Ready to stop researching online: what does DAO stand for and why is it important? If yes, we’ve got you covered. Learn what you should know here.
Did you know Bitcoin’s market capitalization hit $1.2 trillion this year? The price of Ethereum also eclipsed a value of $4,000. Overall, cryptocurrency trade volume grew to $130 billion per day!
With all of these transactions comes the need for security and encoding rules. DAO intended to provide that without any bureaucracy or hierarchy. But it has had its share of hurdles over the years to accomplish this.
What are DAOs and why is it important for you to know about this software? The following guide will explain just that. It will cover why developers created it, its turbulent history, and the future ahead.
What Is DAO?
DAO stands for decentralized autonomous organization. The DAO meaning relates to automating decisions and expediting cryptocurrency transactions.
DAO launched in April 2016 to eliminate human error and manipulation of investor funds. The software left the decision-making to an automated system.
It intended to allow investors to send money from anywhere anonymously and give them tokens for voting rights.
DAO wasn’t affiliated with any specific nation which is why it was considered decentralized. It was powered by the Ethereum network.
The code used in the DAO had several unforeseen issues. Unfortunately, in June 2016, a hack caused $50 million worth of Ethereum to be stolen from the DAO before the hack came to a halt.
The security error was found in the slock code, and not in the basic DAO technology. However, the hack did hurt people’s trust in Ethereum coins and DAOs.
There were several arguments over the DAO’s future after the devastating hack. In September 2016, several major digital currency exchanges delisted the DAO token. This officially ended the first intended version of DAO.
The Future of DAO
Decentralized Finance grew in popularity during 2020 and has renewed interest in DAOs. In 2021, The Maker Foundation announced it was turning over operations to MakerDAO and would switch by the end of the year.
Concerns about legality, security, and structure are being observed closely. However, many investors and analysts believe this type of organization will make a comeback soon and even replace traditional business structures.
DASH is an example of a current decentralized autonomous organization. The popular digital currency’s governance resembles a DAO and it structures its budgeting system in a similar fashion.
Additional DAOs will more than likely enter the crypto field in the coming years. Ethereum enthusiasts also predict that the DAO of DAOs will rise to prominence sooner rather than later.
Dao Is Important for Crypto
Now you know what a DAO is and why developers created it. It’s an important system that will minimize error and prevent manipulation. This vision makes it popular with Ethereum investors worldwide.
Though it hit a major snag early in its existence, developers have learned from these mistakes and decentralized autonomous organizations are on the rise again. It’s safe to say that the future is looking bright for DAOs.
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