from Decimal

Developing your own DAO is a great solution which allows you to significantly reduce costs inherent in centralized business.

What is DAO?

DAO (an acronym for Decentralized Autonomous Organization) is an organization that is governed by algorithms and smart contracts, but without being tied to a specific law or centralized authority. Its name comes from the idea of an organization without a specific leading figure, as if it were CEO in an ordinary company. In addition, they are transparent, open-access, democratic and decentralized organizations without hierarchy.
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DAO Development and Blockchain

What makes DAOs possible are smart contracts. This is the type of contract that has rules that have been defined in order to function. Because DAO has no centralized authority, its operations are based on a voting process by its members. One could not act without the consent and approval of the rest of the people who make up the group. In addition, no one could change a smart contract if it was already active, since everything was publicly recorded.

Why Choose Decentralized Autonomous Organization Blockchain Development?

As blockchain technology advances, it becomes easier to use and gives users more opportunities to actively participate in DAOs. Here are some of the benefits
1. By being decentralized, DAO participants will have a voice and a vote within the organization.
2. DAOs also have the added benefit of making it easier for communities around the world to communicate and co-build the concept of prosperity as well as in protecting their labor rights.
3. The best part about developing DAOs is that they offer immediate trust and sustainable transparency for organizations to focus on their collective interests. Participants don't need to know each other because the rules of participation are embedded in a transparent, secure, open-source blockchain registry.
4. They simplify the creation of organizations because they only need to be programmed into a blockchain and run. This saves money and time normally used in traditional registries. So, it is a fully cost-effective solution. Decimal as a DAO Development company, specializes in the creation of automated & self-sustainable organizations for any kind of industry-specific needs.

Differences between DAO Platform and Traditional Organizations

The main idea lies in the problem of concentration of power. In the traditional company model decision-making is concentrated in one direction, which hierarchically imposes its orders on the workforce, thereby maximizing profits for shareholders. In recent years, we have seen this model taught in business schools or universities lose public confidence for a variety of reasons, such as:
  • Human failures resulting in corruption;
  • Non-transparency and misrepresentation of financial model;
  • Lack of motivation and engagement in the workspace.
However, DAO allows businesses to modify and improve these things through the introduction of Web3 and an improved distribution of labor within the company.
Hierarchical structure headed by the CEO and other executives.
Management approves proposals and makes decisions behind closed doors.
Employees have to climb the career ladder to advance their careers.
Most employees are compensated with salary and stock.
A flat structure managed by a group of core employees.
Participants submit proposals and publicly vote on them with DAO tokens.
Some DAOs allow anyone to join, while others require a minimum number of tokens. Tokens can be purchased or earned by contributing to a DAO.
Most participants work part-time and are compensated in the form of DAO tokens or other cryptocurrencies.

How does a DAO work?

We can highlight multiple features regarding the working process based on our experience as a company that offers DAO development services. All DAOs operate according to 4 important aspects that give it distinctive characteristics compared to other formats of organizations.
Step #1
The first aspect is the ability to program actions and execute them according to certain parameters, which enables it to act autonomously without the need for an individual or group to exercise power over others in the organization.
Step #2 step
Step #3 step
Step #4 step

How does the process of DAO creation work?

A decentralized autonomous organization uses blockchain to provide self-sufficient rules or protocols. Of course, blockchain smart contracts store these rules, and network tokens incentivize users to protect the network and vote on the rules. The next three steps create a DAO:
  • Decimal Chain Developers must fully understand the governance problem they are trying to code in order to create a successful independent smart contract that will serve as the basis for a DAO.
  • Developers define control tokens, such as monetization, to ensure the right balance between rewarding and punishing malicious behavior.
  • Developers launch a blockchain-based DAO, preferably with the same token rates as the other stakeholders. That way, there is no power imbalance. However, most developers release their stakes over time.

DAO Examples

In simple terms, Bitcoin was considered as the first functional DAO. This is because it has a set of pre-programmed rules that are used autonomously and coordinated thanks to a distributed consensus protocol. To be specific, however, TOP DAO projects in 2022 already have little to do with bitcoin blockchain. There are many examples of decentralized autonomous organizations. However, some stand out for their success.
Compare project
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Uniswap (UNI)
Leading DeFi Protocol With Over $5.5 billion in TVL
Compound (COMP)
Popular Crypto Lending DAO Trading at a Discount
Aave (AAVE)
One of the Best DAO Crypto Projects for Long-Term Potential
Curve DAO Token
Ethereum-based DeFi Protocol for Stablecoins
Dash (DASH)
Innovative ‘Privacy Coin’ Set for a Rebound


Can we consider DAO as the solution to the principal-agent problem?

Yes. One of the most important advantages of DAO is that it solves the principal-agent dilemma. When a system has a structure that allows an entity (agent) to make decisions or perform actions on behalf of another entity (principal), there is an internal risk in terms of goals, priorities, or even access to important system information. This presents a dilemma between principal and agent, and refers to the fact that an agent may act in its own interest. Since DAOs do not allow making changes without a vote, there is no such problem.

What makes DAOs so special?

Decentralization, autonomy, and transparency are the core values of DAO. Decentralization implies that there is no central authority, such as a boss or government, and that the basic principles of a DAO project are established from the beginning by all participants. These rules can no longer be changed without the consent of all parties involved.

What is the Future of the DAO Crypto Concept?

We are still living in the early stages of Web3 development. It's fair to say that DAO adaptation is not yet widespread. But as we've seen in recent years, some projects can attract a very big audience. And people aren't just interested because the project is set up for a good cause. The idea of democratic governance is appealing. And DAOs allow the average Web3 user to make their voice heard.

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