Decentralized Autonomous Organization (DAOs) & Continuous Organizations (COs)
Decentralized Organizations and Continuous Organizations are two types of decentralized blockchain solutions for the governance of organizations. Some of the main use cases for DAOs and COs are investment funds (for profit or not for profit), digital cooperatives, and Web3 communities.
What Are DAOs & COs?
To achieve their goals, both of these solutions are run by smart contracts and complex crypto-economic principles. DAOs’ main purpose is to automate and decentralize the governance of organizations, such as corporations. The structure of DAOs is flat and depends on the operation of smart contracts to enforce rules and decisions within the organization.
Tokens are used within the DAO to provide voting and decision-making power to participants, with greater power being given to those with more tokens. COs, on the other hand, are aimed at creating a sustainable financing model for traditional organizational structures. Just like a legacy organization, a CO has a management structure to ensure its functioning.
Along with that, COs have a Decentralized Autonomous Trust (DAT). The DAT is a type of immutable smart-contract based on a bonding curve contract – a complex mathematical model. Its purpose is to discourage speculation, and create incentives for long-term stakeholder participation. It functions by minting, distributing, and burning the COs security tokens in accordance with the bonding curve model.
Are you considering developing a DAO or CO solution? Here are some of the benefits that you could reap!
Benefits of Building Decentralized Organizations
Compared to legacy organizations, decentralized organizations offer several distinct advantages. DAOs are:
No single person or entity has full control over a DAO. As such, DAOs do not have a central point of failure. This eliminates uncertainty and increases participation and security because the ledger is shared by all members of the DAO.
The purpose of the Decentralized Autonomous Trust (DAT) is to guarantee a sustainable financing model for a venture. By offering a continuously open primary market, it allows funding to continue indefinitely. This provides stability to the CO.
Thanks to smart contracts, once the rules of a DAO are in place, decisions are enforced automatically, with no need for human input.
Unlike legacy organizations, a DAO has a flat structure with little to no management structure in place. Decision-making power in the organization is given to each token-holder. This power is proportional to the tokens held by a member, yet it does not grant them any further rights or privileges.
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