Are Decentralized Autonomous Organizations Back?
Despite the infamous ‘The DAO’ hack, which somewhat tainted the name of decentralized autonomous organizations, DAOs have been witnessing a resurgence in the past twelve months.
At least this is what Circle Research analysts claim in their 2Q2019 Crypto Retrospective Report.
A decentralized autonomous organization, commonly referred to as a DAO, is a blockchain-powered virtual organization that operates independently of a central authority based on a set of predefined coded rules. DAO stakeholders (such as token holders, members or contributors) vote on proposals provided by the community on how the DAO’s funds should be spent. When a proposal is approved through voting, funds are dispersed automatically through the use of smart contracts.
The idea behind a DAO to effectively manage the funds of a decentralized cryptocurrency project where all key stakeholders can have a say in how the project’s funds are managed.
According to Circle Research, a number of new DAOs have launched in the past year, which may suggest that we can expect more DAO activity going forward.
Currently, some of the most notable DAOs include MolochDAO, Aragon, dxDAO, MakerDAO, and the DashDAO.
- MolochDAO was launched in early 2019 to help to manage and coordinate funds for Ethereum core development
- Aragon is a decentralized application (dapp) that provides infrastructure for blockchain projects to create and operate DAOs
- dxDAO is a community-driven decentralized autonomous organization that was created by the Gnosis project in May to control the DutchX decentralized trading protocol
- MakerDAO is a smart contract protocol that operates the DAI credit system and is governed by the MKR token holder community
- DashDAO acts as the de facto treasury for the digital currency Dash (DASH) where community members submit proposals that require funding and the community votes on each proposal. 10% of newly issued DASH goes to the DashDAO to enable the project to fund its ecosystem without requiring outside assistance.
Are there any achievements?
Most DAOs are still early-stage projects that are yet to show whether they will succeed in their mission or not. However, we have already been able to witness some achievements by DAOs:
MolochDAO raised funds for Ethereum core development
In May 2019, ConsenSys founder Joseph Lubin announced that the MolochDAO has managed to raise over USD 1.5 million in ETH from the likes of ConsenSys, the Ethereum Foundation, and Vitalik Buterin, co-founder of Ethereum. The funds are to be used to fund the further development of the Ethereum project.
The MakerDAO managing the Dai stablecoin
The MakerDAO administers the popular stablecoin, Dai (DAI), which has its value linked to the U.S. dollar. Dai retains its value through several feedback mechanisms that have been implemented as a system of smart contracts on the Ethereum blockchain. Since its launch in late 2017, Dai is largely managed to retain its peg to the dollar. However, earlier this year Dai was trading below its dollar peg and MakerDAO stakeholders had to initiate an Executive Vote to raise the Stability Fee.
Dai price chart:
The DashDAO funding the DASH ecosystem development
Arguably the biggest success in the DAO space has been the DashDAO. DashDAO has helped the cryptocurrency Dash (DASH) to become and remain one of the leading digital currencies in the market today. Any member of the Dash community can write a proposal and receive funding from the DAO. Hundreds of proposals have been passed for things such as marketing efforts, awareness building, and, of course, development.
Decentralized autonomous organizations (DAOs) are an exciting area within the blockchain space that has the ability to disrupt existing business structures and funding models. In 10 to 15 years, it will be very interesting to see how the DAO space has developed.