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This whole page is under heavy rewrite and thus is a stub. The page shall be a short overall description of how the DAO works, with next pages/chapter being more detailed |
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The legal status of The DAO is subject to intense discussion. None of the contents of this wiki is intended to be, nor should it be construed as, legal advice. |
The ideal of a decentralized autonomous organization is easy to describe: it is an entity that lives on the internet and exists autonomously, but also heavily relies on hiring individuals to perform certain tasks that the automaton itself cannot do.
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DAO in a nutshell
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The Decentralized Autonomous Organization (DAO) is a virtual entity that exists in cyberspace / the internet. It comes into existence when a group of people decide to form a DAO.
Once this initial decision to create is taken the participants may decide to extend participation to a wider community. It is possible that this process could well be entirely anonymous (subject to the technical skills of the participants).
A DAO may be established with a view to raising or investing / managing funds raised, for example to develop a specific idea or a range of ideas or within a particular sector. Alternatively the purpose of the DAO could well be civic - to remove the inherent weaknesses of outdated political structures. Participants / investors 'invest' their funds from their own cryptocurrency holdings or by converting fiat to Ether (the unit of the Ethereum platform). This transfer of ether appears on the Blockchain.
In exchange for ether, tokens are created which represent membership as well as ownership of a portion of the DAO; these tokens are assigned to the account that sent the ether. The amount of tokens created is proportional to the amount of ether transferred.
The ownership of these tokens can be transferred to other accounts using transactions on the Ethereum blockchain as soon as the funding period is over.
The DAO purely manages funds, it exists purely in the ether. In itself, it does not build a product, write code or develop hardware. It requires contractor(s) to accomplish these and other goals. Contractors are hired when their proposal to the DAO is approved.
Every member of the DAO is allowed to submit proposals to spend a portion of the total ether raised, denoted by transfer, on funding projects.
Members of the DAO cast votes weighted by the amount of tokens they control. Tokens are divisible, indistinguishable, fungible and can easily be transferred between accounts. Within the contracts, the individual actions of members, cannot be directly determined.
An important (r)evolutionary step
The DAO structure is a most important (r)evolutionary step:-
- it allows the DAO Token holders to control 100% of funds from day one
- it is immutable code-wise
- it removes the layers of intermediaries
- it negates Government, corporate & community paralysis due to corruption & ineptitude
Creation
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The DAO is the first Ethereum blockchain DAO ever created. Its creation, a 28 day period, ended on 28 May 09:00 GMT and is, as of Jun 2016, the highest ever crowdfunded project in the world.
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Token
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DAO tokens do not represent or constitute an equity ownership stake, share, or equivalent in ANY public or private company, corporation, or other entity in any jurisdiction; DAO tokens are only for use in connection with The DAO under the terms of The DAO’s smart contract code and do not entitle any holder of DAO tokens to any additional rights with respect to any other corporation, company, or entity in any jurisdiction. |
During the initial creation phase where 'The DAO' is funded via ETH, new DAO tokens have been created. Each DAO token holder (a.k.a. DAOTH) is granted voting rights and complete control over The DAO's digital assets proportional to the amount of DAO tokens they hold. The simplest way to buy tokens during the sale period will be to send ETH directly to The DAO's contract. In return, the contract will automatically send you your tokens. Thismust be done from a wallet in which you own the private keys, and ideally should be done using a wallet like Mist where you can watch and interact with contracts and track the corresponding tokens.
There is no cap to the number of tokens which may be sold nor the total value which could be raised during the creation period.
DAO tokens:
- Allow the holder to vote on any expenditure the DAO could make
- Are fully transferable. They can be traded peer-to-peer or on an exchange
- Represent a relative portion of The DAO's crypto assets at any given time
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During its 28 day creation period, DAO token prices have been fixed this way:
- A price of 1ETH / 100DAO for the first 14 days,
- an increase of 0.05ETH each day for the next 10 days
- finally a 4 day period of 1.5ETH / 100DAO.
Once the creation period is over, the DAO token will be traded on some exchanges like any other market.
Contractors
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A DAO is purely software: in itself it does not have the capabilities to manufacture a product, write code, develop hardware or sweep the streets. It requires actors in the physical world for this purpose, called Contractors. Contractors submit Proposals for the development of products or services—these Proposals are written in plain English and backed by a software code in the form of a smart contract that defines the relationship between The DAO and the Contractor: deliverables, responsibilities, and operating parameters.
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