What is DAO governance? What are the benefits of DAO governance?

Web3 is based on trust-minimized distributed networks such as blockchain and oracles. Regarding trust minimization, in addition to DeFi and NFT, the architecture also implements a new type of blockchain called "DAO" social model. So what does this DAO governance mean? Many people don't quite understand it. Simply put, it is a decentralized autonomous organization. It is a new type of organizational structure that aims to transcend traditional organizational forms and make collective decisions in a distributed, transparent and trust-minimized manner. Next, the editor will give you a comprehensive introduction to this DAO governance.

#What does DAO governance mean?

The full name of DAO is Decentralized Autonomous Organization, which is a decentralized autonomous organization. It is a form of organization that utilizes smart contracts encoded on the blockchain to operate autonomously without centralized control or third-party intervention.

The uniqueness of DAO is the use of blockchain smart contracts to write the process into the contract code, execute decisions and assign ownership. Smart contracts lay the foundation for innovation, making the DAO's governance rules completely transparent and unable to be tampered with by members or external parties. The blockchain's code is publicly auditable and secured by a decentralized network of nodes.

Although the abbreviation of DAO contains the word autonomous, DAO is not completely autonomous. DAO is made up of people, so it requires manual action from the user to run. Users need to vote, deploy code and discuss proposals, and these operations are completed by DAO members. Nonetheless, the word "autonomy" is used because some specific functions of the DAO are written in the smart contract code and these functions cannot be tampered with. However, people still need to interact with smart contracts (ie: code), provide inputs to perform specific tasks, and obtain outputs. Therefore, although DAO has a certain degree of autonomy, it still requires human participation and operation.

What are the advantages of DAO governance?

DAO must stand the test of actual combat and prove its scale and long-term value. The following are the potential values ​​of 4 DAOs:

1. Transparency

DAO’s rules and member activities are generally public and can be viewed and audited by anyone. This transparency makes the decision-making process and the distribution pattern of member voting rights fully visible. This is in sharp contrast to traditional organizations, which often lack transparency and require users to blindly trust that the organization can completely and accurately record the decision-making process and that the records will not be tampered with.

2. Democracy

Any member in DAO can submit proposals, challenge other people's proposals, or vote. Therefore, the decision-making mechanism of DAO is more democratic, and members can jointly influence the development direction of DAO. This differs from traditional, hierarchical organizations in which the CEO, owners, or board of directors have the privilege of executing most decisions unilaterally, while other stakeholders have few channels to express their opinions.

3. Trust minimization

DAO’s structure, consensus mechanism and implementation mechanism are all written into the open source smart contract, and the smart contract is deployed on the public chain, so once There is consensus that no single party or small group can tamper with the governance process. This is not the case with traditional organizations. The management process in traditional organizations is usually carried out by centralized entities. The rules of the process are often complex and opaque. Sometimes they are even based on private legal contracts. Not only does arbitration cost people and money, but it is also very slow to implement, making it difficult to guarantee certainty.

4. Tolerance

Anyone in the world can participate in DAO as long as they are connected to the Internet, and there is no need to disclose all identity information. This eliminates potential identity discrimination based on gender, race, socioeconomic status, sexual orientation, and national origin. This is also in sharp contrast to traditional organizations. In traditional organizations, where members reveal their individual identities, it is difficult to establish a purer meritocracy.

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