Written by Shivashish Yadav on   -  3 min read

What is DAO (Decentralized Autonomous Organization)? And how does it work?


Have you ever thought that such a company or organization is being run by such people who live in different parts of the world, and those people do not know each other among themselves? It may sound strange, but this is happening with the help of DAO, all this is possible. Where rules are made with the help of codes that run automatically with the help of blockchain.

Now do not confuse you much, with the help of this blog we understand what is DAO? And how does it work?

What is DAO (Decentralized Autonomous Organization)? And how does it work?

DAO is an organization that runs according to the rules created through the code and that code runs on the blockchain, as well as this code is present in the public, i.e. anyone can read these codes. The special thing about DAO is that no one party has control over it, nor can any government control it.

DAO is run by its community i.e. DAO will work according to whatever decision the community will take together, and it is all automatic, every community member is given a token so that it can be known that whoever has contributed to the decision-making It is given that he should be a member of the community.

In simple words, DAO governs so that the power that is not with any single party like ordinary centralized companies or with board members, etc., so that the organization can be saved from manipulation or wrongdoing. Is. The community members of the DAO together decide on all these projects or how the organization's money will be used.

Voting is done to decide in DAO, and it is necessary to have a token of that organization for voting, we take the example of Bitcoin, let's assume if you want to bring some changes in the network of bitcoin, then you have bitcoin first. Voting will be done after that and if all the members of the community agree on your idea, then work will be done on your idea.

But if the members of the community vote against your idea, then your idea will be rejected at the same time.

How does DAO work?

The rules of DAO that make it one of his most important terms which is one of the community members, DAO makes it through Smart Contracts, if you do not know about Smart Contract, then I have written an article on that where I have explained. What is a Smart Contract and how it works?

These Smart Contracts are available in public and anyone can read the codes of these contracts and know-how DAO works in a decentralized organization. After the smart contract is ready, it is put in the blockchain so that the organization can be saved from any kind of manipulation or wrongdoing. Once the rule is created through the code in the DAO, no one can change it again.

No one can change the rules of the DAO until the community members vote on it and agree together, so it is very important for the community to agree to change the rules of the DAO.

Any organization that works on DAO always takes out a token of its own, through which it raises the funding from which the community members run that organization. According to the number of tokens who have, they have the power to vote.