What is the DAO Maker that was stolen from for $7 million, and what does it have to do with the DAO?

On August 12, DAO Maker officially announced the attack: hackers stole a total of approximately US$7 million, and a total of 5,251 users were affected. They said the reason for the theft was that a wallet with administrator rights was stolen. The hacker used it maliciously and said that he would design a solution to make up for the loss in the future.

It is worth noting that DAO Maker here is a platform for financing crypto projects and has nothing to do with Maker DAO, the representative of DAO that everyone is more familiar with. What is the DAO that is constantly mentioned, and what is its use?

#01 What is a Distributed Autonomous Organization (DAO)?

DAO is the abbreviation of Decentralized Autonomy Organization. In nature, bee colonies, ant colonies, etc. are all natural decentralized autonomous organizations.

In a centralized environment, with the rise of Bitcoin and blockchain technology, decentralization (i.e., distribution) based on community consensus has become a very attractive way of collaboration. In this process, everyone must abide by the consensus that has been reached. Therefore, many people are struggling for this ideal collaboration method.

Distributed autonomous organizations were originally proposed by American writer Ori Brafman in a book called "Starfish and Spiders". In the book, he compared centralized organizations to spiders and distributed organizations to starfish, and gave a detailed explanation of the differences between the two. He wrote in the book:

Spiders are centralized (cell) organizations. If their heads are cut off (the entire organization), they will not survive. Starfish are composed of a bunch of cells that are equal to each other (no center). Each tentacle torn off by the starfish can grow into a complete starfish.

Starfish and spider represent two types of organizations, decentralized and centralized, respectively, in the real world.

When a starfish-type organization encounters setbacks and conflicts and is decomposed, its organization will become a smaller decentralized organization and continue to function; while a spider-type organization will continue to function after its head is cut off. will no longer be able to function.

In contrast, a starfish-type decentralized organization will have strong vitality.

This image analogy allows us to understand the concept and characteristics of distributed organizations, and DAO, as a decentralized autonomous organization, maintains operation through smart contracts and will Transactions and rules are encoded on the blockchain to achieve openness, fairness, human intervention and autonomous operation, but there is no legal entity.

The first fully operational DAO is generally considered to be Bitcoin. In 2016, a German startup launched "The DAO", A DAO organization based on the Ethereum blockchain platform, which raised a whopping $150 million for Ethereum.

However, due to the loopholes in the smart contract, funds were transferred by hackers. The emergence of this incident not only brought the end of "The Dao", but also taught "The DAO" a profound lesson- The security of DAO is crucial Importantly, a small code bug can cause huge losses.

02 What is its use in real life?

What exactly is the role of distributed autonomous organizations in real life?

Avoid censorship first and maximize resource utilization. Distributed autonomous organizations store all content in a decentralized storage network, which is open, transparent and cannot be tampered with. Anyone in the company can personally review the company's activity rules, etc., at a glance, and can schedule resources in a timely manner when taking action, without consuming time due to review.

Secondly, it can avoid marginalizing employees and achieve innovative development of the company. In traditional hierarchical management, it is difficult for leaders to collect opinions, so it is difficult for companies to understand the thoughts of grassroots employees. People in distributed autonomous companies can put forward their opinions on the blockchain at any time and be seen by others, reducing unnecessary procedures and realizing flat management, so that employee suggestions or opinions can be collected, thereby improving employee efficiency. work enthusiasm and creativity.

Finally, it can also improve work efficiency and result credibility. The characteristics of decentralization make some tedious processes in life simple. For example, when making some public decisions, for the sake of fairness and justice, we usually decide by voting, but voting, whether in paper or electronic form, requires a lot of energy, and it is difficult to avoid fraud.

The use of distributed ledgers will allow every vote of a voter to be truly and publicly recorded on the blockchain, eliminating the need for human votes to be counted to produce election results, which is timely and credible. In 2016, the U.S. presidential election adopted blockchain technology.

So far, DAO has been used for investment, charity, fundraising, borrowing or purchasing NFT.

However, this method of collaboration also has many disadvantages. For example, the flat structure is relatively decentralized and operates slowly. When the community has disagreements, large divisions may form. In many cases, the organization The person with the most Tokens has a higher say, which goes against the original idea.

03
Summary

Currently many DeFi have DAO, and everyone decides the future direction through the votes in their hands. In the future, it is likely to become the next hot spot of blockchain and change the organizational form of human collaboration.

The rise of decentralized finance (DeFi) in 2020 has made DAO popular again. There are still many people exploring and advancing it. It is still worth looking forward to how it will develop in the future.

What do you think of this decentralized autonomous organization? Welcome to share your stories in the message area.

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