Have you ever dreamed of quitting your boring 9-to-5 job and joining a cool online community that shares your passion and vision? A community where you can work on exciting projects, make meaningful decisions, and earn rewards for your contributions. A community where you don’t have to deal with bosses, bureaucracy, or borders. A community where you are free to be yourself and express your ideas.

Sounds too good to be true, right?

Well, guess what? This is not a fantasy. This is the reality of decentralized autonomous organizations (DAOs), one of the most innovative and disruptive phenomena enabled by web3, the next generation of the internet that is powered by blockchain technology and decentralized networks.

In this blog post, we will compare and contrast DAOs with centralized organizations, which are the dominant form of organizing and collaborating today. We will look at how they differ in terms of their governance model and mechanism, user interface and experience, scalability and security. 

Are you ready to discover how DAOs are changing the way we work and collaborate online? Then keep reading!

‍

Governance Model and Mechanism

One of the main differences between DAOs and centralized organizations is how they make decisions and who makes them. In centralized organizations, there is usually a single entity or authority that has the power to control and direct the organization, such as a government, a corporation, or a non-profit. These organizations have a hierarchical and bureaucratic structure, where decisions are made by managers or leaders at different levels, and where rules and incentives are imposed from the top down.

This may sound familiar to you if you have ever worked in a traditional organization. You may have experienced some of the benefits of this model, such as clarity, consistency, and accountability. But you may have also experienced some of the drawbacks, such as rigidity, inefficiency, and corruption.

In DAOs, there is no single entity or authority that has the power to control and direct the organization. Instead, power is distributed among the members or stakeholders of the organization, who can participate in the decision-making process through voting or delegating. These organizations have a flat and democratic structure, where decisions are made by consensus or majority, and where rules and incentives are agreed upon from the bottom up.

This may sound unfamiliar to you if you have never worked in a DAO. You may be curious about how this model works and what are its advantages and disadvantages. Well, let’s take a look at an example of a DAO and a centralized organization that use different governance models and mechanisms.

‍

MakerDAO vs. Federal Reserve

MakerDAO is a decentralized lending platform that issues stablecoins pegged to the US dollar. Users can deposit crypto assets as collateral and borrow stablecoins to use for various purposes. MakerDAO is governed by its token holders who vote on proposals to change the system parameters or upgrade the protocol.

Federal Reserve is the central bank of the United States that controls the monetary policy and regulates the banking system. It is governed by a board of governors appointed by the president and confirmed by the senate.

These two organizations have very different ways of making decisions and managing their operations. MakerDAO relies on its community to decide how to run its platform, while Federal Reserve relies on its officials to decide how to run its economy.

‍

What are some of the pros and cons of each approach?

Well, one of the pros of MakerDAO’s approach is that it allows for more participation and innovation from its users. Anyone who owns Maker tokens can propose or vote on changes to the platform, which means that anyone can have a say in how it works. This also means that anyone can come up with new ideas or solutions to improve the platform or solve problems.

However this approach may lead to more complexity and uncertainty for its users. Since there are many proposals and votes happening all the time, it may be hard for users to keep track of what is going on or what is best for the platform. It may also be hard for users to reach consensus or majority on certain issues, which may result in delays or conflicts.

One of the pros of the Federal Reserve’s approach is that it provides more stability and predictability for its users. Since there are fewer people involved in making decisions, it may be easier for users to understand what is happening or what to expect from the economy. It may also be easier for users to trust that the decisions are made by experts who know what they are doing.

However this approach limits the input and feedback from its users. Since there are only a few people who have the power to make decisions, it may be harder for users to influence or challenge them. It may also be harder for users to voice their opinions or concerns about the economy or their situation.

And this is not only true for finance. DAOs can also be applied to other domains, such as social media and e-commerce. Let’s see how they compare in terms of their user interface and experience in the next section.

‍

User Interface and Experience

Another difference between DAOs and centralized organizations is how they interact with their users and what kind of experience they offer them. In centralized organizations, users typically access their services or products through websites or applications that are designed and maintained by the organization itself. These websites or applications have various features and functionalities that enhance the user experience, such as news feeds, groups, direct messaging, live streaming, stories, etc.

This may be what you are used to if you have ever used a popular online platform, such as Facebook, Twitter, or YouTube. You may have enjoyed some of the benefits of this interface and experience, such as convenience, variety, and entertainment. But you may have also encountered some of the drawbacks, such as censorship, manipulation, or exploitation.

In DAOs, users typically access their services or products through web3 tools such as wallets or browsers that are compatible with blockchain technology or decentralized networks. These tools allow users to interact directly with smart contracts or protocols that define the logic and rules of the organization. These tools also offer users more customization and personalization options, such as choosing their preferred network, currency, or identity.

