I have spent some time learning about DAOs and this article is about what I understood so far.
Coined as Decentralized autonomous organization, they are decentralized applications whose main function is to handle fund disbursement. They work more or less as any other treasury but in a more transparent and automated way.
What further separates them from the traditional treasury is that they are essentially a piece of code that runs on blockchain networks, like Ethereum, Cardano, Solana etc. It makes DAOs a lot different from traditional organisations and businesses from an economic and regulation sense.
Let’s take an example DAO and how it operates. There is no defined template of a DAO yet so I’ll use this open source code written in solidity as an example https://github.com/blockchainsllc/DAO/blob/develop/DAO.sol.
This can be called a decentralized application or a smart contract. It defines an Interface which can be used to instantiate a DAO contract. The first few constants define the regulatory parameters. The most interesting part is the proposal array. It holds all the proposals submitted by the proposal creator that specifies an amount which is to be paid to the proposal recipient if it gets approved. Approval is done by DAO stakeholder by casting votes.
From a freelancer’s perspective this can be a bidding platform where gig workers can place their proposals and get paid once the work is done seamlessly. A very transparent and seamless experience as compared to existing freelance marketplaces.
Once DAO gets a legal structure and a standard template this could really become the next best thing for remote work culture and creator economy.