Learn on SubDAO: Can DAOs Bring Decentralization to the Brick-and-Mortar World?

SubDAO Protocol
6 min readJun 17, 2022

DAOs, or Decentralized Autonomous Organizations, have gradually moved from being a mere theoretical blockchain concept to creating decentralized organizations. However, many are still wondering about the limits of DAOs and how well they can succeed in real-life implementation. By definition, DAOs are organizations that can independently run without any management structure. They’re entirely transparent because their code is available to everyone involved in the project.

We’re seeing a shift from centralized platforms like Uber and Airbnb to decentralized alternatives like Arcade City and La’Zooz. These decentralized options of our traditional platforms aim to eliminate intermediaries and provide greater transparency, control, and incentives to all parties involved with each transaction. Furthermore, the governance model of these organizations is decentralized, no one imposes decisions or regulations, but all parties come together as a community to set their own rules in consensus.

As a result, this raises an interesting question: more than applying decentralization to real-life internet-based businesses, can brick-and-mortar company settings run as DAOs?

Theoretical Basis of DAO integrations

The real problem with mainstream businesses lies in their rigid and static nature. Current systems limit decentralization in decision-making since companies are run by a few people, and employees with more direct contact with the customers have very little input. As a result, these businesses lack flexibility, adaptability, and an honest assessment of employee/customer feedback. Most importantly, they fall short when it comes to giving customers a sense of ownership and control over their marketplace transactions. Customers want more than automated tasks; they want inclusion, autonomy, and choice in exchange for their loyalty. In addition, employees feel more valued when they are part of the business and not just a means to making money.

Hence, DAO integration in businesses seeks to decentralize power structures to enable better decision-making, which will facilitate unbeatable services rendered to customers. Previously, DAOs have been used to significantly affect various decentralized applications and projects; however, their functionality has largely been limited to digital spaces where participants exist primarily online. Moreover, the concept of DAOs being used within brick-and-mortar settings has not yet been fully explored. This piece examines whether a decentralized autonomous organization could function within real-world settings while maintaining its fundamental principles: automation and decentralization of decision-making.

Recent Experimentations with DAOs integration

Integrations of DAOs in businesses have been varied; an example is Arcade City which is a ride-sharing service run by a decentralized autonomous organization. The company’s mission is to create peer-to-peer ride-sharing platforms that are more efficient than existing alternatives. By creating genuinely decentralized platforms for ride-sharing, Arcade City hopes to eliminate many issues with existing ride-sharing services: driver exploitation by intermediary companies, lack of transparency; exorbitant fees; lack of genuine peer-to-peer transactions; and much more. Furthermore, the drivers in the system create “guilds,” which are DAOs, helping them make decentralized decisions to provide optimal services.

Arcade City is an online business, and its operation model slightly differs from a brick-and-mortar. Hence, an excellent example of the integration of DAOs in brick-and-mortar businesses is The Cafe DAO, which was established as the owners wanted a decentralized Starbucks. Smart contracts run the coffee shop, and it even has its cryptocurrency. Customers can purchase their cups with coffee tokens. The system then tracks all transactions on a blockchain. This makes it possible for customers to see how much money goes into each cup of coffee. Purchasing a cup of coffee means the customers will have a say in the running of the business, and the profits are shared by all the token holders, not just the executive team. Token holders may redeem their currencies for fiat currency or keep them for governance rights. One cup of coffee equals one vote on whatever proposals the DAOs members make.

Limitations of current DAO Integrations

Many blockchain enthusiasts are frustrated that their favorite technologies are not yet integrated into mainstream business settings. As a result, many will claim that blockchain is not ready for mainstream applications. Many of the criticisms are usually focused on the relatively poorer scalability and interoperability of blockchain technology compared with conventional methods.

It may be pretty challenging for decentralized organizations to run a day-to-day physical business via blockchain technology efficiently, because when put side-by-side with traditional systems, blockchain-based systems may be somewhat slower and more rigid.

Another problem the existing DAO integrations faces is a lack of customer service options, making it difficult for customers and merchants to interact effectively. For example, users might find it hard to resolve issues such as refunds or shipping errors without help from third parties who may not respond quickly enough.

Future Potential of DAO Integrations

There is a growing demand for decentralization in our communities. Still, it might be more viable for certain areas of society than others. For example, a digital entity like a smart contract can efficiently function without being bound by legalities or third-party approvals, but what about physical goods and services? What role could DAOs play in industries like retail or hospitality? More importantly, are there any industries that wouldn’t benefit from some level of decentralization and automation?

To answer these questions, it’s essential to start by looking at some successful decentralized companies. Then start thinking about how their structure would change if they had no one telling them what to do — no investors demanding profits and no shareholders asking for quarterly reports. Instead, the entire business could run on a blockchain, with organization members, customers, and employees incentivized through cryptocurrency tokens.

Whether this is feasible isn’t yet clear; many digital businesses/companies expect disruption in certain areas of their lives, and it doesn’t take much foresight or creativity to predict that there will be more of it in the future. However, one sector that hasn’t yet felt true disruption is that of local businesses. While overall business sales numbers are substantial, small businesses are struggling due to competition from corporate chains and other small businesses that can undercut prices easily.

A possible way for small businesses to gain leverage over larger competitors is by building loyalty through transparency and earning trust by being honest about how they operate. Another way to gain leverage is for customers to get involved in making decisions that affect how those companies run daily. This can be implemented using DAOs and is another example of how blockchain technology is poised to disrupt traditional industries. This means that anyone can participate in a DAO regardless of where they live or which currency they use, as long as they know how to access and use cryptocurrency.

It is an exciting time for blockchain, especially as institutions and governments continue to research and explore how they can integrate blockchain into their existing infrastructures. While we’re still early in our understanding of how decentralization will work at scale, we know that blockchain is a lot more than just bitcoin. Blockchain has the potential to transform everything from healthcare records and online shopping transactions to land titling and voting rights.

About SubDAO

SubDAO is a multi-chain DAO protocol. It allows any decentralized organization to swiftly create and manage DAOs. We are committed to serving as a Web3.0 entry by providing blockchain-based digital agreement signing, DAO social networking, asset management, and other tools and services.

The founding team of SubDAO is composed of the former Technical Team leader of the IBM Group and many early well-known developers from Polkadot. SubDAO has completed multi-million dollar financing from dozens of institutions including Hypersphere, Huobi Ventures, OKEx Blockdream Fund, as well as investment by Messari founder Ryan Selkis.

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SubDAO Protocol

SubDAO is a DAO infrastructure that helps manage digital assets through middleware, multi-sig, and other decentralized features.