Challenges with DAOS

Fictitious decentralization – The power concentration in the DAO relies on the possession of the DAO’S governance tokens. This means that a group of people with the majority stake in the native tokens would have higher voting powers. Many raise a serious question: ‘ Are DAOS all about some rich folks encashing wealth?’ Thus, tokenomics plays a vital role in DAO’S fair governance.

Security – Many incidents repeatedly prove that, after all, it is just a code’. Even though smart contracts can do wonders, it also comes with their fair share of vulnerabilities. No matter how well the code is written or designed, there is always a probability of an error. The prime example is ‘The DAO’, as it was hacked due to vulnerabilities in its code base.

Poor corporate structuring – DAOS are currently in their nascent stages, which means it is still amidst many hits and trials to structure their functionality. It lacks the proper infrastructure to regulate some of the critical roles and responsibilities like finance, reporting, analytics, payroll, communication, diversity, inclusion, etc.

Despite all the advantages of a DAOS, it can be understood that it is not all rosy as it seems to be, i.e., every DAO is created with an ideology and comes with its own set of challenges and opportunities. Any challenge or current pitfall cannot take away the economic opportunities these decentralized organizations can create. Maybe once we see the mainstream adoption DAOS, there can be fewer

possibilities of current grueling issues like ‘moonlighting’ and ‘great resignations.’