DAOs And Why They Are An Important Part Of The Blockchain
Anyone who has spent time in the Web3 world has seen the acronym «DAO» thrown around, but plenty of people might not know much about this term or why it is an important innovation of blockchain technology. Many are already familiar with cryptocurrency and non-fungible tokens (NFTs) to some degree, and while both are important they are just a small component of what makes blockchain so awesome. One of the more amazing innovations made possible by blockchain is the "Decentralized Autonomous Organization", or "DAO".
In May 2016, long before the concept of Metaverse and Web 3.0 (or Web3) existed, Ethereum wasn't even one-year-old yet and people were excitedly exploring the applications of blockchain programs. Then, a new project entered the scene called "The DAO". The idea was straightforward: people would pool their ETH (Ethereum's cryptocurrency) into a smart contract, and then collectively vote on where that ETH would be sent. The DAO was used as a decentralized venture capital firm, and was the most popular project of its time. Six weeks later a vulnerability in the program's code allowed a clever user to siphon most of the ETH locked inside it, collapsing the project. While The DAO itself died that day, the idea of a DAO as a decentralized governing body survived, and has since thrived.
Related: Why NFT Prices Crashing Is A Good Thing
The Ethereum Foundation defines Decentralized Autonomous Organizations as, "Member-owned communities without centralized leadership." In 2022, DAOs are everywhere. They have become a critical piece of infrastructure within most blockchain-based projects, and are the core governance structure of Web3. The oldest DAOs are comprised of token holders who are granted voting power based on the
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