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The way to the decentralized world economy: What are DAOS?



 Cryptocurrencies should be familiar to everyone by now. In addition to  NFT and Smart Contracts, DAOs are now becoming more and more popular. DAOs, which stands for "Decentralized Autonomous Organizations", are possibly the "next big thing" in blockchain technology. In today's article, we'll enlighten you on what DAOs are, how they work, and how you can benefit from them.


What are DAOs?

A DAO is comparable to a listed company in which investors can invest. Shares in a DAO are not measured in shares, but in tokens. Each member of a DAO thus has a certain number of tokens of the DAO. According to its proponents, the DAO should generate returns. This could happen, for example, by buying and selling cryptocurrencies. The return that the DAO generates belongs to the shareholders. The same principle applies here as for a stock corporation. The more tokens (=shares) you own, the greater the share of the profit generated by the DAO. The profits of the DAO can be reinvested or distributed to shareholders. Here, too, the shareholders decide what happens to the money.

Due to the democratic voting rights of the shareholders and the absence of a CEO, DAOs are supposed to lead to a decentralized economy.


How do DAOs make money?

As a rule, the developers first earn money with a DAO. Through rounds of financing from investors, the developers collect money for the project in order to be able to finance it. Investors can later make money by selling the shares of the DAO they acquired early on if it has appreciated in value. The various projects show the possibilities offered by DAOs:

What known DAOs are there?

MakerDAO

MakerDAO is one of the most popular DAOs. MakerDao has raised more than $8 billion in funding since its inception in 2014! The project is now considered fully autonomous. This means that the members can decide for themselves where the journey of the project should go.


PleasrDAO

Another well-known DAO is PleasrDAO. PleasrDAO aims to source cultural, physical objects and sell them as NFT s. Members of the DAO can thus benefit from the increase in value of rare art objects. This DAO could be very interesting, especially for private individuals, since rare works of art are usually too expensive for private purchase. A look at the PleasrDAO site is definitely worth it! The project attracted attention only last year after acquiring artist Wu-Tang's CD.


CityDAO

The CityDAO project wants to unite the virtual and physical worlds and form a kind of metaverse. The aim is to create a virtual city whose administration is in the hands of the citizens, i.e. the shareholders. The DAO has already acquired physical land in the US state of Wyoming!


How to buy DAO tokens?

To purchase DAO tokens, you first need a wallet. The Coinbase wallet is ideal for this. Often the tokens can only be bought with Ethereum. In order to purchase DAO shares, you must first exchange your cash for "forex", i.e. Ethereum. Then use your broker app to find the relevant coin and enter the amount you want to exchange into DAO. The value of your DAO will now increase according to the general requirements of the market. Supply and demand. If your DAO community does good business, the demand and thus the value of your tokens usually increases.


Will DAOs prevail?

That cannot be said at the moment. It is almost impossible that the real world economy, with all its companies, products and services, will completely move into the virtual world. However, it is possible that small projects and ideas could be formed and developed via DAOs in the future. Especially for start-ups, this could be an interesting alternative to venture capital funds to get capital early. DAOs will probably prevail in the crypto world, and the digital, autonomous companies could also become interesting for the Metaverse. One should not oversleep this trend, but many projects should be treated with caution. As so often at the beginning of an innovation, there is a gold rush mood and exuberance. Fraud is usually not far away.

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