DAOs are powerful because they create incentives and a sound framework for thousands of people to organize without the need for formal roles or hierarchy.
As a result, open source projects like cryptocurrencies are able to scale their operations much more quickly than a traditionally governed organization like a foundation/non-profit or a company.
For example, Uniswap is able to process nearly the same transaction volume as Coinbase — despite the fact that it has an order of magnitude less employees than that of Coinbase.
This is possible because Uniswap is operated by a DAO — where the core development team and any $UNI holder can collectively decide on how they want to advance the protocol.
Since UNI holders have a financial stake in the future of Uniswap, they are better incentivized to participate in the governance of the project as well.
This alignment allows UNI holders to simultaneously be an investor, operator, and user of the protocol.
Outside of human capital efficiency, DAOs are inherently the internet-native way to manage projects — built from the ground up on Web3 principles like open, permissionless, and decentralized.
As a result, DAOs are more democratic than a traditional private company because anyone can get a say in the roadmap of a protocol — versus just the Board having that power in a private company.
DAOs allow holders to simultaneously be an investor, operator, and user of the protocol.
For the first time ever, absolute strangers can coordinate hundred of millions of dollars and build a product that serves millions of users without ever meeting in-person, signing a legal document, or honestly even knowing each other’s names (many DAO members have pseudonyms like their Twitter handle or just their ETH address).
And the DAO prevents any bad actors. There’s no way for a member to run away with the DAO’s money — at least not the extent that we’ve seen in traditional startup structures.
Because the code is law.
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Source: https://jimmy-chang.medium.com/daos-are-the-next-best-thing-4efaff6662f6?source=rss——-8—————–cryptocurrency
