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Description
DAO: Decentralized Autonomous Organization.
But what does that really mean?
Harmony's Ecosystem Growth Ambassador Sam Harrison breaks down the Web3 buzzword that is taking the industry by storm: DAO. What is it? Why do I need it? What problems does it solve? All these questions and more are answered simply using common examples and analogies.
A
A
Dao
understand
a
dow
and
to
understand
why
it
is
so
innovative
and
valuable,
especially
in
the
blockchain
world.
We
need
to
understand
what
it's
trying
to
break
and
what
it's
trying
to
do
better,
so
I've
driven,
I
I
drew
up
a
little
org
chart
from
a
traditional
organization
where
we
have
a
ceo
up
top
mr
happy
ceo
right
and
we
have
all
of
his
vps
and
all
this
all
those
various
different
minions
and
as
anybody
who's
ever
worked
at
a
fast
food
joint
or
anybody
who's
ever
folded,
clothes
at
a
various
different.
A
You
know
gap
or
whatever
you
realize
that
the
real
work
is
done
by
these
guys
down
here,
all
of
their
hard
work
of
selling
this
stuff,
but
then
the
profits
all
trickle
up
and
importantly,
the
only
person
who's
happy
in
this
whole
situation.
Is
that
happy,
ceo,
that's
problem,
because
what
we
are
seeing
here
is
we're
seeing
a
very
inefficient
allocation
of
resources.
A
A
A
But
how
does
that
work?
How
does
actually
make
a
difference?
So
imagine
this?
Is
you
and
a
group
of
your
friends
and
you're
all
passionate
about
coding,
you're,
all
very
passionate
about
blockchain
and
cryptocurrency,
so
you
all
get
together
and
you
form
a
dow
and
to
kickstart,
the
dao
everybody
puts
in
10
bucks
right.
A
So
let's
say
that
our
treasury
ends
up
being
you
know,
ten
thousand
dollars
just
roughly
now
these
ten
thousand
dollars,
those
are
all
assets
we
have
in
common
and
the
other
important
asset
that
they
all
have
in
common
is
that
nobody
is
keeping
secrets
from
anybody
else.
Traditionally,
the
ceo
has
all
the
secrets
right
and
his
vps.
A
They
all
know
all
sorts
of
stuff
that
nobody
down
here
knows
or
nobody
outside
of
the
organization
knows
but
internally
to
a
doubt.
Everybody
knows
everything
else
about
what
they're
doing,
and
they
all
agree
that
what
they're
going
to
do
is
they're
going
to
build
this
product
called
happy
box
and
in
building
happy
box
they're
going
to
sell
it
and
all
the
revenue
and
all
the
the
returns
will
come
back
to
the
doubt,
and
this
is
where
the
magic
happens.
A
A
But
then
you
have
people
all
throughout
the
chain
that
extract
resources
from
the
productivity
of
these
people
here
and
the
people
who
have
the
identity
up
here.
You'll
notice,
there's
a
there's
a
very,
very
similar
structure
between
this
and
that
the
question
is:
are
these
people
needed?
Historically?
A
The
answer
has
been
absolutely:
we
need
to
have
accountants,
we
need
to
have
lawyers,
we
need
to
have
sales
people,
we
need
to
have
people
that
that
have
a
very
special
set
of
skills
that
they
can
take
this
product
to
market
and
create
the
value
what
blockchain
has
given
us.
The
ability
to
do
is
when
we
make
our
happy
box
and
all
this
coordination
that
happens
inside
of
dao,
we
can
build
a
smart
contract
and
into
that
smart
contract.
A
You
don't
need
a
legal
department.
You
don't
need
these
other
departments
that
the
smart
contract
itself,
which,
by
the
way,
doesn't
cost
anything
to
work.
You
don't
need
all
that
stuff,
and
that
means
that
this
total
profit
chain.
This
total
economic
activity,
the
value
is
now
spread
amongst
everybody
in
the
dow,
rather
than
being
lost
at
the
various
different
stages
of
a
hierarchical
organization.
A
That's
brilliant!
That's
great!
Sam!
Thank
you!
So
much.
I
love
it
but
sounds
like
you
just
got
in
a
room
with
a
couple
of
your
buddies,
smoked
a
couple
joints
and
decided
that
this
was
the
way
of
the
future.
How
can
this
actually
work?
The
answer
isn't
a
lot
of
times.
Maybe
it
can
because
if
you
don't
have
the
right
shared,
enthusiastic
interest,
people
are
going
to
try
to
extract
value
from
this
organization
without
putting
any
value
in.
