We are in a period of transition. The passing of old technologies and the emergence of a new generation of technology. From cryptocurrencies to metaverse. Technologies that each led to big changes. This article is about one of these technologies

It is dedicated and we want to see what Dao is!

This article is placed in the category of blockchain and crypto world. Like most of the amazing achievements of recent years, the Dao is accessible thanks to the advent of blockchains. Probably the biggest feature of blockchains is their decentralization. This is the main characteristic of Daos. They are decentralized and all decisions are the result of consensus of all members; It means that no person or group can do the smallest thing without getting the consent of the majority. On the surface, everything is beautiful; But of course there are bumps along the way.

We will carefully check everything that needs to be done. First, let’s see what DAO is?!

What is a DAO?

DAO stands for Decentralized Autonomous Organization. If we want to translate it into our own language, it will be translated as: Decentralized Autonomous Organization! As you probably know, decentralization is a feature that has been gaining attention, especially after the popularity of cryptocurrencies and other blockchain-related issues.

But what is Dao? Let us simplify the definition using an example.

Consider a typical company. Its size and smallness are not very important; But make sure you have a big collection in mind. A set consisting of a large number of workers who are all subject to the orders of their superiors. Who are the higher authorities? All middle managers, board members, CEO, main shareholder and… Suppose that this company or business has made its shares available to the public and a large number of people are considered its shareholders. What is the role of these people in micro and macro decisions?! Almost nothing!

The Dao concept completely changes this mechanism. If we want to say very simply what a DAO is, we should say a company where all members and shareholders are involved in all decisions. There is no hierarchy. There is no CEO. There is no sign of the board of directors. Isn’t it strange?! That’s why we decided to prepare this article for you to understand what Dao is.

In companies that have a DAO mechanism, all shareholders have the right to vote, and even the smallest decisions are made by voting. The rules have been determined in advance and if there is going to be a change in them, all the members must agree to it.

But how is this possible? It is better to ask like this: What is the way Dao works?!

How does the Dao work?

First of all, DAOs require blockchain. The same technology that is making huge changes in all fields. After that, DAOs need smart contracts. Another achievement of blockchain. Here we invite you to read the article on what is a smart contract. You will get good and complete information that will help you understand what Dao is; Because DAOs generally operate based on these types of contracts.

In fact, one or more programmers get together and prepare a set of rules in the form of codes. These rules are the foundation of the Dao company. This code is provided as Open-Source or open source; That means everyone can access it. Applicants can see these codes and, if they wish, become part of the discussed DAO and its programs by purchasing membership. This stage is also called the process of attracting capital. After this step, the smart contract, which contains the codes expressing the rules, are implemented on a blockchain. Ethereum was the first blockchain to support smart contracts; But now most blockchains have such a capability.

Therefore, it can be said that the formation of a DAO collection has three main stages:

• Preparing and drafting a smart contract
• Fundraising
• Implementation of smart contract on blockchain

After the third stage and the start of Dao, the developers of the program will only have the right to vote according to the amount of shares they own; That is, it is not the case that because they are builders, they have the possibility to make decisions autonomously. We remind you that every big and small decision will be made through voting and consensus of the members. If there is to be a change, a proposal must be made and everyone agrees.

What role do proposals play in DAOs?

All requests for any changes to DAOs are made through proposals. Proposals are the things that the members must vote to implement or reject. For example, if a new workforce is to be recruited, first its proposal must be prepared and made available to the members. If the majority agrees with this idea, the recruitment process will begin. Other matters such as the removal of a member, request for re-attraction of capital, purchase and sale of assets, distribution of profits and capital, etc., all require a proposal to be put to a vote.

This is also from the proposal. Now let’s see what is the way to join the DAO.

How to join a DAO?

What do you do when you want to become a shareholder of a company?! The answer is very simple. You buy shares of that company! The work that should be done in front of Daos. There is only one fundamental difference.

The shares of DAOs are offered in the form of tokens introduced by the creators of the project. These tokens or cryptocurrencies give voting rights to their holders; That is, when you get the X token introduced by the Dao Y project, you will become its shareholder and will be able to vote for various proposals.

These tokens are called Governance Token. But there is a big problem.

It is not bad to get acquainted with the first DAO in history.

The first dao of history and its bitter fate

It was in 2016 that the first DAO in history named the DAO was formed. The developer of the DAO was Slock. It brings the transactions of the physical world onto the blockchain. One of their services was that people could sell or rent their properties and tenants without the need for intermediaries.

