Ethereum creates the DAO. The first decentralized autonomous organization consists of contracts that execute themselves on the blockchain. They form a company that doesn’t actually exist but still invests money to achieve goals. The genesis of DAO is already one of the largest crowdfunding projects of all time.

DAO. In Chinese philosophy, DAO is the breath that gives life to the universe. Without DAO, not only would everything be dead, but everything would be nothing. If at all.

The DAO in question here is also elusive. Organizations that have no physical and legal existence? An organization is governed not by law and trust but by code. The Decentralized Autonomous Organization consists of smart contracts on the blockchain that execute themselves under given circumstances. It creates a previously unknown class of legal entities: “things” that don’t physically exist but still pursue goals and use the money to achieve them.

Imagine a car that rents itself out. Or a marketplace that manages itself, a sensor that sells data itself, a trading algorithm that invests ceaselessly in its own optimization. Or, as Christoph Jentzsch writes in the DAO whitepaper, more abstractly, “… an organization in which (1) participants manage deposits directly and in real-time, and (2) rules are formalized, automated, and enforced by software.”

You have to let that sink in.

Christoph Jentzsch, by the way, is a full-time Ethereum developer and founder of slock. it. The international startup from Mittweida is developing an Ethereum computer that will become a universal sharing network hardware. But more on that later.

Because what is happening right now — the genesis of the first DAO — is one of the biggest crowdfunding projects ever. So far, 3.67 million Ether have been deposited, and 367 million DAO tokens have been created. Funding is still 18 days away.

So we have an autonomous digital organization with $34.4 million in the capital. We are at the beginning of what Jentzsch calls a “great social experiment”: what will swarm intelligence do with $34.4 million?

The term DAO is no longer brand new. It has long meant decentralized networks that use cryptocurrencies and act like companies — although they have no physical or legal location. Bitcoin aside, DAO is a theory so far. Some Ethereum developers now want to bring it to life.

A look at the DAOhub website:

The DAO is … revolutionary — autonomous — revenue-generating — code.

The time has come to breathe life into the DAO.

The DAO’s mission is to forge a new path of business organization that is better for its members, simultaneously exists nowhere and everywhere, and operates solely through the ironclad, unwavering will of unstoppable code. There can be hundreds of DAOs, and anyone can create one, provided they can put the existing code for it on the blockchain. However, the DAO only exists once:

The DAO is a for-profit DAO that will ceaselessly use the ETH under its control to create value and provide benefits to its members.

Where is the DAO? On the blockchain. Completely transparent.
One of the fascinating aspects of the DAO is that it provides an example of smart contracts on the Ethereum blockchain. If someone needs proof that Ethereum is not just an altcoin but enables something Bitcoin can’t, they may have found it with the DAO.

At first glance, you could think of the DAO as a decentralized investment company. Participants deposit money (Ether), and this is invested as profitably as possible. However, Christoph Jentzsch sees it differently:

The DAO buys things and uses them. My vision is that the DAO can buy and exploit products on behalf of its members. It functions like a company that buys services and turns them into money. The DAO does not invest in a company but buys a product to add value.

Each owner of DAO tokens has a deposit in Ether. With these deposits, the DAO can be entrepreneurial. It can do whatever it wants: hire a marketing agency to develop a website, buy a car to rent via smart contracts, have a computer chip built and sell it, and so on. Anyone who has a DAO token can submit what’s called a proposal, in which they write a service of whatever kind and a smart contract in the blockchain that governs the details of the payouts.

Then, anyone who owns the tokens can help vote on whether the contract goes through. “The turnout has to be at least 20 percent, but can be higher for some decisions. Each token has one vote,” Jentzsch explains. After that, the DAO owns the product and receives the proceeds. It can either have these paid out in Ether or reinvest them.

Everything — from the tokens to the proposals to the votes — is stored as a smart contract in the blockchain and is therefore absolutely transparent and unmanipulable. You can participate directly from the Mist wallet. Whether the DAO makes a profit or loss depends on the decisions its participants make.

“The Dao” was developed and written by slock.it employees, and so far slock.it is one of two vendor offerings for the DAO.

Slock.its ambitious IoT + Blockchain Proposal for developing a Universal Sharing Network has been published on the DAO Forum. At the core of the proposal lies the Ethereum Computer, a multifunctional device being developed to decentralize the sharing economy.

The second currently existing proposal revolves around rentable electric vehicles.

Mobotiq’s vision of modular electric vehicles that can be rented p2p is a perfect fit for blockchain. Integration with Ethereum can enable the development of autonomous, self-rental vehicles.

Given its proximity to slock.It has already been said that the DAO is just a clever move to fund the startup without banks or euros. For Jentzsch, it’s important to note that this is false. Rather, he hopes the DAO will order what slock.it wants to make:

We only wrote the software and are only a contractor. The DAO should become a customer of ours. We wrote a proposal, for the Universal Sharing Network, and if the DAO funds it, it owns it. It can determine how many fees to pay, and DAO token holders can pay without fees in the sharing network.

The smart contracts that are part of the proposal determine the cycles in which slock.it and other suppliers draw money. At the same time, the contract can be terminated by the DAO at any time.

Like any election-based system, a DAO, in theory, runs the risk of a majority tricking. So someone who owns 51 percent of the DAO tokens might decide that 100 percent of the Ether will be paid out to a supplier who is himself. How is this to be prevented?

First, there are the curators who manage the “whitelist.” Only addresses on the whitelist can receive Ether from the DAO. On the other hand, the choice of the majority is not a command:

One can leave with a split. If I don’t like the majority’s decision, I make a new DAO that takes the unused ethers with it. This takes a few weeks, because you also have to write a proposal for it and maybe other participants also want to join.

In principle, you can also use this function to have your Ether paid out. To do this, you have to split off a DAO in which you are the only member and then accept a proposal that says that all the Ether will be paid out to you.

With this principle, participants protect themselves from fraud. At the same time, Jentzsch says, it’s a safeguard to prevent a DAO token from becoming worth less than the Ether it represents.

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Source: https://levelup.gitconnected.com/what-does-the-dao-do-and-how-does-it-work-a7f8bb8b8d36?source=rss——-8—————–cryptocurrency