New governance system, community involvement, simplified investment and payment… Decentralized autonomous organizations aim to reinvent collaboration.
DAOs (Decentralized Autonomous Organization) are meant to be to blockchain what companies are to business. In its design, a DAO is built and governed by smart contracts, which has the effect of dispensing with any human intervention in order to favor operational autonomy based on tokenization, namely the digital representation of an asset on a blockchain. As a reminder, smart contracts are protocols that will manage the automatic negotiation and execution of a contract.
In principle, a DAO does not require a relationship of trust because its members may not know each other, but the simple fact of being part of the same project makes it possible to link personal and collective interests. “The first DAO is Bitcoin, that is, a decentralized and autonomous organization, except that it requires limited involvement from its participants,” recalls Laurent Perello, blockchain expert at TRON DAO.
The very concept of DAO also dispenses with hierarchy. In practice, when a vote is submitted to the members of the organization, they have a right that does not depend on a status, but on a participation fee in the project developed by the DAO. Specifically, the more a member of the organization blocks tokens on the platform, the greater the weight of their vote, the proportions vary, however, according to the projects. So-called inactive members have the possibility to delegate their decision-making power to the benefit of an active member.
Initially, the interest of the DAO model is to federate and involve collaborators around the same project, and that “in a few minutes, where the creation of a company takes between a few days and 6 months. , temporality is totally different on the blockchain,” continues Laurent Perello.
For a project to take the form of a DAO, it must create or own its own tokens. This is particularly the case for the Angle protocol and its eponymous token. In parallel, the organization has developed a euro-backed stablecoin, AGEURO. “This form of financing facilitates the payment of our taxpayers, and also allowed us to raise 5 million euros that we could invest in other protocols”, justifies Pablo Veyrat, CEO and co-founder of the Angle protocol. Note that TRON DAO also launched its own dollar-backed stablecoin USDD this Thursday, May 5th. This relationship between DAO and stablecoins allowed the emergence of many projects, and stimulated the stablecoin market, with a total capitalization of 180 billion USD. A fertile ground that promotes a new form of collaboration “reliable and at scale”, according to Laurent Perello, and that also offers more agility to organizations that adopt this decentralized model.
The other important point supported by the blockchain ecosystem is the security aspect. In this case, smart contracts will guarantee compliance with the protocol, an alternative that “allows the interests of the project to take precedence over individual interests”, observes Laurent Perello. However, some original smart contracts may need to be modified. Again, this requires a community vote. This is a new form of governance, completely transparent, in that the weight of each individual’s vote is defined by a smart contract.
Finally, community involvement around the same project also allows for greater resilience in the face of adverse events. “Two or three years ago a hack could destabilize an entire market by an average of 30%, today it has become anecdotal,” says Laurent Perello. This is explained again by this notion of collective interest, through which the actors involved will group the losses to compensate those who were affected. On the other hand, the developers involved will also make it possible to identify and fill any gaps in the protocol, “the flaw allows for improvement, and the constraint pushes it to evolve”, analyzes Laurent Perello. “Any company can switch to a CAD model,” adds Pablo Veyrat. Taxi companies, marketplaces or even venture capital, CAD applications are destined to develop in more and more sectors, carrying with them the utopia of a new way of collaboration.