Decentralized Autonomous Organizations (DAO) started out as a simple concept envisioned as organizations, created by an idea and powered by developers, that automate business functions and processes by leveraging smart contracts and all the fundamentals of business. blockchain. The basic idea was to iron out the complex business process that various organizations are bogged down in and to facilitate the movement of assets into a very future-oriented digital interaction that required no middleman, promising faster transaction processing, cheaper and more transparent.
Replacing many intermediaries, DAOs themselves have acted as digital intermediaries that offer transparency and scale, giving them the stature of an organization without the traditional organizational constructs of entities, groups, management, charters and other forms of collective action. As the traditional centralized organizational structure is challenged, the key organizational elements that remain are fueling a new economic revolution that spawns a new creator economy and brings together artists, lawyers, developers and creators from around the world to create. ideas and monetize them globally in permissionless crypto-economic systems built on blockchain and Web3 technologies – and essentially defining the future of work.
The reduced reliance on relying parties, the tokenization of assets, and the new stores of value enabled by blockchain technology may themselves enable new types of organizational structures and reduce the power of intermediaries. Ronald Coase’s famous essay on purpose for business, “The Nature of Business” explored why businesses exist and what makes them up.
From a transaction cost perspective, the company creates an economic structure where the transaction cost within its limits is reduced by better control of standardized contracts with its employees and ownership of resources. As the cost of internalizing resources increases, the result is contractual agreements with other companies in specialized areas. The transaction costs associated with contracting can be drastically reduced by decentralized verification and blockchain-enabled smart contracts.
While this was the initial thesis behind DAOs, with speed, efficiency, and costs bringing primary goals, DAOs are now an important part of governance and the main driving force behind extracting value from. base layer, or layer one blockchain platforms. These Layer 1 blockchain platforms represent emerging Web3 technologies that aim to provide greater control to participants by fundamentally decentralizing computing, storage, and interconnection. Many DAOs will emerge, representing the collaboration of a global pool of talent, digital natives and ingenuity of a community sharing a common belief system, and bringing the term “organization” to life.
Related: DAOs will be the future of online communities in five years
DAO: Pillars of the Creative Economy
A broad definition of a DAO would be an organization that records its members, rules, and responsibilities on an immutable ledger enabled by blockchain technology. Its charter and its development are public and immutable. Typically, membership requires resources and some sort of community membership, in the form of tokens, to participate or vote as a participant. Tokens are denominated in monetary assets (fungible or non-fungible tokens), whether crypto or fiat. Acquiring tokens, in most cases, requires either a participation of time and skill, or a membership using fiat or crypto.
DAOs provide a unique structure that naturally supports a designer economy, in which a business model supports a structure through which you hire your talent and time, gain flexibility and income, and leverage it to facilitate fractional ownership. in the system supported and governed by the community. Blockchain and, by association, DAOs embody a natural governance structure for borderless online collaboration on crypto-native projects by digital natives that, incidentally, can be exploited by traditional organizations that adhere to the principles, of the same way that physical businesses have found a ramp to digital equivalents in the era of Web 2.0.
While issues of regulatory clarity and an investor protection framework persist, these digital entities embody a digital reality like that of a nation – the state attempts to attract talent, capital and innovation. Although the governance and rules of engagement are not perfect, it is a continuous experiment of innovation aimed at changing the way we live and strengthening the participation of every willing community. While the arguments for autonomy and collectivization are used to defend the absence of regulation, the possibility of buying the right to vote and the lack of protection strongly counter this argument. If DAOs become digital analogues of existing business and organizational structures, will they continue to serve as an avenue or promoter for an economy of creators and support for Web3 principles?
Related: Bull or bear market, creators dive headfirst into crypto
The future of work
Web3 as a technological paradigm aims to provide rails for the creation, tokenization and movement of value and assets. The Web3 aims to resolve content ownership and ensure portability of digital assets by tokenizing them, which paves the way for this tokenized value to be exchanged for other fungible tokenized assets, allowing creators to monetize their effort. of work. These work efforts may include (but are not limited to) mining and creating content, such as art, music, and other forms of non-fungible tokens, which are at stake in an ecosystem, just like game tokens.
In a future where dynamic organizations, without borders and without hierarchy can undertake a large part of the creation of value, a service offer is more possible with interconnected value networks, exchanges and bridges ensuring connectivity between these ecosystems. These decentralized exchanges or asset gateways not only provide a way to trade diverse asset classes, but also facilitate the global movement of assets, creating truly global economies that attract digital natives and a talent pool.
The innovation driven by decentralized and transparent token business models aims to deliver an excellent experience for end users and employees, while ensuring that the organization reaps the cost savings and competitive advantages of superior experiences for participants. DAOs involved in DeFi, NFT, and various other Metaverse projects deliver just that, where a handful of developers or founders design initiatives and pursue decentralized development through platform projects or crowdsource development with token incentives and attendees. who are not only consumers, but also gain from their meaningful participation.
Related: DeFi and Web 3.0: Unleash your creativity thanks to decentralized finance
DAOs represent the emerging trend driving a profound and lasting transformation of the workplace that combines cultural, digital and philosophical belief systems. This attracts investment from other symbolic projects and talent from digital natives around the world, creating an experience for all involved that results in a more resilient and empowered workforce and greater community participation.
This article was co-authored by Ananth natrajan and Nitin Gaur.
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Ananth natrajan has over 18 years of worldwide experience in multiple roles including research and development, business acquisition, systems engineering, product development, construction management and management project. His startup is building cybereum, a blockchain-based platform for the collaborative management of complex projects with multiple stakeholders. He holds a BEng and MS in Mechanical Engineering, an MBA from IESE and an MSc in Major Program Management from the University of Oxford. He is a Professional Engineer (PE) and Professional in Project Management (PMP). He has led multidisciplinary teams in several complex projects and technology / product development efforts. Ananth has several patents in offshore wind turbines and blockchain technology.
Nitin Gaur is the founder and director of IBM Digital Asset Labs, where he develops industry standards and use cases, and works to make blockchain for the enterprise a reality. He previously served as CTO of IBM World Wire and IBM Mobile Payments and Enterprise Mobile Solutions, and he founded IBM Blockchain Labs, where he led efforts to establish blockchain practice for the business. Gaur is also a prominent IBM engineer and IBM master inventor with a rich portfolio of patents. In addition, he is a research and portfolio manager for Portal Asset Management, a multi-manager fund specializing in digital assets and DeFi investment strategies.