The recent progress in cryptocurrency and blockchain technology has opened up several new possibilities to optimize the way finance works. The majority of the population still prefer centralized financial service due to the ease-of-use. However, DAOs will help bring the same ease with better security to the DeFi world and promote crypto adoption.
Ethereum has applied the principle of decentralization outside the financial world in the last few years and pivoted the industry to a new age of success. While cryptocurrencies aim to remove the middlemen, blockchain technology’s smart contracts and tokenization models help bring the world closer.
Traditional Organizations
In a traditional organization, every employee is given a contract that determines their relationship with the company. Employee’s rights and obligations are regulated using these contracts, which fall under the underlying government. If the employee fails to meet their end of the bargain, the company can take legal action based on the contracts.
These organizations are structured in a top-down manner with many layers of bureaucratic coordination which control the workplace. This top-down management module gives power to the entities sitting on top of the pyramid, thus harming the employee’s rights.
The common problems faced by a traditional organization are:
- Single party control that controls all the decisions.
- Opaque and inconsistent decisions lead to scrutiny and scams.
- Parties at the top work over the shoulders of their employees, giving them an unfair advantage.
For countless years, these organizations have created an environment where everyone is not treated fairly when it comes to decision making inclusion. DAO or decentralized autonomous organizations have the potential to provide better transparency and create a fair environment for every party involved.
DAO’s Security, Autonomy, and Privacy
A DAO is an organization that is governed under digital rules and distributes the control to token and shareholders equally without hierarchical management. These organizations tackle the age-old problem of governance which is generally referred to as the principal-agent dilemma.
DAO involves a group of people interacting using a peer-to-peer network according to a self-enforced open-source protocol. What gives DAO an edge over traditional organizations is its additional security, better performance, low transaction costs, and a higher level of transparency. The most prominent advantages of a DAO are:
Security
A decentralized autonomous organization helps to improve the security of an organization by enhancing transparency in all transactions. As every individual in the organization is aware of the activities, they can make informed decisions and avoid any security issues.
Autonomous
As a DAO’s control is distributed equally among all the shareholders, investors, and users, it promotes a fair environment. No single entity can decide for their sole benefit as it has to be approved by all holders.
Privacy
One of the USPs for blockchain technology and cryptocurrency is privacy. The smart contracts created through blockchains and DeFi apps are secure and private. All the transactions are done anonymously while ensuring transparency.
PhoenixDAO propagating the use of blockchain
PhoenixDAO is an excellent example of how a DAO should work for Decentralization and Community as its ethos. The platform offers a digital identity-based suite of products and protocols to power the crypto ecosystem, focusing on DeFi and NFTs.
PhoenixDAO currently offer three products:
- PhoenixDAO
- Staking dApp
- Events dApp
PhoenixDAO is a live example of how a DAO platform must work. Every spending decision of the native PHNX token is voted by the DAO community, which is regularly posted on the budget running page. It is an autonomous platform that runs on the revenue generated by the dApps.
To incentivize voting, PhoenixDAO offers PHNX tokens as a reward for participating in governance. Also, anyone can participate in governance because of its open framework. To get the voting rights and earn more rewards, users have to stake the PHNX token into contracts.
PhoenixDAO has begun internal testing of its DAO to ensure complete security, autonomy, and privacy for its users. DAOs are the world’s future as they tackle all the drawbacks faced by traditional organizations and create a fair opportunity for all.
