A Decentralized Autonomous Organization (DAO) is an entity with no central authority. Decisions are made from the bottom up and are governed by a community built around a set of rules integrated into blockchain technology.

DAOs are internet-based organizations owned by their members and collectively managed by them. In this model, founding members agree on rules and contracts encoded on the blockchain through smart contracts, and decisions are made collectively.

“Technology has come to change many of the ways to carry out highly routine activities. DAOs have been created as mechanisms for decentralized decision-making,” says Hector Torres, managing partner of the firm, regarding the use of this entity.

While they started in internet forums and among blockchain and cryptocurrency enthusiasts, the structure of DAOs can be an excellent option for any distributed and guided company.

“A DAO can perfectly be structured to fulfill the role of a Board of Directors for making strategic decisions in a business. In this way, technology makes the administration of a common company more efficient,” our specialist assures.

The fact is that there is no set organizational structure that a DAO must adhere to; they can be modified in their execution to accommodate the context and size of different companies, from a large corporation to small businesses.

“Many people liken it to a digital company, but if we look at it within our business structure, what we have is a way to make decisions,” says our expert on New Technologies and businesses.

To implement it, Torres explains that you must have established goals, ask yourself which activities can be automated, and which areas of the organization cannot be subject to the DAO.

Once the above is defined, certain mechanisms will be used to execute it. Firstly, a Smart Contract must be created to define the ability to program actions and make them happen according to the established parameters.

The second tool is the consensus protocol to ensure that decisions are made within the DAO and are made collectively. This way, nothing outside the organization can influence the decision made.

To comply with consensus, the company can issue a governance token that will be given to the members of the company, enabling them to vote on the organization’s decisions.

All decisions will be recorded on the blockchain, creating a digital ledger, ensuring security, and making each change clearly recorded for all to see.

While during the funding phase, the DAO may not be entirely autonomous or independent of its creators, over time, all its processes are subject to the decisions of the key actors.