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Comparing DAOs and Traditional
Organizations

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DAOs are not totally replacing traditional organizations at the moment. However, they bring fresh ideas
to the table. By leveraging blockchain and smart contracts, DAOs are flattening the traditional corporate
hierarchy. DAOs are formed by groups of people that have a common goal that they choose to be
governed by. This logic is hard-coded into smart contracts on the blockchain.

A New Approach

There is confidence in the structure that introduces a brand-new way of working. This new way is better
than the traditional structure of organizations. Even though not every company will become a DAO, many
organizations will consider whether to form an LLC or a DAO.

If you have been privileged to attend a crypto conference, you would experience what it means to be in a
DAO. The real magic comes from interacting with the people involved. Hearing the excitement in their
voices about the mission they are working on and the community they are built along the way would
inspire you. In some cases, members of the DAO might never have seen each other in real life. But the
bond is real. The ideologies that unite them are real.

Decision Making in a DAO

DAOs make better decisions and make fewer mistakes than a typical company. That’s because they can
leverage their decentralized workforce. This helps to scale the brainpower behind decision-making.

Consider a project manager with a team of six on a project. He finds out from his team whether they have addressed all the pending items. “Did we leave any stone unturned?” And they answer in the affirmative. But how exhaustive can a team of six be when it comes to brainstorming on new ideas? This is the reason many startups with applications facing the internet put out bug bounties. They pay people to find bugs that their development team couldn’t discover.

DAOs scale the brainpower behind their activities. With DAOs, more people are employe to think through
decisions. Besides, teams can be exhaustive when they think through a problem to solve or a decision to
make. In the team of six we mentioned earlier, there is a limit to what they can be able to see. They are
limited by the experiences and expertise of the members of that team.

Little Administrative Overhead

Operations in organizations are streamlined also there is little administrative overhead. The most
significant part is that many members will happily contribute even for free to organizations. This is
because they already inclined to contribute in two ways- first, the financial incentive of holding the
organization’s token gives them a reason to put in the effort towards building the organization.

They see the time they spend in building the organization as having a financial reward for them. On the
other hand, the signal to the rest of the community that they are a contributing member of the
organization. This gives them bragging rights and identity, which in turn builds up a reputation for them
within the system.

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