Decentralized Autonomous Organizations (DAOs) are a relatively new concept that’s starting to gain traction in the blockchain space. They’re basically a combination of smart contracts and computer code that lets people create their own decentralized governance protocol without relying on non-blockchain technology like voting or polling.
What is a DAO?
A DAO is a decentralized autonomous organization — a new type of organization that exists only in the digital world. Its decisions are made by groups of people who have invested in it, and it can be used for governance, fundraising, or other purposes.
Benefits of creating a DAO.
There are several benefits to creating a DAO, including the following:
- Decentralized organizations are more efficient and transparent than centralized ones. As with other blockchain-based solutions, a decentralized organization cannot be altered by any one person or group of people. This allows for greater efficiency and transparency since all members can see how funds are being used and processed.
- Decentralized organizations are also democratic in nature because they allow all members to vote on key decisions about how their funds should be allocated or distributed across projects or tasks. This means anyone who owns tokens (which we’ll discuss later) has an opportunity to vote on matters that affect their investment in this entity’s future success.
- Finally, decentralized organizations are more resilient than their centralized counterparts because they don’t rely on a single point of failure like servers located within one physical location where there may be natural disasters such as earthquakes or floods which could cause irreparable damage by destroying physical equipment containing critical data needed for operation management purposes only.
Creating an Ethereum DAO in 4 steps
Step 1: Understand the basics.
A decentralized autonomous organization (DAO) is an entity or company that is run by rules encoded as computer programs called smart contracts. The idea behind a DAO is to use technology to provide a decentralized management structure in lieu of the traditional hierarchical setup.
In order for this concept to work, you will need to have access to the Ethereum blockchain, which means that you will need some ETH (Ethereum tokens). You can buy it on any cryptocurrency exchange and transfer it into your account on MyEtherWallet or Mist wallet.
Step 2: Download the Ethereum client.
- Download the Ethereum client.
- Make sure you download the right version for your operating system.
- Install the Ethereum client on your machine. This can be done by downloading an installer
- Run geth –version in a terminal window to check that everything went well.
Step 3: Create an account with ether.
There are two main ways to get an account with ether. The first is to buy it from an exchange, which is a service where you can exchange fiat currency for ether, and vice versa. You can also join a mining pool group where you share computing power with other people to mine for bitcoin and alt coins (more on that later).
Buying from an exchange has several advantages:
- It’s easy to do if you have some money available in your bank account or credit card balance.
- You’ll be buying your ether directly from someone who already has some stored value there, so it’s probably safer than if you were doing it yourself at home by downloading the Ethereum client software onto your computer and trying to mine some coins at home without anyone else involved.
Step 4: Code it!
- Create a smart contract.
- Write the code in solidity: The smart contract is where you put all of your hard work into creating a self-executing, autonomous organization that runs without any interference from humans or third parties. You can use any development framework you want—Truffle, Remix, etc.—and write your code in solidity (a programming language similar to JavaScript). Just make sure that you test first before deploying anything to the main network!
- Use Testrpc: Testing on Testrpc will allow you to build and deploy contracts without spending real Ether or gas costs until they’re ready for prime time. It also provides an environment where changes are instantaneous rather than waiting hours for new blocks mined by miners across the world once deployed onto mainnet.* Run tests and deploy to main network: Once everything is tested thoroughly enough (and I know how much everyone loves writing tests), then go ahead and deploy it onto mainnet.
You can create your own decentralized governance protocol on Ethereum.
The core of the idea behind DAOs is that they are autonomous, self-governing organizations that operate through rules encoded as smart contracts. A DAO consists of a digital ledger and its corresponding operations, but these are not limited to traditional financial transactions like payments or receipts; rather, they include any sort of automation like voting procedures or decision-making rules. This means that a DAO can be used to manage and automate anything from a simple club meeting agenda to complex business processes within an entire company’s workflow.