This article is intended to provide a somewhat thorough introduction to DAOs for beginners. It’s over almost 18K words (\~1 hour to read) and is organized into 8 parts, which are summarized below for the tl;dr crowd:
1\. **What is a DAO?** A DAO – or *decentralized autonomous organization* – is a blockchain-based organization that may replace the modern corporation. Unlike a traditional corporation, no single person or group owns or controls a DAO and they rarely have executives or managers. Instead, they are **owned and operated by members** who make decisions democratically (much like a modern-day cooperative).
2\. **The Problems with Traditional Corporations:** While they have greatly benefited society in several ways, corporations are relatively inefficient – multiple layers of management make them slow, bureaucratic, unimaginative, opaque and wasteful. In addition, they are generally constrained with a myriad of financial and legal regulations.
3\. **The Benefits of a DAO:** Proponents argue that DAOs will retain all of the benefits of a traditional corporation – namely trust, security and growth – while being much more open, efficient, flexible, transparent and democratic (in fact, Mark Cuban called them the **“ultimate combination of capitalism and progressivism”**).
4\. **How Does a DAO Work?** DAOs use blockchain technology to store their own funds and smart contracts to enforce their own laws – meaning that they don’t have to rely on traditional intermediaries such as banks or courts. As such, DAOs **largely operate outside of the purview of the existing financial and legal ecosystem**, allowing them to eliminate many of the costs, restrictions and regulations imposed on conventional organizations.
5\. **DAO Ecosystem:** There are nearly 5,000 DAOs today representing almost 4 million members. In aggregate, these organizations **hold nearly $8B in their treasuries** and span a wide variety of use cases including investments, charity, entertainment, worker collectives and social clubs.
6\. **DAO Tooling:** DAOs rely on a variety of communication, fundraising, governance, treasury management and compensation tools to operate efficiently.
7\. **Problems with DAOs:** Critics argue that DAOs will be inefficient, expensive, prone to crime and represent a legal and regulatory nightmare.
**8. Why DAOs will Eat Corporations:** DAOs are a truly disruptive innovation that **have the potential to grow 10,000x.**
Keep reading to dive into these topics... :point\_right:
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