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How Will DAOs Shape the Future of Startups?

Entrepreneurs, technologists, and researchers are taking full advantage of blockchain technology to create new firms. These new firms will be more transparent, efficient, and available for common folks to invest in. The underlying structure used in such firms is known as Distributed Ledger Technology (DLT) and provides a decentralized environment.

The decentralized companies don’t have any central authority; instead, these are community-owned. All the community participants have equal access and rights to vote in these firms’ decisions. Such firms are already working in the crypto ecosystem and are known as DAO (Decentralized Autonomous Organization).  These firms aim to change the future of startups.

Many crypto enthusiasts believe that DAOs can replace the traditional business model with a much more efficient one. We will explore how things can turn out for startups in the near future. 

DAO Can Create a Secure & Profitable Business

DAO manages its operations and develops financial goods and services using blockchain technology. Web2 users must learn about this revolutionary idea and see its potential. Web3 is the future for startups and businesses. Even you can make DAO and take assistance from the DAO Development Company to implement your idea. 

Businesses that opt to run as DAOs are not required to hire staff members but can create income using network resources. A ride-sharing DAO can make money by charging a fee for every ride. Drivers and riders receive a portion of this income after that. A digital tool DAO makes money by charging a fee for its services.

The DAO members can get a specified portion of the revenue generated. Profits made by companies that operate as DAOs can potentially be used as a source of capital for growth. 

DAO Can Bring True Democracy & Automation 

DAO utilizes smart contracts to perform its actions, which are self-executing codes. This smart contract functionality enables DAO to perform business processes without help. For example, there is an e-commerce DAO that sells books. If any person places an order, DAO is responsible for finalizing the order. Smart contracts can also create invoices and initiate shipping to that person’s address. 

When a DAO is allocated to a dapp, the community is given complete authority over upcoming settings and upgrades. It also makes it possible to operate a decentralized fundraiser with money directly held by the DAO.

As a result, startups can better compete with established services on an equal footing by developing a loyal user base, motivating contributors, and leveraging network effects to expand their reach. Members of the DAO have the authority to express their opinions about how their funds should be distributed.

Global Reach For  Startups

The biggest challenge for entrepreneurs is expanding their business internationally. After all, there is no assurance of success, and it is expensive. DAOs facilitate such procedures. Your firm can use the blockchain to onboard new employees, form teams to manage the expansion, and raise money from investors worldwide. DAOs simplify for startups to expand their markets and increase their revenue.

End of VC Control May Not Be Enough

Despite their many advantages, DAOs are not without criticism, just like most technological developments. For starters, if you want to be successful as a DAO startup, you must be willing to leave a sizable amount of authority over your business.

The real challenge to centralization comes from Web3’s current format, which is more akin to Web2.5 and rejects the stale revenue models of big tech. Unfortunately, this also applies to Ethereum. Many “decentralized” projects present themselves as Web3 services but rely on cloud providers like Amazon Web Services to host their frontends. The internet is the only blockchain that can provide people with web content directly without external cloud servers.

Concluding Thoughts

There will always be difficulties with anything new. As DAOs are still relatively new and untested, they are complex and will probably remain for some time. There will be many difficulties as DAOs begin to appear on the blockchain because they are still in the “start-up” stage. I think the DAOs functionality will replace some parts of startups to automate.  However, we might see some changes in the DAOs structure to synchronize it with the business needs.  

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