With the creation of blockchain networks and decentralized finance, we have created many ideas that serve to help reach societal goals. MetisDAO has created the DAC, or Decentralized organization. Other blockchain networks may also employ DACs.

Instead of creating DAOs, people can create DACs, though they would first have to learn about the differences and similarities between DACs and DAOs.

DACs (Decentralized Autonomous Corporations) and DAOs (Decentralized Autonomous Organizations) are both decentralized entities that operate on the blockchain. They share similarities in terms of their decentralized nature, transparency, and immutability, but there are also key differences. DACs are focused on creating a decentralized business model, while DAOs are focused on decentralized decision-making and governance. Both have their unique advantages, with DACs being better suited for businesses looking to build a decentralized business model and DAOs being better suited for communities looking to govern themselves in a decentralized manner. Ultimately, it depends on the specific use case and goals of the organization as to which one may be more beneficial.

DACs and DAOs are used to organize society as either an organization or a competitive company. But first… Let’s get into what exactly a DAC and a DAO are. This can help us differentiate between the two and see which one is more useful for certain things.

Unlocking the Secrets: Understanding the Differences and Similarities Between DACs and DAOs in the Blockchain Space

What is a DAC(Decentralized Autonomous Company) in Crypto?

DAC stands for Decentralized Autonomous Company. The intention of a DAC is to connect a group of people together through a business between both physical and online connections to achieve certain business goals. A DAC is essentially an on-chain decentralized business.

Members of the business can have voting and governance on-chain. The only real difference between a DAC and a physical business is that DACs perform online and on-chain and have decentralized features. They can do everything that an off-chain / physical business does, including marketing, teamwork, meetings, payroll, accounting, etc.

DACs are used to improve the Web3 economy. DACs are used to separate tasks between different people just like an ordinary business would. They can also be used to delegate tasks to important people and give them special permissions. A web3 economy will have all types of businesses that interact with each other. DeFi and Gamefi will be able to be interconnected to a greater degree with DACs.

A DAC is a subcategory of a DAO, since with a DAO the only special characteristic is voting and governance. We will explain these differences in a later part of this post.

One advantage about using a DAC is that people will have an easier time making and being part of a business online as opposed to in person. This is because you can interact with people from all over the world. Meeting with people through the web is also easier with software like Zoom and Facetime being available. Employees do not have to travel to meet their coworkers or to get business done.

What is a DAO?

A DAO is an acronym for Decentralized Autonomous Organization. It is an organization with rules put in place by code in a smart contract. The organization is not ruled by a central authority like a government. There is no CEO or president who makes core decisions. Another feature of a DAO is that it inherits the security and transparency of the blockchain on which it is deployed on. For example, since cryptocurrencies like Ethereum are transparent, DAOs that are executed on Ethereum are also transparent.

A distinctive feature of DAOs is that they have their own governance systems put in place. Members of the organization can vote in favor of decisions and proposals. The results take place and get recorded in the blockchain. These results are also permanent unless the DAO votes to reverse them or change them.

This is different than changing the form of governance because once the DAO is executed, the smart contract is permanent.

The DAO has governance tokens to figure out who is eligible to vote. These governance tokens are usually sold on the open market. Acquiring a certain number of these tokens allows the owner special voting permissions. They can vote on different decisions and can influence the direction of the DAO.

The Ins and Outs of DACs and DAOs: How They Differ and How They Are Similar in the Blockchain Space

Now that we know what exactly a DAC and a DAO are, we can compare the two. A DAC is just a more specific application of a DAO, but they both have their differences.

DAC Vs. DAO
	DAC (Decentralized Autonomous Company)	DAO (Decentralized Autonomous Organization)
Voting and Governance	Yes	Yes
Purpose	Tailored Towards Business and Profit Making	On-chain Organization with Governance
Completely Decentralized	Yes	No
Potential of Becoming Completely Efficient	Yes	No
Profit Distribution	As actual dividends	As Rewards and Airdrops
Valuation Container	Individual-centric	Organization and Tokens
Main Network Launched on	Metis Andromeda	Ethereum
Cost to create a DAC	10 $METIS	0.2 $ETH

Decentralized Organizations 101: Exploring the Distinction between DACs and DAOs in the Blockchain Space

Are DACs and DAOs Completely Decentralized?

DAOs are not completely decentralized since an entity can buy many tokens on the open market and have the upper hand in voting power. This effectively can create a plutocracy. Not all DAOs are like this, but most are. Many DAOs like Uniswap also have a few people who make major decisions on where the protocol is to go next.

DACs on the other hand have another system of governance. Instead of having traditional governance tokens, governance is chosen by people who have the most reputation. Reputation is given to the people who contribute and who add value to the organization. In this case, it is difficult for someone to buy tokens and then be able to vote on the protocol even if they are completely new to it.

The Efficiency of DACs and DAOs

DACs are a very specific type of DAO that are specifically designed to act as businesses. Therefore, it is incumbent upon them to be able to handle business-like functions autonomously. This can include functions like taking payroll, communications, and other administrative tasks.

DAOs on the other hand, are used for a much broader outlook. They are not entirely efficient when it comes to business-like ventures.

Profit Distribution of DACs and DAOs

DAOs can choose to be either profit or nonprofit organizations. If they choose to be profit-making organizations, profits are distributed through rewards or airdrops. DACs on the other hand, are specifically designed to distribute profits as dividends.

The Valuation Container of DACs and DAOs

DACs have a system in place that awards contributors and team members with reputation power. This system is recorded permanently through an NFT. As such, the value of the DAC comes from its team members and not the value of the governance token or the organization as a whole (Like a DAO).