What is a DAO (Decentralized Autonomous Organization)

 

A decentralized autonomous organization referred to as DAO for short is an organization built on rules encoded as a computer program that is frequently transparent, controlled by the organization’s members, and uninfluenced by a central government. DAO’s are member-owned communities with no centralized leadership that keep financial transaction records and program rules on a blockchain.

The DAO, which amassed 3.6 million ether (ETH) and was hacked and drained of US$50 million in cryptocurrency, is a well-known example of this type of business organization. The hack was reversed in the weeks that followed, and the money was restored, thanks to a hard fork of the Ethereum blockchain. The majority of Ethereum miners and clients migrated to the new fork, while the original chain was renamed Ethereum Classic.

How do they work?

In order for DAO’s to properly operate they rely on “smart contracts” which are sophisticated software programs and algorithms designed to take into account different circumstances and possible options that a user may take in order to enact certain rules.

This enables actions to be taken and decisions that would otherwise be centralized to be divided up amongst the various peers in the network to allow for decentralization and fair rules for all users.

Read the full post on the AGR Technology tech glossary:

https://agrtech.com.au/glossary/dao-decentralized-autonomous-organization/