What is a DAO?

A DAO, or decentralized autonomous organization, is a type of organization that is run through rules encoded as computer programs, called smart contracts, on a blockchain network. These rules dictate how the organization operates and how decisions are made, and they are enforced by the network rather than by a central authority. Because DAOs are decentralized, they are often considered to be more transparent, accountable, and resistant to censorship than traditional organizations.

How to Create a DAO?

Creating a DAO typically involves the following steps:

  1. Define the purpose and rules of the organization: This includes creating a whitepaper or other document that outlines the goals of the organization, how it will be governed, and how decisions will be made.
  2. Write the smart contract code: This code will be the backbone of the DAO, and it should be written in a programming language that is compatible with the blockchain platform you are using. The smart contract should include all the rules and logic that govern the organization.
  3. Test the smart contract: Before deploying the smart contract to the blockchain, it's important to test it thoroughly to ensure that it functions as intended and does not contain any errors.
  4. Deploy the smart contract: Once the smart contract has been thoroughly tested, it can be deployed to the blockchain network.
  5. Fund the DAO: To make the DAO functional, it needs to be funded. This is typically done by sending cryptocurrency to the smart contract's address.
  6. Launch and Promote: Once the smart contract is deployed and funded, the organization can be launched and promoted to attract members and start operating.

It's worth to mention that there are also different platforms that allows you to create DAOs with a more user-friendly interface such as Aragon, MolochDAO, DAOstack and others.

What Was “The DAO”?

The DAO (Decentralized Autonomous Organization) was a specific type of DAO that was created in 2016 on the Ethereum blockchain. It was designed to be a decentralized venture capital fund, where members could vote on which projects to invest in and share in the profits. It raised over $150 million in a crowdfunding campaign, making it the largest crowdfunding campaign in history at that time. However, it was hacked in June 2016, and a significant portion of the funds were stolen.

The hack prompted a contentious debate within the Ethereum community about how to handle the situation, and ultimately led to a hard fork of the Ethereum blockchain to return the stolen funds to their rightful owners. The incident also led to changes in the way DAOs were designed and implemented, with a greater emphasis on security and risk management. The incident brought attention to the potential legal and technical challenges of decentralized autonomous organization and smart contract risks.