Businesses are capitalizing on blockchain technology to create new companies that are more secure, accessible, efficient and profitable than their predecessors. This technology, commonly referred to as a digital ledger, is used to provide decentralized services. In other words, these businesses are not under the control of a central authority. Companies operating in this manner and that use community-first governance models, meaning all customers or members have the right to vote on major business decisions, are known as decentralized autonomous organizations (DAOs). DAOs represent the future of business.
According to TIME, enthusiasts believe DAOs will replace traditional companies as new-age co-ops. In light of this, Phillippe LeBlanc and Mark Homza know now is the time to capitalize on this next-gen business model. As entrepreneurs and co-founders of full-service creative agency, Funday they recently launched first-ever consumer packaged goods (CPG) DAO, gmgn supply co. “The community will be your customer, your contributor, and your investor. It will align all of the market participants in ways that a traditional corporation simply can’t. This incentive alignment between all stakeholders will make it very hard to compete against DAOs,” explains LeBlanc.
DAOs: More Secure and Profitable Businesses
A DAO uses blockchain tech to manage its operations and create financial products and services. Mark Homza, a founding member of gmgn supply co., says they have been working to help their Web 2.0 clients discover the power of the web3 space. “Web3 is the future and is on its way to transform work as we know it. In fact, we introduced our web3 division to meet the growing demand of companies who want to ‘launch and play’ performance-based marketing in a digital world. We’ve seen a huge push for decentralized autonomous organizations, or DAOs, that could very well be that vehicle to lead the charge and shake things up.”
Homza says that blockchain technology is unique in that, “It can record any or all transactions of cryptocurrencies, NFTs, making it virtually impossible to cheat or hack.” The blockchain used in a DAO can also be used to protect the personal data of the organization’s customers. Customers would be able to decide for themselves if they want to share their data with the organization.
Businesses that choose to operate as a DAO do not necessarily need to hire employees. Instead, they can use network resources to generate revenue. For example, a ride-sharing DAO can generate revenue by charging a fee for each ride. This revenue is then distributed to drivers and riders. Another example is a digital tool DAO that generates revenue by charging a service fee. The revenue generated is then shared with all DAO members. Businesses operating as a DAO can also use the profits generated as a source of funding for expansion.
Transparency, Inclusivity and Control
A key advantage of DAO is its transparency because all blockchain transactions are recorded. This allows the public to see transactions and if the DAO is operating in a manner consistent with the terms of the agreement. Of note, blockchains offer anonymity so your identity will never be shared. Transparency could also result in greater accountability when it comes to how the DAO allocates revenue, how funds are spent, and how funds are audited.
Anyone can participate in a DAO. In a traditional business, a person has to be an owner, employee, or a board member to participate. In a DAO, everyone is entitled to participate. Members of a DAO can also choose whether they want to participate in the governance of the organization.
Many businesses operate under restrictive data privacy laws that make it difficult for people to control how their data is used. Businesses that operate as a DAO would have to comply with data protection laws. Additionally, because DAO’s offer more transparency and are audited, people would have more control over their data and could decide if they want to share with an organization.
Disrupting the Future of Business
With anything new, there will always be challenges. Decentralized Autonomous Organizations are complex and will likely remain this way for a while, simply because the concept of a DAO is so new and relatively unexplored. “DAO’s are still in the “start-up” phase and there will be a lot of pain points as they start to emerge on the blockchain,” explains Homza.
But even with the unknown, Homza says the future looks pretty pretty good. “We believe that if we dive into Web3 and get our hands dirty with our own DAO (gmgnsupplyco.) will also ignite a new kind of drive for change. This is something that a lot of start-ups may also experience as they embark on the Web3 landscape themselves,” noted Homza. Simply put, DAO’s could change the future of business.