What is a DAO?
An essential feature of digital currencies is that they’re decentralized and lack a central entity to control them, like a government. The centralized property allows these currencies to enjoy high privacy and security, a feature that standard currencies lack. The decentralization feature of digital currencies inspired the creators of the DAO concept. But before diving deeper into Decentralized Autonomous Organizations, it’s critical to understand what they are.
DAOs are community-led organizations existing in the blockchain world. Unlike legacy orgs with centralized authority, DAOs are governed by the group that forms them. The rules governing the decision-making process of a DAO are coded in a smart contract.
DAOs recognize community members who contribute to the organs’ growth. The incentives members get for their efforts are coded in the digital agreements. Members are rewarded with a governance token upon submitting proposals on the changes that should be introduced.
What are the benefits of developing a DAO?
The key benefits of DAOs emanate from decentralization and community governance. DAOs are particularly beneficial in the Metaverse space because the Virtual Worlds are growing and require the input of various members. Here are the primary benefits of DAOs:
- Decentralization: A prominent feature of DAOs is that they’re decentralized. Their guiding rule is attaining the maximum distribution level by depending on community involvement. Unlike legacy organizations that depend on the CEO and board of governors for decision-making, DAOs rely on the input of community members. So, DAO members submit proposals on the changes they wish to make.
- Community participation: DAOs act as a venue where like-minded people worldwide meet and work to attain their objectives. Members only require a governance token and internet connection to hop into Metaverse and get involved. Active participation creates a sense of ownership in each member, leading to innovative and disruptive ideas.
- Use of smart contracts: The rules of a DAO are written in a smart contract and enjoy all the attributes of blockchain technology. For example, smart contracts are unalterable and secure. The computer code removes the need for human intervention.
How Metaverse and DAO converge
In Web2, a few behemoths control user data and use it to do business. However, metaverse developers overcome the challenge by using blockchain technology. Blockchain is a decentralized ledger that stores user information in distributed servers. Through decentralization, individuals in Metaverse can possess sections of the virtual worlds they help develop.
DAOs help members to have a fair influence on their preferred virtual worlds. Communities in the Metaverse expand organically to meet the needs of their owners who manage them. Here are the critical points of convergence between DAOs and the Metaverse:
Financing projects in the virtual worlds
Building virtual worlds (Metaverse) is an expensive undertaking requiring the contribution of many people. DAOs fulfill this purpose because they help pool funds for joint investment. These blockchain-based orgs can help support projects in crowdsourcing to finance their programs.
Investing via non-fungible tokens
DAOs can help members in the Metaverse to pool resources and invest in blue-chip NFTs. A DAO help NFT developers nurture a sense of community when they participate in various activities and raise funds to invest in multiple projects. Community members submit proposals for a vote when they want to introduce changes to the NFT-enabled DAO.
Decentralization of the virtual worlds
DAOs play a critical part in promoting the spirit of decentralization in the Metaverse. Multiple projects in the virtual worlds use DAO to strengthen the idea of decentralization. For example, Decentraland allows members to vote for the changes they require via the virtual reality ecosystem.
Decentralization is a critical Metaverse trait that distinguishes it from Web2 internet. The virtual world can only achieve the goal of decentralization if its users possess and govern it. And that’s how decentralized autonomous organizations (DAOs) come in handy. Here we’ve explored the significant points of intersection between DAOs and the Metaverse. You can also leverage the opportunities of DAOs in the Metaverse to grow your business. At Topnotchcreatives, we help you teach your target audience target about your DAO. Contact me if you need an article, blog post, or press release about your DAO.