DAOs Are Gaining Steam, And Here's Why You Should Care

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Decentralized autonomous organizations (DAOs) are quickly captivating the crypto community and reimagining the future of organizational models and hierarchies. These member-owned communities operate without centralized leadership and are gaining usage heading into 2022 by swapping traditional organizational structures for crypto-economics.

While many were unfamiliar with DAOs before ConstitutionDAO’s recent failed bid at a copy of the U.S. Constitution, they are multiplying at a rapid rate. According to Cointelegraph, active DAOs have increased by 660% since 2019.

It's essential to learn how DAOs operate and what is fueling their momentum to understand how they challenge legacy structures with applications well beyond the crypto community.

What are DAOs?

DAOs are organizations whose policies and governance (operations and stakeholder interaction parameters) are programmed in the blockchain. They're encoded in a computer program instead of in typical paper governance documents like shareholders' agreements and bylaws.

This way, the rules aren't subject to different interpretations like in typical organizational constructs and are transparent to DAO members. Updates to operations procedures and decision-making follow the pre-established framework. They unfold automatically after trigger events or based on decisions approved by specific DAO token-holders who vote electronically.

Some of the leading benefits of the setup are reduced organizational friction, fully democratic governance, and no need for intermediaries between DAO members and decision making.