Imagine a world that instead of being controlled by closed-door board room meetings and backroom lobbying, is operated by distributed governance on open-source networks. This vision is what blockchain-based decentralized autonomous organizations (DAO) are hoping to fulfill by creating platforms that replace traditional hierarchies and are governed by token holders.
In essence, DAOs are purely Internet-native organizations that lack a central leadership and are instead, operated through on-chain rules solidified in a smart contract. This allows for a bottom-up decision-making process whose consensus is achieved through voting. This part is where cryptocurrencies step in and act as governance tokens that allow holders to partake in all major decisions.
While it might sound like a recent buzzword fueled by the Web3 mania, DAOs have in fact been in existence for years. During this time, they have managed to capture a significant market share of the cryptocurrency industry and many popular DeFi projects like UniSwap[1] are in fact DAO governed.
They fit perfectly into the utopian decentralized Internet envisioned by web3 enthusiasts. One that is free of central gatekeepers and promotes collective ownership.
Creation of the creator economy
DAO’s vision of an ownership-based economy is also shared by the non-fungible token (NFT) sect, which preceded the DAOs in being crypto’s ‘next big thing’ this year. This can be evidenced by the same breaking[2] Google trend records and becoming Collins Dictionary’s word of the year[3].
While NFT sales volumes surged to $2.5 billion[4] in the first half of 2021, by the beginning of December, users had sent[5] at least $26.9 billion worth of cryptocurrency to Ethereum[6] contracts associated with NFT marketplaces and collections. Archival documents, digital animals, music, memes, and even tweets are being tokenized
