A Decentralised Autonomous Organisation (DAO) operates through smart contracts on the Ethereum blockchain. DAOs aim to establish a new form of organisational structure, using code to automate governance, eliminating the need for traditional management and intermediaries. DAOs are democratic, with decisions made by stakeholders based on their token holdings.
The DAO, a specific DAO project, raised a record $150 million in crowdfunding in 2016. However, a flaw in its code was exploited, leading to the theft of $50 million worth of Ether. This event, known as the DAO Hack, resulted in a controversial hard fork in the Ethereum blockchain to recover the funds.
MakerDAO is another prominent DAO project, which created the DAI stablecoin. DAI is pegged to the US dollar and backed by collateral assets in the Maker system. MakerDAO’s governance model allows DAI holders to vote on system parameters, ensuring the stability of the DAI coin.
DAOs present a revolutionary approach to governance and decision-making, with potential for significant impact on business and society. Nonetheless, they also pose challenges and risks, as demonstrated by the DAO Hack. Future developments in this field require careful consideration of these factors.
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