Inspired by the decentralization of cryptocurrencies, DAOs are entities with no central management and are basically corporations the place its bylaws are written in code that mechanically execute every time a set of standards are met. This promotes reliability, safety, and belief within the system.
Good contracts are the core of the DAO, which guarantee the transparency and safety which DAOs base themselves on.
Blockchain and sensible contracts are governance applied sciences which have the potential to supply larger ranges of transparency whereas lowering paperwork with self-enforcing code.
(extra about sensible contract on this text — https://medium.com/@mirev89/trust-and-security-in-the-blockchain-part-3-blockchain-101-ad67784b2cd6)
Selections get constructed from the bottom-up, ruled by a group organized round a particular algorithm enforced on a blockchain therefore making their functioning totally autonomous and clear.
As they’re constructed on open-source blockchains, anybody can view their code, and anybody also can audit their built-in treasuries, because the blockchain information all monetary transactions.
DAOs deal with an age-old downside of governance, which political scientists and economists consult with because the principal-agent dilemma.
This happens when the agent of a corporation has the facility to make selections on behalf of, or impacting, the principal — one other individual or entity within the group.