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DAO Runs Blockchain as an Alternative Source of Finance? Weighing Specialist


DAOs can be used for a number of purposes but are explicitly used for charities and capital raising.

Cryptocurrencies have grabbed global headlines in ways that were unlikely during the Russo-Ukrainian war. Whether it is the insistence of U.S. lawmakers to enact legislation to allow foreign crypto firms to do business with authorized Russian entities or Ukrainians to receive funds through cryptocurrencies, one such way is through a Scattered Autonomous Organization or DAO.

DAO, like cryptocurrencies, is powered by blockchain technology. Raj Kapoor, strategic advisor, equiDEI, described DAO in one line: “DAO is an internet community with shared bank accounts where people use Ethereum wallets.”

According to the Ethereum website, smart contracts define DAO community rules and no community member can change them except through voting.

DAOs can be used for a number of purposes but are used prominently for charity and to raise capital – the first of which occurred during the ongoing war.

UkraineDAO, a special initiative of the founder of the music group Pussy Riot, Nadezhda Tolokonnikova, has raised over $ 6 million by selling Non -Fungible Tokens (NFT) of the Ukrainian flag. According to its official website, all proceeds from the sale will be channeled to ‘Come Back Alive’, a non -profit organization, which helps the Ukrainian military.

“The case of Ukraine’s DAO shows that decentralized structures can be rotated quickly and cheaply as well as involve communities around issues of global concern,” said crypto expert Anndy Lian.

The UkraineDAO project, Lian observes, is an indication of how the DAO allows charities to bypass bureaucratic delays and direct funds into the pockets of those in need. “DAO is a more formal way to channel funds and at a lower cost in terms of money transfer fees,” he added.

DAO And Its Future

While the Russo -Ukrainian war has focused on the DAO – and crypto assets in general, this is not the first time the DAO has raised funds for any reason. For example, in November 2021, the ConstitutionDAO hopes to raise funds through the DAO to purchase a copy of the U.S. Constitution.

“DAO is the best way to incentivize the population during war – an alternative form of finance. Russia and Ukraine have the opportunity to see how DAO works, understand their weaknesses and make them better. This war can be a step towards DAO acceptance,” he said. Kapoor.

However, there are concerns about the possible use of DAO to circumvent global sanctions. But Lian said that crypto transactions are not anonymous and can be traced through public-private partnerships. Therefore, he said, any illegal channeling of funds can be controlled.

There are also major issues of DAOs not having a consistent regulatory framework. Crypto Specialist Lian supports the global DAO framework for greater sustainability. “Leaders need to be recruited internationally, such as through the UN, as well as by individual nation-states if the DAO is to prove sustainability,” he said.

DAO In India?

In India, DAO is likely to add another dimension to the financial sector. “India finds the role of autonomous organizations as cost efficient and helpful in facilitating business. They can have a positive impact on companies,” said crypto veteran Kapoor. He also added that DAO does not require a cryptocurrency, arguing that DAO uses blockchain technology that can also be used to create recruitment portals or travel -sharing applications.

The issue of regulating DAO and other crypto -related products is an elephant in the room that has yet to be addressed in India.

Kapoor feels that the government will eventually be open to adopting the DAO if it sees its benefits. India has been concerned about crypto assets being misused for terrorism financing and money laundering. Kapoor said that the regulatory framework, which he believes will come once the DAO is brought under some legal mechanism, will ensure any abuses are applied.

But the fine print of such a rule would be very important. Kapoor explains why: “DAOs eliminate the need for central authorities. Regulating DAOs presents issues of legal identity. Forcing DAOs to adhere to existing business structures can negate their decentralized aspects.”

While originality and compliance can still be key elements of the rules, it is difficult to bring ‘smart contracts’ under the framework as no changes can be made after they are created and this can be an issue if contract conditions change, he said.

Kishan Srivastava, Co -Founder, SDLC Corp., a crypto development and marketing firm, argues that regulations must use the KYT (know your transactions) mechanism to combat money laundering and terrorist financing through DAOs. “The KYT mechanism will focus on transaction behavior rather than user identity. This can help not only monitor real -time behavior of transactions but also ensure user privacy,” he said.

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