What is DAO?
DAO is Decentralized Autonomous Organization. It's a project on the Ethereum blockchain, which acts as a decentralized business structure. It can operate without interference from humans. In simple, the blockchain gives power back to individuals rather than centralized institutions like governments, banks, and corporations.
DAOs
DAOs are always early-stage projects with high levels of volatility, which means they usually require more research before you invest any money into them.
In essence, DAO is an organization that is completely transparent, open and anyone can participate in it. The structure of a DAO is determined by its code. People who buy tokens become the members of the DAO and can participate in its governance and make decisions on how it operates. The decisions are taken by consensus and recorded in the blockchain through smart contracts.
completely automated organization. It doesn't work like a traditional company. The organization's activity, budget and operational rules are predetermined by smart contracts written in Solidity language on the Ethereum platform.
Decentralized Autonomous Organizations (DAOs) are complex organizations that may be defined as software agents that are self-governing and self-managing, with their code distributed over the internet. They operate as open, transparent organizations that can operate without interference from humans or central authorities. The purpose of such organizations is to provide incentives that override the centralized authority expected by humans, assuring the self-governance of the agents.
Non-economic issues handled by DAOs include voting, reputation and governance, administration, decision making and enforcement. In addition, there are legal issues such as insurance questions and legal contracts. The design of entities as DAOs requires a new governance system or models to govern it. Such organizations also can play a role in the management of goods and services on a global market.
Token Incentive
DAOs are communities that hold cryptocurrency tokens. This means that DAO investors are given the opportunity to vote on how they want funds to be spent. A few token incentive schemes include profit sharing, equity stakes, and token rewards.
Profit sharing is when a company decides to share some of their profits with the DAO investors in order to generate more revenue for the company and incentivize people to invest in it. Essentially, you're trying to give people a chance at getting a share of the profits if they invest in your company or DAO.
Equity stakes is when investors get shares in your company depending on how much they invested. This is similar to receiving dividends from stock ownership.
Token rewards are when investors receive tokens as a reward for their investment in the company or DAO's token projects. These tokens can only be used within this system and cannot be exchanged for other cryptocurrencies or fiat currencies like traditional money can be exchanged for other kinds of money.