‍

Uniswap vs. Coinbase

Uniswap is a decentralized exchange that allows users to swap any two tokens on the Ethereum network without intermediaries or fees. Users can access Uniswap through their web3 wallets, such as MetaMask or Trust Wallet, and connect to the smart contract that powers the exchange. Users can also create their own liquidity pools or join existing ones to earn fees from trading.

Coinbase is a centralized exchange that allows users to buy, sell, and store various cryptocurrencies with fiat money or other crypto assets. Users can access Coinbase through their website or mobile app, and use various features such as charts, news, alerts, or portfolio tracking. Users can also earn rewards by staking or lending their crypto assets on Coinbase.

These two platforms have very different ways of interacting with their users and providing them with different experiences. Uniswap relies on its smart contract to facilitate the exchange of tokens, while Coinbase relies on its website or app to facilitate the exchange of currencies.

Uniswap gives more freedom and choice to its users. Users can swap any tokens they want without having to register or verify their identity. Users can also set their own prices and fees without having to follow any market makers or order books.

However, using Uniswap may require more technical knowledge and skills from its users. Users need to have a web3 wallet and understand how to use it. Users also need to be aware of the risks involved in trading on a decentralized exchange, such as price volatility, liquidity issues, or smart contract bugs.

On the other hand, Coinbase makes it easier and simpler for its users to buy and sell cryptocurrencies. Users can use their fiat money or credit cards to purchase crypto assets. Users can also use various tools and features to help them manage their portfolio and learn more about the market.

With that being said, Coinbase takes away some of the control and ownership from its users. Users have to trust Coinbase to store their funds and execute their orders. Users also have to follow Coinbase's rules and regulations regarding their transactions and activities.

‍

Scalability and Security

A third difference between DAOs and centralized organizations is how they handle the growth and protection of their organization and its users. In centralized organizations, scalability and security are usually achieved by investing in more infrastructure, such as servers, databases, or firewalls, and by hiring more staff, such as developers, engineers, or security experts. These organizations can leverage economies of scale and scope to increase their efficiency and effectiveness.

This may be what you expect from a large and established organization, such as Amazon, Netflix, or Google. You may have benefited from some of the advantages of this method, such as speed, reliability, and quality. But you may have also suffered from some of the disadvantages, such as centralization, dependency, or vulnerability.

In DAOs, scalability and security are usually achieved by relying on the underlying blockchain technology or decentralized network that supports the organization and its users. These technologies and networks use various mechanisms, such as cryptography, consensus algorithms, or sharding, to ensure the integrity and availability of the data and transactions. These mechanisms also enable peer-to-peer collaboration and coordination among the users.

‍

Aragon vs. WordPress

Aragon is a platform that allows users to create and manage DAOs for any purpose or industry. Users can choose from various templates or modules to customize their DAOs according to their needs and preferences. Aragon runs on the Ethereum network, which provides security and scalability through its proof-of-work algorithm and its upcoming transition to proof-of-stake.

WordPress is a software that allows users to create and manage websites for any purpose or industry. Users can choose from various themes or plugins to customize their websites according to their needs and preferences. WordPress runs on a web server, which provides security and scalability through its PHP programming language and its MySQL database.

Aragon relies on the Ethereum network to support its DAOs, while WordPress relies on a web server to support its websites.

Aragon allows for more decentralization and diversity among its users. Users can create any kind of DAO they want without having to depend on a third party or a central authority. Users can also join any DAO they want without having to conform to a standard or a norm.

However Aragon may face some scalability and security issues due to the limitations of the Ethereum network. Since the Ethereum network is currently congested and expensive to use, it may affect the performance and affordability of the DAOs. It may also expose the DAOs to potential attacks or hacks from malicious actors.

On the other hand, WordPress offers more scalability and security options for its users. Users can choose from various hosting providers or services to host their websites according to their budget and needs. Users can also use various security measures or tools to protect their websites from threats or breaches.

But Wordpress creates more centralization and dependency among its users. Users have to trust their hosting provider or service to store their data and run their websites. Users also have to follow their hosting provider's or service's policies and terms regarding their websites.

‍

Conclusion

In conclusion, DAOs and centralized organizations are two different ways of organizing and collaborating online. They differ in terms of their governance model and mechanism, user interface and experience, scalability and security. While centralized organizations have some advantages in terms of user-friendliness, functionality, and reliability, DAOs have some advantages in terms of openness, transparency, and democracy.

As web3 continues to evolve and mature, we may see more hybrid models emerge that combine the best of both worlds. We may also see more innovation and experimentation in the field of DAOs as more users become aware of their potential and benefits.

If you are interested in learning more about DAOs or joining one yourself, here are some resources you can check out:

- https://deepdao.io/ - A dashboard of DAOs that you can analyze or compare

- https://metagov.org/ - A framework for building DAOs that you can use or contribute to

- https://snapshot.org/ - A tool for creating proposals and voting for DAOs that you can integrate or adopt