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What is a DAO?

A ‘DAO’ (aka ‘Decentralized Autonomous organisation’) are fraud-resistant, transparent, and programmable organisations helping people around the globe create new types of organisations that better serve their purpose and values.

It is like a community, business or organisation which is collectively owned and managed by its members. Rather than concentrating ownership into the hands of founders, directors, and investors, a DAO distributes ownership to a variety of stakeholders in an ecosystem, including contributors, users, strategic partners, vendors, employees and so on. DAO’s help break down the traditional power hierarchies that are responsible for extreme concentrations of wealth

To manage funds, it has a built-in fraud resistant treasury that no one has the authority to access without the approval of the group. Decisions within the organisation are governed by a variety of governance styles (chosen by each group) to ensure everyone in the organisation has a voice.

The ability to trust is brought by the fact that all these decisions & financial transactions are recorded on a blockchain ledger, which in essence is a highly secure & decentralised online excel sheet stored on distributed servers around the globe to guarantee its accuracy.

Everything is out in the open and the rules around spending & decision making are baked into the DAO via its code.

Essentially a DAO reduces fraud, brings transparency, gives its members a direct and immutable voice which increases trust in & within an organisation, a community, a cause, a municipality, a city, or a business (any group of humans coordinating).

Why do we need DAOs?

DAO’s allow us to do things with our organizations that would otherwise be financially prohibitive for the majority of people. Most people don’t have the resources to hire the team of lawyers needed to routinely modify their organization governance systems, send out new shares each day, or to set up novel, more inclusive, more dynamic organization systems that best meet their needs. Before DAOs came along, the majority of humanity was restricted to the narrow range of commonly used organizational styles which may not reflect their values.

With Hypha’s tools, DAOs are built for governance flexibility and provide communities with a diverse range of ‘governance primitives’ that allow communities to create governance systems suited specifically to their case at minimal cost. So, while “voting” typically comes with the assumption of ‘majority rule’, groups can choose to tweak this anyway they would like. From consent to consensus, from super-majority to respected-minority, from anarchy to benevolent dictatorship and anything in between, the DAO is an open governance environment and voting is but one way that groups can make decisions and align while using a DAO.

Also with DAOs you don’t need to trust anyone else in the group, lawyers, or the authority of nation states. You only need to trust the DAO’s code, which is 100% transparent and verifiable by anyone, as it is recorded on the blockchain. Interestingly this actually increases trust within the group and helps groups become more open to welcome new people, as the protocols are designed to ensure that any potential community harm is minimized.

We are at a transformational moment in time, as DAO’s create a fertile space for many new opportunities for global collaboration and coordination. While corporations were built for the industrial age, DAOs are built for the information age. Hypha builds for the age of Systemic Regeneration and the fundamental evolution of civilization.

A comparison

DAO A traditional organization
Organisational structure:
Usually a flat structure and fully democratized. Typically designed to widely distribute wealth and power.
Usually a hierarchical structure with multiple layers of decision makers. Typically designed to concentrate wealth and power.
Decisions / Governance:
Voting – or other chosen governance style – required by members for any changes to be implemented. Essentially the governance is driven by the community.
Many governance outcomes are implemented automatically without a trusted intermediary.
Depending on structure, changes can be made by a sole party, or voting may be offered. Governance is mostly driven by executives, Board of Directors, activist investors etc..
If voting is allowed, votes are tallied internally, and the outcome of voting is likely to be handled manually.
Operational management:
Services offered are handled automatically in a decentralized manner (for example distribution of philanthropic funds, allocation of resources to projects, etc..).
Requires human handling, or centrally controlled automation, prone to manipulation.
Degree of transparency:
All activity and information is transparent and fully public.
Activity is typically kept private. Information is generally only shared on a need-to-know basis. Limited level of transparency for the public.

While corporations were built for the industrial age, DAOs are built for the information age. Hypha builds for the age of Systemic Regeneration and the fundamental evolution of civilization.