Finn is part of the management team in an MNC,
he has come up with some profitable
investment policies for his company and his employees.
Before its implementation he needs
to pitch his idea in front of the board of directors,
but the board of directors didn't
approve of his idea and that too without any explanation for their decision.
Disappointed by this he started
browsing the internet,
looking for a solution that could
benefit everyone,
where every member gets to have
their say and that is when he came across the concept of dao,
which is a decentralized organization
that is collectively owned by its members,
wherein decisions are voted upon by
themselves which runs on blockchain technology,
but to understand its concept in
depth.
we went to his friend sam who is a blockchain
expert,
finn explained to him his situation,
how he came across the dow and why
he wants to know more about it,
on realizing his excitement and curiosity
sam decided to take him through the dow and how it functions,
Let's
understand a bit about what blockchain?
Blockchain is a system of storing
data that makes it difficult or impossible to change hack or manipulate the
data,
It's basically a digital log of transactions
that are duplicated and spread across the blockchain's whole network of
computers,
the DAO is something that makes use
of its rules and policies for its proper functioning,
he further added a DAO or
decentralized economist organization is a blockchain based organization that is
collectively owned and controlled by its members,
they have built in resources that no
one can access without the group's permission,
all proposals are implemented using voting
processes to make decisions upon,
its rules and policies ensuring that
everyone in the organization gets a say this whole system majorly runs on ethereum
blockchain,
Further added that back in 2016 the developers
of the dow believe that by putting decision-making power,
in the hands of automated technology
that will eliminate the decision-making power driven by an individual or by
body,
it was created to allow investors to
send money anonymously from anywhere globally,
they would issue tokens to those owners.
letting them vote on potential initiatives
or proposals.
fin was fascinated and asked sam how
exactly,
it works and how this can be the solution
for his situation,
sam explained basically smart contracts
are the backbone of doubt,
smart contracts are programs that
run when certain conditions are met and are stored on a blockchain.
Step
1
when the documentation of the idea
takes place in the similar way in doubt,
a group of people write these smart
contracts to administer the organization.
contract goes live on the ethereum
network,
changes to its rules can be proposed
only by voting,
the contract automatically fails if
the rules are violated.
Step
2
Which is a funding period in which
pitching of ideas takes place in front of the selected members and investors of
the organization.
similarly people in the DAO
organization contribute money to the DAO by purchasing tokens that signify
their membership in the organization.
when the funding period ends it proceeds
to next step
Step
3
When the approval and implementation
process of the idea takes place or say the dow starts to operate,
people can now make proposals to the
DAO on how to spend the money and how the members can vote to approve those proposals,
this is how the first ever dow was launched
by slockett,
What
led the dow towards criticism?
this is due to the infamous dow hack,
Back in june 2016 hackers used dow's
vulnerabilities to assault its treasury,
the hackers were able to gain access
to 3.6 million ethereum valued around 50 million dollars.
This sparked a divisive debate among
DAO Investors,
with some demanding for the DAO to
be permanently dismantled,
initially vitalik buterin the
founder of ethereum advocated a soft fork of the ethereum network,
which included a piece of code that would
effectively blacklist the attacker and prohibit them from moving the stolen cache,
but soon after the problem was
detected in its code putting it vulnerable to assault,
after great debate a second
alternative a hard fork was suggested and subsequently implemented,
the hard fork effectively reset the ethereum
network's history and move the dal's ether to a different smart
contract, allowing investors to
withdraw their assets.
as a result of the hard fork two competing
and now distinct ethereum blockchains emerged,
those who opposed the hardport which
wiped back the blockchain's history backed the soft fork version which is now
known as ethereum classic etc,
the ethereum blockchain is the blockchain
that implemented the hard fork changing the blockchain's history.
DAO
The dao breach and related ethereum
hard fork shook the ethereum community and raised serious concerns about the developing
platform.
In hindsight vitalik buterin
ethereum developers and the global community made decisions that ensured the
ethereum blockchain survival in its early days,
since the DAO attack ethereum has increased
in importance as a foundation of blockchain cryptocurrency and decentralized
finance,
this occurrence i believe heralds the start of a new age for ethereum's public blockchain.
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