The Role of DAOs in Shaping Future Business Models

Do you know what Decentralized Autonomous Organizations or DAOs are? These are not your traditional business establishments. DAOs can be described as digital communities that exist on blockchains. Blockchain technology makes highly secure transaction records. 

Unlike ordinary companies, there are no bosses who sit in the offices and make decisions for everybody. However, their decision-making power lies in the fact that members vote through tokens that they possess. Sounds futuristic, right? Well, this future is here now.

DAOs are no longer just technology prototypes. With the increase in numbers with each minute, individuals aggregate capital and knowledge to operate companies in a decentralized manner. But what does that mean for you, and why should you be interested in it?

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Why Do We Need a New Way to Work?

Current generations of workers, particularly the millennials and Gen Z, ask for nothing less rules embedded in a blockchain. These contracts deal with payment, decision-making, and the resolution of disputes. DAOs also enable several forms of payments, such as tether payment or other stablecoins, for enhanced security and seamless cross-border transactions.

Let’s use Axie Infinity, for instance. This gaming DAO leveraged the use of blockchain to develop a play-to-earn template that attracted people from all corners of the world. Their token raised to an alarming value, making the project a multi-billion dollar. It is not only gamers who are getting on the bandwagon. Web3 investors are starting to use DAOs such as Orange DAO and VC3DAO to invest in startups with the web3 future.

What’s in It for You

Thus, the question raised here is: Why should you care about DAOs? First of all, they are all about having ownership. DAOs have the unique characteristic of providing some degree of payback to a worker in the form of actual ownership of the DAO when they contribute to the project. It implies that you are no longer working for someone else’s gain; instead, you contribute to your own growth.

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Also, with DAOs, the possibilities are almost endless and are all about flexibility. Want to work from home? Go for it. Would you rather travel while doing your job? That also works. DAO stands for decentralized autonomous organization, and since participation in all these formations involves the internet and no physical addresses, you can participate from anywhere.

DAOs also hold a lot of incentives for businesses as well. It has been proven to be an advantage to DAOs because they can have access to talent from all over the world, and with this comes different ideas that benefit development. Because members take an interest in the project’s outcome, they feel more motivated than the regular employees in an organization.

Challenges for DAOs

Of course, DAOs are fantastic, but nothing is perfect. A big problem that needs to be addressed is legal risk. Many nations have no well-defined legal requirements applicable to DAOs, which adds confusion. For example, who is to blame when there is an error? Can members be held liable? These are questions that, until today, have not been answered.

Another concern is governance. Everyone has a vote: this proposal may work very well in practice, but what happens when members choose to oppose self-motive? It is something that DAOs must determine if they want to matter in the long run.

But what happened with the protection of the workers? Traditional jobs have provisions for leave, such as sick leave and maternity leave. DAOs don’t have this built-in, and members could be left without any type of protection. As a result, governmental intervention could become necessary to protect participants in a DAO from unfair treatment.

Wrap Up

The technology is present, but it will take a few more years for the laws and people to be on terms with it. In most regions across the globe, DAOs operate in a legal ambiguity.

Therefore, the perception of future DAOs will largely lie in the ability of technologists, entrepreneurs, and regulators to come to terms. If they can determine when and how these rules and protections apply, DAOs might grow into being a major player in the worldwide economy.