A
This
guy
gets
to
be
paid
for
something
that
he's
enthusiastic
about
doing.
He
really
excited
about
the
the
happy
box
product
he's
super
super
excited
about
it.
He
thinks
about
it
all
day
and
he
innovates
on
it
all
of
the
time
and
that
innovation
from
him
and
from
all
of
his
buddies
that
are
also
thinking
about
it.
All
the
time
make
this
happy
box
better,
faster,
stronger
than
the
happy
box
that
the
traditional
organization
sells.
We
know
that
this
already
works
historically
in
the
economic
sense.
A
We
look
at
co-ops
and
we've
seen
that
the
validity,
the
strength,
the
fiscal
longevity
of
co-ops
are
actually
twice
as
strong
as
traditionally
structured
organizations,
a
traditional
startup
after
five
years,
eighty
percent
of
them
have
died,
have
gone
bankrupt,
a
co-op.
After
five
years,
only
40
percent
have
died
or
gone
bankrupt.
That
means
that
the
20
success
rate
for
the
original
organizations
is
dwarfed
by
the
60
ex
success
rate
of
a
co-op,
the
dows.
Take
it
one
step
further
with
the
autonomous
with
the
smart
contracts.
A
A
There
are
a
couple
of
cautions,
though,
that
we
have
to
be
careful
of
caution.
Number
one
is
the
fact
that
look
if
I'm
incredibly
enthusiastic
about
something
and
I'm
spending
60
hours
a
week
on
it
odds,
are
that's
gonna
start
feeling
like
a
job,
and
I
really
don't
want
my
thing
that
I
love
to
become
a
job.
A
So
we
need
to
make
sure
that
these
dowels
are
not
exclusive.
If
this
guy
here
and
this
dao
also
wants
to
participate
in
this
other
dow
over
here,
then
he
can
that's
totally.
Okay
and
he'll
spend
10
hours
a
week,
building
the
happy
box,
but
then
he'll
spend
10
hours
a
week
over
here,
building
the
happy
diamond,
which
is
just
a
happy
box
on
its
side,
but
that's
fine,
because
he's
enthusiastic
and
he
doesn't
get
burnt
out
and
harnessing
that
enthusiasm
is
more
powerful
than
following
one
man's
leadership
or
one
woman's
leadership.
A
If
mr
happy,
ceo
is
wrong
about
his
prediction,
that
wrong
travels
all
through
the
entire
organization
and
then
everybody's
toast,
if
this
guy
right
here,
is
wrong
about
what
he
wants
to
do
with
happy
box,
that's
fine
because
he
has
all
the
other
people
who
are
also
innovating
and
also
trying
very,
very
hard
to
make
sure
happy
box
is
the
best
possible
product
on
the
market.
They're
not
required
to
follow
one
man's
vision.
They
take
votes,
they
have
shared
responsibility.
A
It's
a
more
efficient
allocation
of
resources.
That'll
allow
you
to
be
paid
for
the
stuff
that
you're
enthusiastic
about.
So
I
think,
hopefully,
I've
answered
some
of
your
questions.
Odds.
Are
I've
probably
left
you
with
more
questions
at
the
end
than
you
had
at
the
beginning?
That's
okay,
dow's!
In
general,
this
is
we're
in
a
new
world.
We
are
trailblazing
business
organizations
and
and
functions
and
ways
in
which
we
coordinate
across
massive
groups
of
people
and
massive
distances
in
geography.
A
So,
if
you
do
have
questions,
don't
hesitate,
drop
them
to
the
comments
below
right
then
there
and
when
you
do
our
community
or
I
will
get
in
there
and
we'll
answer
them
also,
if
you
want
to
learn
more
about
what
harmony
is
doing
and
how
we
are
pushing
this
entire
thing
forward
in
concert
with
our
many
different
partners
visit
us
at
talk.harmony.one,
that's
our
forum
and
you
will
see
a
bunch
of
different
people
talking
about
the
various
different
dows,
because
we
need
the
tools.
We
need
your
help.
We
have
to
figure
out.
Okay.
A
Where
are
the
pain
points
when
we
talk
about
coordination
amongst
our
group?
Where
are
the
pain
points
when
we
talk
about
paying
these
people
out
for
the
work
that
they're
doing
what?
If
I
want
to
start
a
brand
new
one?
How
do
I
go
about
doing
that?
How
do
I
go
about
recruiting
more
people
to
my
dad?
How
do
I
make
sure
that
the
we
are
responsible
about
how
we're
using
our
pool
of
assets?
All
of
those
are
important
questions
to
ask
some
of
the
answers.