. The Genesis DAO attracted nearly 14% of all ether tokens
issued till date.
5. However, on June 17, 2016, The DAO was hacked after a hacker
exploited a loophole in its underlying code which allowed them to
drain funds worth $70 million. Ethereum blockchain was fairly new
back then. Ethereum decided to roll back the blockchain history so
most of the funds were re-allocated to the network’s investors. It was
a very controversial decision considering blockchain technology was
supposed to be immutable. This led to the hard forking of the network
creating 2 separate networks – Ethereum (who supported the
decision) and Ethereum Classic (who opposed the decision).
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