Why DAOs Will Fundamentally Change Communities
DAOs represent an opportunity for community membership to be ownership, where consensus is not just valued, it’s the ruling principle.
Oh cool, you’re in DAO… what’s that?
First, let’s define it. “DAO” is the acronym for decentralized autonomous organizations. In a traditional organization, there is typically a hierarchy. The board of directors or upper management determines the structure and has the power to make changes. A DAO is an organization without any central control: its power is distributed among all its members.
Anyone who wants to join the DAO can do so, and anyone who wants to leave the DAO can do so; there is no central authority that enforces membership or excludes anyone. Joining is a function of ownership. If you own a token of the DAO, you’re a member.
A community with a shared bank account demands that value is created and views respected.
DAOs can be financially autonomous or raise funds from outside by issuing tokens, which can be bought and sold. It then spends that money however the token was programmed to spend the money.
In this way, the DAO operates like a corporation whose only assets are its employees and whatever assets it has been authorized to purchase on their behalf. But unlike a corporation, which exists as a legal entity separate from its shareholders, a DAO is controlled entirely by its shareholders and operates under programmatic (i.e., computer-enforced) contracts that specify exactly how it is allowed to operate (for example: “The DAO will purchase X of asset Y to support project Z”)
Representation is directly tied to ownership and consensus
DAOs are the result of a long trend in the transformation of society from hierarchical structures to networks.
DAO’s represent the next step in the evolution of organizational structures for collective action.
Contracts on the blockchain would govern the utility of a token, further demanding fair and inclusive systems. Where holders see conflict, they can propose change.
For example, a DAO holder may decide to write a proposal for funding a new project. Once voted on, the proposal will have a clear yes or no based on consensus. If approved, the change is implemented.
Allowing holders of a DAO to have a say in its direction changes everything.
The next wave of communities will be fundamentally more aligned in both values and intentions of membership.
Communities now grow with member values, whether organizers like it or not.
I think this kind of structure will fundamentally change how we organize our communities. I believe that most of the organizations that we know will disappear, replaced by DAOs.
And I believe that we are already seeing this begin to happen.