The original text is a report on DAO, and this article is the author’s summary points for a summary of the report, similar to scattered key points.

Over the years, the main characteristics of changing organizations are: reducing transaction costs for coordination. This is reflected in Coase’s corporate theory. You can achieve some insignificant improvements, such as applying a decision support system within an organization, but sometimes a major systematic change occurs. At first, it looks like a trivial improvement, but it can actually give birth to a completely new type of organization.
DAO can not only reduce transaction costs, but also create new organizational forms and compositions.

In order to have a powerful DAO, members must:

Equal access to the same information for decision-making
There should be the same fee when conducting preferred transactions
Their decisions are based on DAO’s own and best interests (not on coercion or fear)
DAO attempts to solve problems related to collective action by aligning individual incentives with the best global results (for individuals or companies), thereby solving coordination problems. By pooling funds and voting on fund allocation, stakeholders can share costs and incentivize coordination to benefit the entire ecosystem.

DAO is using the new form of alternative governance for the largest experiments. These experiments were not conducted in the form of a large nation-state, but at the grassroots of local communities. This is when the peak of globalization appears in the rear view window, and the world is focusing on more localized models.

It is worth noting that Bitcoin is the first type of DAO. It is run by a team of core developers without central authority. They mainly make decisions about the future direction of the project through the Bitcoin Improvement Proposal (BIP), which requires all network participants (although mainly Miners and exchanges) can make recommendations about project changes. The code to make.

There will be more and more DSaaS (DAO Software as a Service) providers, such as OpenLaw, Aragon and DAOstack, aiming to accelerate the growth of DAO as a category. They will provide on-demand professional resources such as legal, accounting and third-party audits to provide compliance services.

In DAO, there is a trade-off triangle, and these conditions must be weighed to find the best result so that DAO can complete its task:

Exit (individual)
Voice (Governance)
Loyalty (decentralization)
DAO challenges the traditional hierarchical and exclusive organizational structure seen in many aspects of today’s world. Through the “wisdom of the crowd”, collective decision-making can be better, so as to better organize.

The intersection of DAO and decentralized finance (DeFi) is spawning new products. As DAO uses DeFi products as a method of payment/distribution more and more decentralized and digitalized, DAO will increase and lead to more and more DeFi products interacting with DAO. It will be the most powerful if the DeFi implementation allows token holders to use governance to customize and optimize the design of application parameters, thereby creating a better, tailored user experience. It can also be used to time lock and create different types of fee structures.

DAO allows merging of capital, distribution of allocated capital and creation of assets backed by that capital. They also allow non-financial resources to be allocated.

Using DeFi allows DAO to bypass the traditional banking industry and its inefficiencies. This is very important because it creates a trustless, borderless, transparent, accessible, interoperable and composable company.

The DAO community and governance are very complex and difficult to handle correctly, but they are critical to DAO’s success. There is a need to balance coordination processes and incentives so that all community members consider their contributions important.

Most DAOs want to wrap a legal structure with a basic smart contract code around the entity to comply with regulations, provide legal protection and limited liability for its participants, and allow for easier deployment of funds.

Today’s DAOs are not completely decentralized or fully autonomous. In some cases, they may never want to be fully decentralized products. Most DAOs will begin with centralization, and then begin to adopt smart contracts to automate simple internal processes and limit centralized management. With consistent goals, good design and luck, they can become real versions of DAO in time. Of course, the term decentralized autonomous organizations, which does not fully reflect reality, has brought a lot of heat and attention.

DAO is not fundamental or unique to blockchain technology. DAO has a long history of improving governance structures, decentralizing decision-making, increasing and enhancing transparency, and enabling members to vote and actively participate in decision-making.

The participation of DAO is currently aimed at the segments within the cryptocurrency segment. Many DAOs require a minimum participation in cryptocurrency governance. This actually limits the participation of cryptocurrency participants, usually rich and technically savvy enough to participate in DAO.