ParaState as a Decentralized Autonomous Organization (DAO)

The concept for a new management model called a decentralized autonomous organization (DAO) has been circulating in the cryptocurrency community since blockchain technology made its emergence a decade ago at the hands of Bitcoin. Its main idea is to establish an organization that can function fully without hierarchical management.

In essence, DAOs are societies without the human factor. A DAO technically does not have as its initial goal the generation of profits, but rather it configures an organizational system.

It presupposes the maximum expression of the decentralization of associative structures, strictly linked to the supreme ideal of freedom, which directly affects the conception of governance.

ParaState as a blockchain project focuses its organization on the decentralized scheme represented by DAOs, as a way to empower its community of users and developers vital to the operation of its ecosystem.

Decentralized versus centralized organizations

DAOs are a new revolutionary form of organization replacing the increasingly irrelevant prevailing corporate model, so far as its ability to respond to the new realities that the blockchain world raises.

Through a set of rules encoded in smart contracts, a DAO technically goes into operation. This model supports the fully autonomous management of decentralized organizations and their associative structures.

The information of the DAO is stored to be accessed publicly and guarantee its security, highlighting the structural and foundational principles of blockchain that make it possible to take advantage of its benefits in contexts of corruption or mistrust.

Currently the companies that provide blockchain solutions are established centrally in a country whose regulatory system provides a guarantee of transparency and debureaucratization. The founding “partners” renounce their shares or shareholdings for the benefit of the ecosystem, establishing ab initio that the community will have the architecture of a DAO.

Here, through tokenization, the functions given to the native ecosystem governance token to allow and facilitate the governance of the DAO is vital, giving rise to the figure of the “decentralized autonomous partner”.

As we can see, there are no employees, there are no unions; instead there are autonomous partners who in a free and self-organized way seek the well-being of the ecosystem and work for a common goal.

In traditional organizational schemes, entities or companies are constituted with a traditional hierarchical system in which the founding partners are responsible for making decisions about the direction of the company.

If the decisions are correct, there is nothing to worry about. Otherwise, many people are affected by the decisions of a few.

ParaState as an Autonomous Organization

ParaState is a decentralized autonomous organization (DAO) funded by license fees (as a percentage of gas fees) generated by transactions on other networks using ParaState technology.

The use of rules encoded in smart contracts is the basisfor its operability. ParaState has an internal token, represented by STATE tokens that can be spent by the organization or used to reward certain activities within it.

Any blockchain project that is interested in taking advantage of the technical advantages of ParaState EWASM will be charged licensing fees in the native currencies of these blockchains. Therefore, the intrinsic value of STATE is backed by a basket of native cryptocurrencies from these blockchain projects.

Users who own the STATE token have the right to vote and the possibility to influence the operation of the DAO represented by the ParaState Foundation, which manages the developer treasury and executes the decisions of the DAO at the very beginning.

All decisions about where and how to spend your funds are made by consensus. Furthermore, all financial regulations and transactions are recorded on the blockchain.

ParaState intends to initially rely on off-chain voting protocols such as Snapshot to account for votes, and will seek to develop more direct participation.

Token holders wishing to participate in the governance of the EWASM’s development may have the option in the future of staking their tokens in exchange for a proportional vote on the development of the technology.

Of the collection of license fees for the EWASM runtime/pallet, 90% will be distributed to the DAO treasury, while the remaining 10% will go to the long-term development reserve.

Automated Democracy and the ParaState DAO

Using blockchain technology for the organization of projects is a great idea that tries to solve everything that is wrong in the way that centralized modern organizations are managed.

ParaState firmly believes that a perfectly structured DAO will give every user in its ecosystem an opportunity to shape the organization. Without a hierarchical structure, anyone can present an innovative idea that can then be considered by the rest of the parts which make up the organization.

This represents the true spirit of decentralization represented by blockchain technology when it was introduced by Nakamoto through Bitcoin a decade ago. Since all financial decisions, rules and transactions are recorded on the blockchain, available for review by anyone, DAOs are completely transparent. A standard in ParaState’s vision.

For more on how ParaState is Building a Decentralized DAO to Future Proof Inter-Chain Development, see the BanklessDAO Interview with ParaState Founder Marco Chen.

About ParaState

Known as Ethereum on steroids, ParaState is a multi-chain smart contract platform bridging the application and developer ecosystem between Polkadot, Substrate and Ethereum, as well as other chains wanting to provide Ethereum compatibility. While supporting the EVM pallet to provide seamless compatibility with all existing Ethereum applications, ParaState also provides developers with a next-gen smart contract implementation environment, Ethereum-flavored WebAssembly. These two infrastructures are ensured to talk to each other and share the same account system on ParaState.

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