What is a DAO? | Explained
DeFi - May 25, 2021
A DAO is a decentralized autonomous organization. You might’ve heard of the Maker DAO on Ethereum. This is one form of a DAO, and there are also so many more. In this video, we break down what a DAO is and why DeFi needs DAOs.
DAOs are central to the decentralized finance or DeFi ecosystem. It refers to an autonomous organization created for a specific goal, with no central authority. DAOs are based on an open-source code, or a public blockchain that everyone can enter.
It is created as a self-governing body. There is no leader, one authenticator, and authority. it is distributed to members of the organization. The governance is voted on based on tokens. These tokens are locked in a treasury, which has a proposed supply schedule. In order for new members, to have a say in the DAO they have to buy the tokens. The greater the value of the DAO, the greater the value of the token. This promotes the gamification of the community.
The most popular DAO in the cryptocurrency world is Maker on the Ethereum Blockchain. It is behind the MKR cryptocurrency and the stablecoin DAI. So many DAOs are also springing up in DeFi and NFTs.
The members of these DAOs decide which currencies to invest in (goal), based on a vote (token), and are self-governed (autonomous).
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