Thread by @FinFloww

What the F*** are DAOs ? What's this new trend in the crypto space everyone is talking about on twitter?

Let's understand it easily in a thread🧵

A DAO is a Decentralised Autonomous Organisation. But for actually understanding a DAO we need to recollect what an "organisation" is in the first place?

It's simply a group of people, doing certain tasks together towards a certain purpose. Now what would be an "autonomous organisation"? The same tasks which were done by people will now be done by a computer code.

The unique part about a DAO organisation is it's completely decentralised. It's not been run by anyone and it's completely transparent.

But this doesn't mean humans won't have any contribution in a DAO. A DAO is an organisation working on something to accomplish a purpose right? So, all those tasks are done by code written by engineers.

Since the tasks are required to be done again and again, they are written on the smart contracts. A smart contract is a simple self-executing terms of agreement written in code.

These tasks require multiple chains⛓️ of smart contracts to be executed.

Let's understand this concept better with an example: suppose you're going to a coffee shop☕, you go onto the counter and ask the person there for coffee.

That person feeds it on a computer, it gets recorded in a central database and he asks you to pay.

You pay the money, that person adds milk, coffee, and makes the coffee using the machine.

Now suppose this Coffee shop was a DAO, there won't be any person working there.

You'll have to give your order to the system,

the system will understand what kind of coffee it is and make the coffee machine make it.

Meanwhile the system will charge you too.

All of this done without human intervention. How was it possible? because all these set of tasks were programmed in the coffee DAO using smart contracts.

If you choose Iced Latte, it would know what kind of instructions to give the coffee machine to make that particular coffee using the set of instructions in the smart contract.

How does a DAO get funds to function? Every organisation needs funds, either through the activity they are doing or through external resources.

DAO gets it through people who buy the DAO's crypto tokens.

They basically become stakeholders of the DAO.

They even have voting rights for any kind of decision the DAO is making.

If stakeholders of the coffee shop DAO see that the coffee machine is getting old and needs to be replaced, then that decision will be taken by vote. If the majority votes for getting it replaced, it will get replaced.

Very recently a group of crypto investors made a DAO to buy one copy of the original USA Constitution.

They collected 3 Million dollars through the DAO to auction for that copy.

Their plan was that they'll allow people to own and govern what happens to the original copy of the US Constitution and have voting rights on where it will be placed, like which museum and all.

Of course coffee house might not be a great usecase 😂 but there are multiple great use cases coming up. We'll look out for them and keep telling you.

What do you think about DAOs now? Is the concept clear?

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