Hello to my friends who love life and always keep smiling despite all kinds of negativity. I would like to talk about the Decentralized Autonomous Organization (DAO), which we hear very often with the start of the bull trend. What is DAO… ? What does it promise…? What am I thinking… ?
Let's start …
What is DAO?
It is an organization designed to be automated and decentralized. They act as a type of venture capital fund, with open source code and no typical management structure or board of directors. In order to be completely decentralized, the DAO does not have links to any nation-state, although it mostly uses the Ethereum network.
One of the most important features of cryptocurrencies is that they are decentralized. This means that they are not controlled by a single institution such as the government or central bank, instead they operate across various computers, networks and nodes.
Inspired by the decentralization of cryptocurrencies, a group of developers came up with the idea of a decentralized autonomous organization DAO in 2016 and brought it to life.
What is the working system of DAO?
With the introduction of smart contracts on the Ethereum platform, DAOs began to become widespread. DAOs are a set of rules. The determined rules are written into smart contracts.
DAO funding process begins by staying within the drawn rules. With the fund provided, the resources needed by the organization are created and investors have the right to vote in the management.
Once the DAO system is operational, it becomes completely autonomous, completely independent of its creators and everyone else. They are open source so anyone can view and use them. It is transparent and immutable as all rules and transactions are recorded on the blockchain.
How the funds will be used is decided unanimously. Anyone who invests in the DAO can make proposals for the future.
The DAO enables people from all over the world to exchange money with each other. Sample; Investment, fundraising, donation, borrowing, ...
Disadvantage; A potential problem that may arise in the voting system, if a vulnerability is detected in the startup code, cannot be fixed without a majority vote. Until the vote takes place, malicious programmers can exploit the vulnerability in the code.
Good examples of DAO projects;
Source by CoinMarketCap
My thoughts, you are seeing DAO projects according to Coinmarketcap data. Each of them are high quality and powerful projects. DAOs look pretty strong, especially in the DEFI markets. Some investors think there may be legal issues, potential security issues. I think such organizations have started to come to the fore. They will even replace the traditional financial system. UNISWAP, AAVE, MAKER, COMPOUND, DECRED, … are the stars of the cryptocurrency markets. These projects will be examined in my next article. It's good for you to follow me...
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