DAO (Decentralized Autonomous Organization) - Organizational form, governance model, success and failure cases - web3 series Section 18

DAO, the full name of Decentralized Autonomous Organization, is a new organizational form in the Web3 era. When I participated in community governance and investment research, I discovered that DAO is not just a concept, it has unique features in project management, fund allocation, and decision-making mechanisms. Today, I would like to take a deeper look at DAO’s organizational form, governance model, and the success and failure experiences of several real cases with you.

The organizational form of DAO

DAO is an organization that relies entirely on blockchain and smart contracts to operate. Its core features areDecentralization, automation and transparency.

main form

1. Investment DAO: For collective investment or venture capital management, such as The LAO.
2. Product DAO: Products such as Aragon DAO are jointly developed and maintained by community members.
3. Social DAO: Aggregate members based on interests or topics to determine community activities and fund use, such as Friends With Benefits (FWB).

👉Case 1: The LAOThe LAO is an investment DAO that manages funds through smart contracts, and investment decisions are voted by currency holders. Participants can earn returns on investment but must bear investment risks.

Inspire: DAO can allow global users to participate in decision-making, but it needs to design an incentive and responsibility mechanism.

governance model

The core of DAO lies in governance, that is, how to allow members to make decisions together.

Mainstream governance model

1. Token-based Governance: The more coins you hold, the greater your voting power.
2. Reputation-based Governance: Allocate voting rights based on contribution or historical behavior.
3. Delegated Governance: Members can delegate voting rights to representatives.

Voting mechanism type

• On-chain Voting: Voting and results are recorded directly on the chain.
• Off-chain Voting + On-chain Execution: Like Snapshot, voting is conducted off-chain and on-chain operations are performed.

👉Case 2: MakerDAO’s governance mechanismMakerDAO uses MKR tokens for governance, and token holders can vote on key indicators such as risk parameters, mortgage rates, and stability rates. In 2019, when ETH plummeted during the black swan event, the community quickly adjusted the mortgage rate through voting, mitigating the risk of liquidation.

Inspire: Governance design directly affects the risk resistance and decision-making efficiency of DAO.

Success and failure cases

Success Stories

1. u䱱swap DAO: Through the UNI token governance protocol upgrade and liquidity reward scheme, community participation is high and decision-making efficiency is high.
2. Yearn Finance DAO: Automatic revenue aggregator, the community proposes and implements optimization strategies to achieve stable growth in protocol revenue.

Failure case

1. The DAO (2016): The first-generation investment DAO was hacked due to smart contract vulnerabilities, and about $50 million was stolen.
2. Failure governance DAO: The voting participation rate of some small community-based DAOs is extremely low, resulting in funds being unable to be used effectively and members losing confidence.

Inspire: The key to the success or failure of DAO lies in smart contract security, incentive mechanism design and community activity.

Frequently Asked Questions (FAQ)

Q: What is the difference between DAO and traditional companies?

A: DAO has no board of directors and executives. All decisions are executed by smart contracts, and members vote to determine the direction. It is completely decentralized.

Q: Can I participate in governance by holding tokens?

A: Generally yes, but voting rights and influence depend on the number of tokens or reputation points.

Q: Will the decision-making efficiency of DAO be very low?

A: It depends on the voting mechanism and community activity. Delegated governance can increase efficiency but may reduce decentralization.

Q: How does DAO ensure the safety of funds?

A: Smart contracts must undergo professional auditing, and multi-signature wallets and insurance mechanisms can be introduced to reduce risks.

Summarize

DAO is an important innovation of Web3, which allows global users to equally participate in organizational decision-making and fund management. From investment type to product type to community type, different DAOs have different goals and governance methods. Successful DAOs often have sound governance mechanisms, active communities, and secure smart contracts; failed DAOs often ignore security, incentive mechanisms, or community participation.

I personally believe that DAO has great potential, but to truly operate well, it needs to comprehensively consider multiple factors such as technology, governance, incentives, and legal compliance. Understanding the operating logic of DAO will not only help you participate in it, but also provide a reference for future Web3 projects.

💼 LIKE.TGThe official overseas marketing tool is now available for free trial!It integrates multiple powerful functions: residential agent IP, fan promotion, number segment screening, customer acquisition system, translator, counter, etc. to efficiently expand overseas markets!

📞 Contact official customer service to obtain trial rights:

• Telegram customer service:@LIKETGLi
• WhatsApp customer service (Enron):Click to contact

🎁 Join【LIKE.TGecological chain】Global resource interconnection community, unlock exclusive benefits, industry tips and real-time support!