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What is a DAO? What is the Architecture of a DAO? (How to Build a DAO — High Level)
We explore DAOs on the Ethereum, Polygon, and any EVM-based blockchain, what tools are out there for us to build them, and go through step-by-step what the governance process looks like.
Introduction
DAOs or “Decentralized Autonomous Organizations” is a bit of an overloaded term describing any group that is governed by a transparent set of rules, typically found within a blockchain or smart contract.
I say “overloaded” because:
- Some people could say that since Bitcoin miners could choose to not upgrade their software, that is a form of “voting” for a patch they like.
- Some people think that DAOs must use smart contracts due to their transparent decentralized rules.
- Some people just slap the name DAO on their project because they think it’s a trend.
It’s also not to be confused with “The DAO” which was an implementation of A DAO back in 2016 that set the record for the largest hack at the time.
Imagine if all of the users of Google had voting power into what Google should do next, and all the rules were immutable, decentralized, and transparent for all to see. This solves the age-old problem of trust and centrality.
So DAOs really revolve around this idea of “decentralized governance” , and can be summarized by “Company Operated Exclusively Through Code”.
To really understand this, we’re going to look at:
- The protocol that is setting the precedent for all DAOs, Compound.
- Tradeoffs of different decentralized governance architecture.
- The tools that go into building one of these
We will have a full code-along tutorial for developers who want to learn more in my next video. You can see a sneak peek of the content here, and watch the video on this article here:
