Q & A: What is "Decentralized Autonomous Organization (DAO)"? --Like a club for crypto investors

As web3 and blockchain become more and more integrated into the mainstream, new abbreviations are constantly emerging. But what they really mean remains largely unexplained. DAO can be said to be one of them.

Decentralized autonomous organizations (DAOs) are like clubs for crypto enthusiasts (enthusiastic crypto investors), jointly managed by like-minded people and in their decision making. It's just a group of members with equal say. And most clubs have the potential to have so much money that they don't know how to deal with it.

However, DAOs are everywhere on the distributed Internet. Books for a variety of purposes, costing millions of dollars from funding larger companies, financing blockchain-based projects, or falsely arguing that copyrights will be available in the future. You can also buy the first edition. Needless to say, these organizations have a great deal of resources. Therefore, in this Q & A series, we will introduce what you need to know about DAO.

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――What do you pronounce DAO in the first place?

Read "Dao".

--So what is DAO?

Decentralized Autonomous Organization (DAO), as the name implies, is a group of people who do not have a manager or company to give central instructions when making decisions. It is built on the blockchain by smart contracts (one-on-one contracts generated digitally). In many cases, you can join a group by purchasing each DAO's own token and vote on decisions regarding how to use and manage the pooled funds. People from all over the world can join these DAO groups, and members often communicate through the channel of the chat service Discord.

According to Jason Yanowitz, co-founder of Blockworks, a cryptocurrency-focused financial media company, DAO has a "completely flat hierarchy" and "people gathered around a shared balance sheet." It's a different way to govern. "

--What does DAO do?

DAOs have different missions, whether they have their own goals or are part of a larger project.

Some have arisen from personal interests, such as the "Constitution DAO" formed in 2021 with the purpose of purchasing one of the original US Constitutions from the international auction house Sotheby's. In the end, the DAO couldn't get the highest bid and eventually won the auction, but the members were able to get a refund of their original investment.

Others have grand goals that require the group to operate its essential business. "Mantra DAO" is one example. A community-operated decentralized financial platform where members can invest, lend and borrow crypto assets.

--When was DAO first made?

The first DAO (called The DAO) was built on the Ethereum blockchain by a German-based development company called Slock.it, which connects transactions in the physical world to the blockchain. So, participants can rent, buy, sell and share real estate without going through an intermediary.

According to a 2018 interview with Slockit founder Christoph Gentz, the company, which was looking for a way to raise money in early 2016, said in April of the same year that it was a crowdfunding platform Kickstarter. And created a DAO similar to GoFundMe. A distinctive feature of this DAO is that it gives all investors and members the right to vote in the company's decision-making when using the funds raised.

Over time, the DAO expanded into a decentralized organization for venture capital funds, holding about 14% of the total Ethereum cryptocurrency that existed at the time, the British Political Economy Magazine Economist (The). Economist) is telling. Also, according to Coindesk, a US cryptocurrency media, from May to June 2016, it collected $ 150 million (about 16.5 billion yen) from more than 11,000 members, the largest in history as of 2016. It seems that it was cloud funding.

However, this DAO was hacked in June 2016 and lost about 50 million dollars (about 5.5 billion yen) (about 3.6 million ETH at the rate at that time). Surprisingly, Slockit did not disband after the hack, but the DAO never regained its original state.

--So, were all DAOs branched from the first DAO?

It's not. The word DAO has since become used by other companies, blockchains, crypto investors, etc., and has become just a descriptive acronym rather than a decent name. increase.

――How will DAO affect the media and marketing industries?

Keep in mind that DAOs, whether cryptocurrencies or other forms, have a lot of money and are ready to spend it if the majority of the group agrees and agrees. .. The majority rule is set within each DAO.

Some publishers, such as Blockworks, have already begun to sell advertising opportunities such as event sponsors to DAO in anticipation of potential profits.

"DAOs are becoming a new mechanism. Some DAOs have more than $ 10 billion in funding, but media companies aren't aware of that yet," Yanowitz said. I'm talking. He says he's currently in the process of training the Blockworks sales team to learn how to sell to DAO's Discord channel.

Another value added to DAO and web3 is the ability to build a community, explains Amanda Kasat, co-founder and CEO of web3-based marketing firm Serotonin. He said DAO "breaks categories such as users or buyers, companies or teams, and investors into a group of members that work together to form a community that focuses on specific deliverables and experiences. It is a powerful propulsion engine for the purpose, and "(members) are all participating together."

[Original: WTF is a decentralized autonomous organization (DAO)]

KAYLEIGH BARBER (Translation: SI Japan, Editing: Makoto Nagata) Illustration IVY LIU