What are the benefits of DAOs in communities

According to Cointelegraph, sharing economies are considered an early example of DAOs

Cryptocurrencies and DAOs are considered interrelated
Cryptocurrencies and DAOs are considered interrelated

Following decentralised finance (DeFi), non-fungible tokens (NFTs) and metaverse, decentralised autonomous organisations (DAOs) have been the recent trend in cryptocurrency, according to Cointelegraph. DAOs are considered blockchain based entities founded on the basis of a supportive community that shares incentives and common interests, with rules being encoded in smart contracts that manage proposals and business transactions such as inventory control, cash management, pricing, hiring, among others. 

According to Cointelegraph, sharing economies are considered an early example of DAOs or community-driven entities. The focus of DAO is expected to shift from a hierarchical and vertical structure to a community led organisation, which allows organisations to perform independently from its members. Due to this, DAOs are expected to focus on individuals of a community rather than on profits. Benefits of DAOs for communities are mentioned below:


Community based DAOs is intended to relieve humans from tumultuous situations due to bureaucracy, while incentivising quick decision-making processes. As a result, DAOs can get community support from anywhere in the world without the need of a physical location. Such geographical decentralisation means that DAO is not bound to any specific country or jurisdiction.

More achievable goals

Through DAOs’ automation, it can ensure a reduction in operational and functional costs, and also stimulate a feeling of motivation and productivity among members.

Native tokens

Cryptocurrencies and DAOs are considered interrelated as DAOs use blockchain to automate native tasks and tokens to function. From use of DAOs to issue a project’s native tokens, it allows communities to benefit from rights such as voting, proposing and earning revenue. Community crowdfunding can also be possible through DAOs.

DAOs can encourage community causes

DAOs are considered as future of businesses but can also represent non-profit organisations. These organisations represent large communities which share the same principles and objectives, and can be sustained and run by automated efficiency, decentralisation, and transparent distinctive of DAOs. With use of transparent crowdfunding, good causes can be supported which can make processes clear and efficient.

(With insights from Cointelegraph)

Also read: 500K user German crypto bank ‘Nuri’ files for bankruptcy

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