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An Introduction to DAOs

A DAO or decentralised autonomous organisation is a system of coded rules that determine the actions a decentralised organisation will take. Let’s take a closer look at what DAOs are and how they work.

In simpler terms, a DAO is a certain type of organisation that is based on open-source code and is run by its community. So, unlike traditional companies, the basic structure of a DAO is not based on any form of hierarchical management. A DAO has no centralised ruling power.

Instead, DAOs follow computer-coded rules (or smart contracts) and are collectively governed by their community members. This means that control is shared among participants. Participants usually use governance tokens to vote on decisions made by the DAO.

DAOs offer useful models for fundraising campaigns like ICOs, the tokenisation of assets, in decision making and voting systems.

The concept of a DAO is an innovative structure that enables an entirely new business model, where activities can be completed in a completely automated, transparent, and decentralised way. A DAO is as close as a project can get to being a true democracy.

What was The DAO?

The DAO was the first example of a decentralised autonomous organisation. created The DAO to operate as a venture fund platform for crypto projects. However, the project never got off the ground.

In June 2016, a hacker exploited a few lines of code and moved 3.6 million ETH ($70 million). However, the funds were moved to an account subject to a 28 day holding period so the hacker could not complete their getaway. To refund the money, The DAO re-wrote the blockchain. The hack was the beginning of the end for The DAO.

Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

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