We all know what organizations are. Think of Meta, formerly known as Facebook. They have a centralized management team (cough, Mark Zuckerberg) who owns and manages the organization, are headquartered in a certain country and can have hundreds of thousands of members.But what if there is a new kind of organization? Can you imagine a decentralized organization where the community owns and governs themselves, not a team consisting of CEO, CFO and COO? What about one that is fully online and not limited by physical boundaries?We already have organizations like this. They are made possible by blockchain technology and are called DAOs.<h2 id="header-0">Introducing DAO</h2>DAO stands for decentralized autonomous organization. To set up a DAO, a developer or a group of developers create smart contracts. These smart contracts contain rules to guide the governance of the DAO and have to be deployed on the blockchain.Once deployed, the developers have no more say than the other community members. All decisions regarding the DAO have to be raised in new governance proposals which will undergo majority voting.DAOs usually have their own governance token to raise funds from community members. In turn, members receive voting rights on proposals. This means that members in a DAO can work together to achieve common organization goals (like how <a href="https://apollox.zendesk.com/hc/en-us/articles/4413865282201-ConstitutionDAO-From-people-to-PEOPLE-" rel="noopener noreferrer nofollow">Constitution DAO rallied together to buy the last print of the U.S. Constitution (First Ed.)</a>), or even change their governing rules as long as the proposals are approved by the majority.The main difference between DAO and a simple interest club is that DAOs usually have economic utility. Since they have their own governance tokens and treasuries, community members have to be mindful when voting for how the DAO’s reserve funds are used, among other finance-related issues.<h2 id="header-1">Pros and Cons of DAO</h2>Advantages<ul><li>No hierarchy; the community governs themselves</li><li>Democratic; anyone can raise a proposal and decisions go through majority voting</li><li>Transparent; the code is open source for all to see</li></ul>Disadvantages<ul><li>Decision-making may be inefficient as majority vote is needed</li><li>Difficult to change smart contract rules once deployed on blockchain</li><li>Legal gray area as DAOs are not bound to any specific jurisdiction</li></ul><h2 id="header-2">Web3’s Boost</h2>While blockchain technology helped to conceptualize and build DAOs, Web3 helped to popularize them.The term was coined by Polkadot founder and Ethereum co-founder Gavin Wood in 2014. Web3 is envisioned as the next iteration of the internet. A Web3 world would be an online decentralized ecosystem incorporating blockchain technologies like crypto and NFTs.Users would have control over their personal data and have sovereignty over their identity. They can also participate in decentralized finance, which is non-custodial and without centralized involvement.DAOs seem to fit right into the Web3 ideal with their decentralized governance and ownership. However, Web3 technologies are still primitive and the concept remains a hazy utopian vision.To add on, DAOs are facing an ideological problem, in which democratic voting may not be the best option. There are arguments that the collective is unable to make good, rational decisions. This is in contrast to the current world order, where decisions are made by elites (e.g. governments, leaders). Even though this is highly centralized, most of us believe that they have the knowledge and experience to make good decisions. What's more, with recent high-profile cases of DAOs being charged in legal court by regulators, DAOs are facing their biggest troubles yet.DAOs may continue to profit from Web3’s boost, but we may be seeing new forms of DAOs very soon.

What is a DAO (Decentralized Autonomous Organization)?

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