What is the DAO?

the dao logo

The DAO is a Decentralised Autonomous Organisation.

That means that no one single person or small group of people should in theory have control over the DAO actions and only all the token holders or financial contributors can decide the direction of the Organisation.

The contributors or token holders can vote and submit proposals and once a majority decision or consensus is reached the organisation will have to do as instructed. This is Decentralisation.

It also means the organisation lives on programmable code on the Ethereum Blockchain and will always execute exactly as the code is intended. Therefore it is Autonomous.

The code that underpins the DAO can be inspected and checked to ensure it will execute as proposed.

The DAO is a project formed by the founders of Ethereum to raise capital for more Ethereum based projects that have real world use cases.

Profits and returns will in theory be distributed once projects that are funded by the DAO mature and start to earn revenue, as long as the token holders vote for it.

Will it be a success? Time will tell.

What are the Risks?

The entrenched powers could see this as a threat and are incentivised to sabotage each real world company that develops organisations from the DAO funding.

This smells and feels like a share capital raising (despite no one using the words) and is a highly regulated market. Regulation stifles competition as it raises the barrier to entry in any market. This however is one of the advantages of Ethereum and Blockchains as they exist outside this monopolistic governance system.

Dividends are not likely anytime soon as all projects are likely to be for long term value. Companies adopting real world use cases with new technology take time to develop.

What are the opportunities?

This could be like investing in a fund at the seed capital stage that invests in Google, Apple and Microsoft all at once while they are still in the founders basement.

There is likely to be some way to exchange tokens soon and this means instant returns and value creation may be possible.

The entry price into the DAO is going to increase after the initial funding round so value should be instantly create-able.

The DAO itself can’t be shut down unless the internet and every computer running a node is compromised or turned off. ( see Can Ethereum be Shut Down? )

What now?

With this innovation raising upwards of USD150m this is set to become the largest ever crowd funding by far and it is hardly surprising the mainstream media has largely ignored any reporting on this to date.

Once the media does report (how can they ignore it) , surely the DAO will only receive more investment and Ethereum gain more attention for its obvious opportunities.

This should raise the bar further in Ethereum innovation and we could start to finally see some real world use cases come to fruition ( see Is Ethereum gambling to explode?

Is you company interested in integrating Blockchain Technology, Ethereum or looking for to raise funds for a DAO project ? Then please consider our friends at GoldCote Consulting who specialise in Blockchain and DAO technology consultation.  Check out their services here www.goldcote.com/service

Whats do you think? Have your say.