Most associations have a traditional model – the board and executives work together to run an organization that offers services and benefits to its members. However, in this conventional model, members have little to no control over what the organization does.
Decentralized autonomous organizations – DAOs – flip this model, decentralizing the power structure and putting it in the hands of members. And DAOs are not a far-off technology relegated to the world of Web3 – they’re in use today, and there is plenty for association leaders to know about them.
Decentralized autonomous organizations, commonly known as DAOs, are organizations designed to distribute power from traditional leadership models – like CEOs and Board of Directors – to a disputed network of stakeholders, also known as members.
Their rules and policies are handled by the blockchain and funding and exchanges are completed via cryptocurrency. DAOs are an essential part of the Web3 landscape and are quickly growing in popularity and application.
How does an organization with no central authority or leader operate?
The most important part of a DAO is the protocols set when creating it. They dictate how voting is done, the types of investments the organization is looking to make and the benefits members can expect.
For example, some DAOs will use tools like Discord to introduce ideas and begin initial voting on potential investments. Alternatively, the DAO could be established with a specific goal, like ConstitutionDAO. The only decision their members needed to make was what to do with the constitution once it was acquired.
The transparency afforded by the smart contracts that establish the DAO allows members to make informed decisions when joining and voting.
This list is not exhaustive, with many DAO models to choose from. However, many of these organizations can impact how associations and nonprofits operate and gain funding in the near future.
As we continue to explore the future of Web3 and community building, DAOs represent a modern-day association. However, instead of building on the traditional structure of executives and board of directors, these decentralized organizations put control entirely in the hands of their members.
So, what do you need to know to prepare?
While the association model may not need a complete rebuild today, the dynamic between members and the organization may shift soon. This is why association leaders must focus on future technologies and their relationship with members.
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Jose Triana joined the Sidecar team as the Content Manager in 2021. He is a writer and creative focused on helping purpose-driven organizations learn and find value online. When he isn't working on content, you can catch him going for a run or resting with a good book.
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