It was in April that this group planned to attract capital and for the first time used the approach of today’s daos for this work. As you probably guessed, this project was implemented on the Ethereum blockchain and its token was called DAO. Its creators were able to collect a capital amounting to 150 million dollars at that time. Even in the period when the price of Ethereum reached 20 dollars, the value of the collected capital reached 250 million! But in June of the same year, hackers were able to exploit a security flaw in its smart contract and execute one of the largest cyber attacks in the crypto space. The money they stole with this attack was 70 million dollars!

the DAO ended its work at the same time and with a bitter fate. Slock didn’t die, but the DAO never took off. Especially since all the major crypto exchanges removed the DAO token from their list of cryptocurrencies. The DAO disappeared, but the name remained, and now many projects dream of becoming a DAO.

In the next section, we will examine some active projects in the field of DAOs.

Currently active projects of Dao

Well, so far we have understood what Dao is, how it works, how to become a member, and now we want to introduce some active projects in this field. Keep in mind that introducing these projects does not mean recommending them as an investment option. If you want to do this, be sure to do a complete and comprehensive research so that you don’t get any harm.

1- MakerDAO

This project, which is located on the Ethereum blockchain, is an organization that provides the possibility of lending and borrowing for applicants. Since cryptocurrencies are volatile in nature, the MakerDAO project uses a StableCoin called Dai.

Note: A Stablecoin is always worth $1!

2- Aragon

Aragon is an open source software that makes it possible to run Dao projects. In fact, Aragon is a Dao project that helps build other Dao. Some kind of infrastructure. The governance token of this project is called ANT; That is, if you have this token, you will be able to vote on different programs of this project.

3- MetaCartel

According to the creators of this project, MetaCartel is an ecosystem consisting of developers of decentralized applications or Dapps. An ecosystem where more than 800 developers have come together to build and develop decentralized applications on Ethereum. As expected from a Dao, MetaCartel revolves around its members and decisions.

4- GitCoin

The Gitcoin platform was built to support open-source applications and is considered a dao. Its governance token is called GTC, and by owning it, you can give your opinion on the future projects of the complex.

5- Dash

Dash is a token that is unique for two reasons:

Fast transfer

Confidential transfer

This platform, which is a kind of decentralized exchange, is also considered a kind of DAO; Because it is managed by Masternodes. This DAO is placed on its own blockchain known by the same name.

6- Star Atlas

In 2021, many Play-to-Earn games were introduced. Large examples of them, which will mostly reach the final release stage in the coming years, are mostly DAOs. Including Star Atlas. This game, or rather Metaverse, has two tokens. One of them is called POLIS and it is considered a sovereign token; That is, if you have it, you have the right to comment on the progress of this project.

So far in the article, we have discussed more about the story; But there is also a dark side. In order to give you a relevant article, we have to say what are the flaws and problems of Dao.

What is wrong with DAO theory?

The first issue is that DAOs are highly vulnerable to hacker attacks. Do you remember that we said that the codes in smart contracts are Open-Source and everyone can access them?! Well, hackers can also spend time and find its defects; Therefore, the probability of a cyber attack will be much higher. Similar to what happened to the DAO.

Next, a Dao-based business cannot have any secrets. If you run a business, you know how essential this is at times. Of course, there are things you don’t want your competitors to know about; But there will be no secrecy in the Dao.

These are the challenges that exist on the path of Dao. In addition to these two problems, there are other issues.

For example, when we try to implement the Dao idea in the real world, certain problems may arise. When a production line in the factory has a problem, what did he do with the smart contract?! Or if workers go on strike, or if inflation deviates from the predicted formula, or if… Of course, keep in mind that DAO is a very new concept and technology. Just like web3 and even blockchain itself. Maybe in the future, with the changes that will be made, all the problems will disappear. Maybe not!

The last word

Dao is the future of businesses?! It is definitely not possible to give a definitive answer. As we explained throughout the article, despite all the advantages that DAOs have, there are still many drawbacks in their way. Defects that can be problematic. Like a security issue. And of course, the whole other challenge that we talked about above.

If one day the achievement of Web3 is realized, Dao will not be far away. This is the only thing that can be certain. In short, in this article we found out what DAO is, we learned how it works, we found out what is the membership procedure in a DAO, we got to know the first DAO in history, we checked the active projects that claimed to be DAO and finally the flaws in this We put the theory under the microscope.