Why and when do you need a DAO

Johann Barbie, Parseclabs.org


  1. If you want to formalise interactions between different actors in code instead of using written contracts: "We will pay you $100 for this task. If we don't agree, then you should go to court" -> "We put $100 in the escrow, and we have a Dispute Resolution mechanism in case something goes wrong"

  2. If you want to add incentives/penalties to balance the process and eliminate asymmetry: "If you don't attend the meeting, you should feel sorry" -> "If you don't attend the meeting, then your stake is burned"

  3. If you need to effectively govern some resource collectively;

  4. If you want to process/work with crypto and tokens directly;

  5. If you need to add transparrency. As a result, one can verify that protocol is applied correctly (finances, votings, decisions, etc);

  6. If you need to protect actors from the centralised management;

  7. If you need to reduce possibility of censorship.

As a result

  • DAOs lead to better decision making: easier, done faster and more verifiable;

  • DAOs can help you build entirely new business models;

  • DAOs can reduce costs;

  • DAOs can help you raise capital and control it.