So You Want To Buy The Constitution? Better Know What A DAO Is First

By November 24, 2021Ethereum
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If you’re into crypto, online communities, or American history, you’ve probably heard of a DAO at this point.

DAOs aren’t new, but they’re becoming more mainstream, so we thought we’d break down what they are, how they work and why they’re becoming more relevant.

How DAOs work

Shorthand for decentralized autonomous organization, a DAO is more or less an online community that’s owned and controlled by its members. It’s different from most organizations in that there isn’t a hierarchy–members have equal power and vote as a group to make decisions.

DAOs are governed by their smart contract, according to Ethereum.org, which lays out the group’s rules and can’t be changed without a group vote. DAOs operate on blockchain technology, so transactions and the group’s rules are recorded on the ledger.

Because of the transparent nature of DAOs, they’ve been used to organize strangers on the internet and crowdfund toward a common cause.

How is it related to crypto?

DAOs run on blockchain tech, and funds raised by DAOs are part of a “shared crypto wallet,” according to Aragon. The money raised by DAOs are often in some form of cryptocurrency.

Why is everyone talking about them?

DAOs aren’t new, but they gained more mainstream attention last week after a group organized to raise money to bid on a copy of the United States Constitution, which was up for auction at Sotheby’s. According to a Twitter account from ConstitutionDAO, the group raised more than $40 million from more than 17,000 people to bid on the copy. While ConstitutionDAO didn’t win the auction (Citadel CEO Ken Griffin was the highest bidder and paid more than $43 million for the copy of the Constitution), it did bring together thousands of people for a common cause, and marked the first time Sotheby’s worked with a DAO.

Another example of a DAO working toward buying a collectible was when the group PleasrDAO raised $4 million to buy the only existing copy of a Wu-Tang Clan album last summer.

What’s next?

As more businesses start accepting cryptocurrency as a form of payment and digital collectibles become more popular, it’s likely that DAOs will continue to form and raise money to buy digital and physical goods. Most recently, a DAO known as Krause House began pooling money to buy an NBA team, raising more than $1.7 million so far.

So whether it’s bidding on the Constitution, buying a Wu-Tang Clan album or attempting to acquire an NBA Team, it seems anything is possible in an economy where DAOs are a thing.

Illustration: Dom Guzman

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