The more you read about cryptocurrency and the many benefits it offers, a recurring concept is the reduced need for human intervention: through the use of blockchain technology like smart contracts - for example - businesses, communities and any organisation can use blockchain to govern themselves. Smart contracts can automate and ensure a transaction is completed trustfully between two parties without the need for an overseeing third, for example. As this concept became real life and was adopted by multiple industries, a more ambitious and revolutionary model emerged: DAOs.

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Decentralised Autonomous Organisations (DAOs) are an alternate model that has genuine potential to become the new archetype. By utilising blockchain tech & smart contracts, this model proposed to automate all processes of a traditional business without the need for centralised human control: tracking inventory, invoicing, payments, projections and changes to the current structure and much more can all be completed autonomously. Because of this, DAOs are heavily linked with the progression of AI (Artificial Intelligence) and other Web3 ideas. It’s easiest to use an example here to outline the basic idea of DAOs:

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A hat shop adopts the DAO model and starts storing data on the blockchain over their traditional system of manual human admin work: all inventory statistics, what is being bought & sold, is now handled by smart contracts so whenever a popular style of hat stocks are running low new orders are automatically made; invoices are created and paid automatically so there is no chance of late payment; the data collected on inventory and transactions means the model can accurately project the amount of stock they will need in future and even similar styled hats that can be offered as a suggestion to customers.

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To put it simply, this DAO hat shop business has evolved to a point where almost no human intervention is needed. All base functions of the business are covered by blockchain and smart contracts, and even accurate predictions based on collected data of how the hat shop can progress are proffered by this system: the hat shop will never be short on stock as this system will automatically purchase new hats when stock gets below 'x' amount; when this stock arrives and is scanned into the system, the smart contract will execute the actual payment to be made to the supplier; and even the next steps to progress and increase profit margins is suggested by the DAO.

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This is just one example of a DAO model in real world business, however arbitrary the main takeaway is the same: DAOs offer a more efficient and secure system. The ability of being able to govern and function automatically and without centralised control is one of the keystones of cryptocurrency, and DAOs highlight the inclusive community aspect also. However, it’s important to note at this point that DAOs are still in their infancy, and most of the information you will hear about DAOs is theoretical. Having mentioned that, the theory is being put into practice by some trailblazers with a mixture of results.

Ethereum (ETH) was the breakthrough blockchain in using smart contracts, which are essentially coded sets of rules that cannot be overridden by individual parties without the predetermined authority. This is an aspect of decentralisation as even the network owners of ETH cannot alter its infrastructure without an agreed consensus. This idea was taken further and implemented into the main decentralised exchange (DEX) on the ETH blockchain: Uniswap (UNI).

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UNI is a great example of the DAO theory working in practice, you can become a ‘member’ of the DAO simply by holding their UNI token: once you own the token, you can proportionally vote on how the organisation is run. Transactions are automated via smart contracts on the UNI DEX, exceeding 100,000 transactions per day. The DEX functions are autonomous, and there is no centralised control - UNI is a great model of a working DAO.

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Decentraland (MANA) is another example in crypto where stakeholders vote democratically on how it is managed, to great success; by holding their MANA token people can partake in these discussions. Fitting to its name, MANA has excelled because of a strong community acting as management in a purely decentralised manner.

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The first DAO, that actually gave the name, was the DAO token. It was swept up in great popularity back in 2016, with over $150 million being raised in ETH. The idea was to create an entirely decentralised organisation governed by blockchain technology, and with the theoretical benefits already outlined in this article it is not surprising there was so much fervor around the DAO. Sadly, it was very short-lived as over 3.6 million ETH was exploited by hackers. DAO was delisted from major exchanges and immediately the concept and technology was questioned. However, this led to other organisations learning from this and running a DAO successfully - like UNI and MANA.

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Amongst all the major technological advancements crypto offers, DAOs are among the most exciting as they have the genuine ability to make any collective organisation run autonomously without the need for human interference. We are still a long way off DAOs becoming the norm, though. But if we see more successful organisations evolve as a DAO the benefits will be too obvious for the world to ignore them; DAOs can change the way businesses, communities and any collective organisation govern themselves.