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DAOs or Decentralized Autonomous Organizations have made significant inroads into the corporate world and the enterprises of tomorrow have already embraced them. Given below are astonishing facts, published by soocial.com, that support the claim that DAOs are gradually taking the place of conventional organizational structures.
#1. DAOs have a total market capitalization of ~$21 billion as of January 2022.
#2. The market cap of the top 5 DAO tokens is $13.2 billion.
#3. Approximately 1.7M people hold governance tokens and there are 497k active voters in the DAO ecosystem.
#4. Ethereum is the most preferred token in the DAO ecosystem.
In this blog, we will explore DAO Smart Contract Development and DAO smart contract audit process. We will also learn about the benefits of DAO smart contracts and the use cases of DAO in smart contracts in real-life scenarios.
What is a Smart Contract
The term “smart contracts” refers to software code that, when placed on a blockchain network, autonomously implements everything or sections of an agreement. The code can serve as the only representation of the parties’ contract or it may supplement a standard text-based contract by carrying out specific clauses, like the money transfer among Parties. As the code is distributed among several bitcoin networks, it profits from the irreversibility, stability, and safety that blockchains provide.
In a smart contract, the conditions of the relationship involving the contracting parties are directly encoded in the programming language, making it a self-executing program. The rules and underlying code are spread throughout a decentralized blockchain network. Trades are traceable and irrevocable, and the code regulates their execution.
In the absence of any centralized authority or a controlling mechanism, smart contracts enable trustworthy operations and arrangements to be made between dispersed, unknown parties.
Although blockchain technology is now primarily thought of as the basis for cryptocurrencies, it has developed well beyond supporting digital currencies and has started supporting other areas like Decentralized Autonomous Organizations. Let’s understand how smart contracts work and how they are bringing an impact in the DAO landscape.
How do Smart Contracts Work?
A smart contract functions like all blockchain transactions. The required actions are as follows:
1. A blockchain wallet is used to start a trade.
2. The distributed system receives the request, where the identification is verified.
3. The trade, which can involve a money transfer or anything else, is authorized.
4. The trade contains the code that specifies the kind of activity that should be carried out.
5. A block containing the trades is uploaded to the blockchain.
6. The same procedure is followed to amend any changes to a contract’s conditions.
What is a Decentralized Autonomous Organization (DAO)
A “Decentralized Autonomous Organization,” or DAO, is an independent organization run by the communities. Smart contracts construct the underlying laws and carry out the chosen course of action. At any time, the community can openly review suggestions, votes, and even the code itself.
A DAO is run exclusively by its current members, who jointly decide on important initiative decisions including technological improvements and capital placements.
In general, community members submit recommendations for the system’s future developments before convening to vote on each one. The laws implemented inside the smart contract then approve and execute proposals that reach a certain degree of agreement.
Any decentralized autonomous organization’s platform development is based on top smart contracts, and much like other smart contracts, DAO smart contracts exist to make sure that autonomous procedures follow predetermined rules. As a result, when particular events occur, all conditions are met, and they start established procedures.
Advantages of DAO Smart Contracts
Let’s explore various advantages of DAO smart contracts:
1. All trades in a DAO are handled by smart contracts, there is no need to have trust in any central body. These contracts are visible and unchangeable since they are kept on a public ledger. As a result, everyone may take part in the community without being concerned about being scammed or defrauded.
2. DAOs are not dependent on any physical foundation or governing structure. Since they operate online, anyone can join them from anywhere in the world. An Internet connection and a digital identity are all you need. This makes it possible for folks from all over the world to collaborate and work forward toward a single objective.
3. In a DAO, there are no entry barriers. Participation is open to anybody with an Internet connection. This makes it simple for new members to join the group and support its expansion.
4. DAOs make decisions through a voting procedure, and each participant can provide inputs regarding the choices that are made collectively. Compared to the conventional hierarchical structure, where a select few at the top control all choices, this method is significantly more equitable.
5. DAOs are autonomous organizations having the ability to run independently of a centralized authority. They become incredibly effective because there is no need for middlemen.
DAO contract OpenZeppelin is one such tool that helps you create a perfect DAO smart contract swiftly and accurately. One must not forget that DAO smart contract audit is an important task before the launch of your smart contract which enables you to finetune the finished product before it goes live.
Notable Use Cases of DAO Smart Contracts
Before we conclude, let’s go through some of the use cases of DAO smart contracts.
# Metaverse Decentralization
When it comes to democratized decision-making, using DAOs is essential. A well-known Metaverse platform called Decentraland has developed a Decentraland DAO where owners of the $MANA (the platform’s native token) can vote on the logic of the game.
# Gig DAO
Many DAOs are currently attempting to benefit from one another’s networks by establishing a DAO that focuses on securing gigs for its members. The concept is on introducing the many services (information, layout, policy, etc.) that DAO may provide to the web3 projects and then assign the job to these members.
# Investing based on NFT
The emphasis on NFT-based trading, which has begun to pick up steam with the expansion of the NFT market, is another of the top DAO use cases. Numerous NFT holders may stake their NFTs in exchange for tokens that reflect a small portion of the group’s assets to vote and acquire tokens.
# Fundraising
Most of the crowdfunding campaigns run by DAOs make them valuable outside of the blockchain and cryptocurrency industries. You should consider how DAOs can assist in crowdfunding money to support particular objectives. A clear illustration of how decentralized autonomous organizations might assist in raising money for a specific purpose is the Constitutional DAO.
Conclusion
There may be several use cases since the DAO phenomenon is growing each day. However, working with an expert DAO smart contract development service provider is important. DAO Development paves the way for the future growth of enterprises and commercial and non-profit entities.
If you wish to develop your own DAO platform, connect with Antier today, who have delivered several DAO projects across the world.
