A DAO empowers its community members with voting rights and allows investors to send, receive and store value globally, automatically and anonymously.
For years, automated systems have been viewed as a way to reduce annoying hurdles to humans, such as dealing with lengthy and burdensome traditional bureaucratic systems. A DAOs’ purpose is to primarily to help resolve such issues and encourage humans to focus on better productivity and other more rewarding aspects of an organization.
A DAO’s automated system does not require a traditional central management, which is more vulnerable to failure, human error and manipulation.
In terms of real-world applications, what can a DAO do?
The lack of hierarchical management allows the organization to have different applications. Besides the typical crowdfunding function replacing venture capital firms, a DAO can be helpful to incentivize and reward independent freelance professionals with proposed funds raised across the organization. Charities can have their donated funds approved and secured through a DAO.
Another function that has been expanded more recently is the creation of a DAO as a network of digital assets on-chain. For example, parcels of lands represented by NFTs can be owned collectively by the DAO or by individuals.