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There’s no doubt that DAOs (decentralized autonomous organizations) are changing the way people work, organize and participate in their communities.

Although these groups might be difficult to get involved with (for now), they are a paradigm shift in everything, from politics to culture to work. There are thousands of technologists working to build tools that make these amazing entities more accessible, easier to organize, clearer to navigate and more integrated into existing societal infrastructure, so it’s just a matter of time before they gain mainstream, mass adoption.

Here’s what you need to know about how DAOs work, what they represent and how you can begin seeing them come into your everyday life. 

What is a DAO?

DAOs are groups of people that organize around a project, cause, organization, or goal. The crypto community is the most popular use case for DAOs today. Here, people can communicate, vote, and organize themselves to take part in projects that involve blockchain.

For instance, most web3 projects have DAOs that vote on community-generated proposals about what that project should do — such as what features it should have, who it should pay for software development, or how it should spend reserves to attract users. DAOs offer the chance for communities surrounding projects to play an active role in determining how these projects grow and change. 

We are still in the early days, but we’ve also started to see DAOs with unique purposes outside of the development and growth of technical projects. You can think of collectives such as the Constitution DAO The author attempted to buy a copy the U.S. Constitution original, but was unsuccessful. AssangeDAO That organized to buy an NFT from Julian Assange, and thus help finance his legal battle. This led to the creation of a vibrant ecosystem of climate action and collective benefit DAOs.

Members can earn crypto tokens to gain voting power. These tokens are a measure of how much influence they have on governance within the DAO. Their voting power is proportional to the token supply. DAO membership can be determined by other methods.

NFTs can be used as membership cards. All holders of NFTs have access to private communication channels, protected documents, and the ability to vote on DAO governance proposals. These DAOs have the flexibility to try out different democratic approaches thanks to their various tools. Some may choose to adopt a shareholder model, where voting power is determined by the financial stake of each member in the DAO. Others may prefer a one-person, one-vote approach. There are many options.

How will DAOs actually be used in the real world

I believe DAOs will be able to service corporations, political actions committees, cities and homeowners associations (HOA) in future. Imagine if your HOA membership gave you access to private communications channels in your housing development, allowing you to vote on the flowers and how to allocate funds to maintenance projects.

A more democratic alternative to the HOA board’s centralization of power could be found. Residents could take an active part in shaping their environment by being empowered. HOA homeowners could be given an NFT to unlock voting, communications, and other necessary materials. Nonmembers would not be able to access these, so only those who are members of the group can participate.

This could also be applied to non-profits, where people give money and get a cryptocurrency. This corresponds with voting power. People who donate a lot would have additional voting power over those who donated a little, allowing them greater influence over which causes get funded and which don’t. 

Also, the D in DAO stands for democracy

These technologies have many potential applications. They could make a significant impact on democracy and society. This could theoretically lead to voting for politicians where citizens are issued a lifetime NFT which would enable them to vote in elections as well as participate in a more direct form democracy.

A company crypto currency could be issued to shareholders of public companies that corresponds to their shares. By submitting governance proposals, shareholders can take an increasing active role in corporate decisions. Imagine if Chevron shareholders could vote to change how environmental impact data is disclosed.

DAOs are a way to make people feel heard and empowered in an age where many feel powerless and unheard. Such applications are being used in a variety of settings. countries like Taiwan to have a profound, positive effect.

It’s just a matter of time before the user experience catches up with the technology, driving mass adoption and bringing this new, better way of organizing people into the mainstream. 

Julien Genestoux, founder and CEO of Unlock Protocol.

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