,

Building a better DeFi ecosystem through smart contracts: Why DAO matters 

A DAO (decentralized autonomous organization) represents one of the newest and most promising governance experiments. Many have long wondered how value can be exchanged in a secure and trusted environment without the oversight and control of a centralized entity or middleman.

Source: cryptodaily.co.uk

DAOs alleviate these concerns. Decisions are made from the bottom-up by members who also collectively own and manage the entity. DAOs operate on smart contracts that automatically execute once a pertinent set of criteria is achieved. Smart contracts also govern the DAO’s rules, help facilitate who gets voting rights, and help manage the governance proposal process.

As DAOs are built on blockchain technology, they are transparent and autonomous so members can have as much information as they need to make governance proposals and vote.

DAOs Are Attracting Attention Outside Of The Crypto World

It should come as no surprise that a DAO’s many advantages have interested scores of people. In March 2021, the U.S. state of Wyoming made an initial step to help legally clarify the status of a DAO. The state Senate passed legislation entitled ‘Dencetralied Autonomous Organization Supplement.

The bill intended to deem DAOs as limited liability companies (LLCs) under Wyoming law. By Fall 2021, BLOCKS DAO LLC became the first legally registered DAO LLC under the legislation. Wyoming officials also passed legislation providing liability protection to DAOs who organize as an LLC. The State of Vermont also permits DAOs to register as LLCs.

One of the biggest advantages of DAOs is the lack of trust required between two parties on a personal level to transact or exchange information. The parties only need to have confidence in the DAO’s code itself, a simple process as smart contracts and code can be tested, audited, and made open-source so anyone can review it.

Additionally, each action a DAO takes after launch must be approved by the community. Decisions are not able to be made behind closed doors by a few key figures, as is often the case in many traditional organizations. Some might argue the lack of a central hierarchy or authority would slow down progress as it might take longer for tasks to be completed.

However, the truth is the structure and smart contract safeguards in a DAO actually streamline the process of achieving tasks and moving forward. For example, members can put forth ideas to be voted on, and other members can then optimize the idea and eventually vote on a decision. The smart contracts in a DAO also help resolve disputes quickly since everything can be put to a vote.

PhoenixDAO: Leading The Way In Demonstrating The Advantages of DAOs

A number of crypto and blockchain-focused projects have recognized the benefits of a DAO and are integrating the structure as part of plans to become decentralized and community-led.

One example is PhoenixDAO , a digital identity-based suite of protocols designed to cover authentication, identity, payments, and decentralized governance. A core goal of PhoenixDAO is for the project to be controlled by a decentralized stakeholder community who invest in the native PHNX token.

The process for the entire PhoenixDAO project to become a self-governing DAO is set by the Phoenix Foundation. PhoenixDAO team members intend to automate DAO transparency by displaying each PHNX spent on a public budget page as members vote on spending proposals.

In contrast to other DAOs who run on donations, PhoenixDAO is completely self-sustaining through a range of revenue-generating products, like an on-platform dApp (decentralized application) store.

According to the PhoenixDAO team, 1,000 staked PHNX is required to have voting rights in the DAO. Members must stake 10,000 PHNX to create a proposal for others to vote on. Possible proposals can include changes to platform governance, leaders, ecosystem participation, marketing, protocol, and listing.

The PhoenixDAO team believes decentralized governance is essential for decentralized networks. The DAO rests at the forefront of Phoenix’s entire ecosystem, which also includes token staking, a dApp store, and an Eventbrite-style events application.

As DAOs become a more popular governance structure in both the cryptocurrency world and outside of it, projects like PhoenixDAO continually demonstrate the advantages of DAOs and how smart contracts can serve as an effective governance mechanism.

About PhoenixDAO

PhoenixDAO is a revolutionary decentralised environment that has curated a list of flagship dApps, all designed to create a more rewarding and accommodating environment for the crypto community. PhoenixDAO is powered by The DAO (governance system), Staking dApp, Events dApp and the dApp store.

PhoenixDAO is an autonomous project with unique protocols (Identity management, authentication, payment, and tokenization protocols), which helps create a secure and safe decentralised space.

White Paper: https://github.com/PhoenixDAO/PhoenixDAO-docs/find/master?q=

Follow PhoenixDAO on Twitter and Telegram .

Leave a Reply