To explain what DAOs are, let me first tell you about smart contracts. Blockchains are becoming more intelligent and gaining more and more features. With the advent of Ethereum (open source platform and mining network for various crypto currencies), blockchains got smart contracts. These are pieces of software that perform certain actions based on data in the blockchain. For example, if someone puts in one euro and clicks on 33, the smart contract gives a can of Coke.
An individual smart contract cannot perform much yet. But if you take more of them together, you can speak of a Decentralized Autonomous Organization (DAO). A DAO (pronounced Dau) consists of a set of smart contracts that together form an organization. Decisions about the direction and policies of the organization are made by votes and proposals submitted and executed by the blockchain. Here, the blockchain acts as a kind of public ledger in which all transactions and activities of the DAO are recorded and confirmed.
No central authority
Blockchain technology ensures that DAOs do not need a central authority to make decisions. A DAO is designed to work completely autonomously and is decentralized, so there is no central authority or hierarchy. But can you still do anything with it? Or is it a very technically challenging Rube Goldberg machine: a complex device that performs a very simple task unnecessarily slowly, indirectly and circumstantially?
I believe, and this is also the direction of my dissertation, that we can use DAOs' to deploy large-scale digital assets for commons governance. Commons are goods whose use belongs to everyone, such as the sky, a forest, a lake, or digitally, a Wikipedia page. Because the property belongs to everyone, it is difficult to ensure quality. Therefore, we often see commons either become owned by a single party (Forestry Commission for a forest) or slowly die off.
Elinor Ostrom (Nobel Laureate in Economics in 2009) has conducted groundbreaking research in the field of commons. She has studied many commons around the world and distilled from them eight principles that successfully governed commons adhere to. These forms of governance are complex and diverse, but all allow for the vibrancy of the commons without centralizing ownership.