Imagine a company or an organization that instead of being controlled by a CEO or a board of directors, is run by the people who use its services or participate in its community. This is essentially what a DAO, or Decentralized Autonomous Organization, is.
In simpler terms, a DAO is like a cooperative business or club where everyone involved gets a say in how things are done. But instead of having meetings in person, all decisions and rules are managed online, using blockchain technology. This setup ensures that the organization is decentralized, meaning no single person or group has complete control.
It’s autonomous because it essentially operates itself according to rules encoded in smart contracts, which are self-executing pieces of code on a blockchain.
How Does a DAO Work?
DAOs work through a series of smart contracts, which are basically programs running on a blockchain. These contracts define the rules of the organization, automatically enforcing decisions made by the community. Here’s a breakdown:
Proposals: Any member of the DAO can propose changes, new projects or other decisions about current operations or the future of the DAO.
Voting: Members then vote on these proposals. In a truly decentralized system, each vote is weighted by how much stake (often in the form of tokens) each member holds.
Execution: Once a proposal is approved by the majority, the smart contract automatically executes the decision without need for any human intervention.
DAOs represent a shift from traditional hierarchical structures to more community-driven models. Here’s why they’re significant in the web3 world:
Decentralization: Power is distributed among all members instead of concentrated into a single centralized entity, reducing the risk of corruption or poor management. This distribution also reduces the consumer-to-business trust necessary for an effective organization. In fact, DAOs could almost alternately be called democratized autonomous organizations, but decentralization is a more apt description.
Transparency: Every decision and transaction is recorded on the blockchain, making the organization’s operations fully transparent. For centralized organizations to achieve this level of transparency, there must be a well established routine of sharing information with the users, such as the way publicly owned companies share quarterly financial reports or how a traditional non-profit organization’s financials are shared with its community.
Inclusivity: Anyone with internet access and the required tokens can participate, making DAOs more inclusive than traditional organizations. Because of their ability to essentially manage themselves, DAOs lend themselves well to greater specialization, allowing people to participate in governance in fields for which they are especially qualified, no matter where they live in the world.
Global Reach: DAOs can operate across borders, allowing global participation without the need for a centralized authority.
Examples of DAO Benefits
To make this concept more relatable, let’s consider a few scenarios:
Community-Driven Development
Imagine a group of indie game developers who come together to create a new game. Instead of going through a traditional publisher, they form a DAO. Players and fans can buy tokens to join the DAO and vote on game features, funding allocation, or marketing strategies. This way, the game evolves according to the community’s preferences, and profits are distributed among all contributors.
In this example, the use of a DAO not only covers the governance of their project, but also provides development funding through the sale of tokens.
Charitable Organizations
A charity could be run as a DAO, where donors get to vote on which causes should receive funding. Because all transactions are on the blockchain, donors can see exactly how their money is being used, ensuring transparency and trust. As a result of these benefits, more people could be inclined to donate.
Government Organizations
While the governments of the world are understandably hesitant to begin using a technology as new as blockchain, DAOs would serve well for many aspects of government operations. As traditional democratized voting processes become more corruptible, the security and transparency of DAOs could help protect voting rights and election sovereignty, aligning more closely with the will of the people.
While the Gala ecosystem doesn’t currently operate as an official DAO, it shares many of the principles that make DAOs powerful. At Gala, community input is highly valued, especially through platforms like Discord and Telegram, where feedback is actively monitored and considered in decision-making.
For instance, Gala’s Founder’s Nodes—a network of community-run nodes—play a crucial role in maintaining and securing the GalaChain, which is a key part of the Gala ecosystem. These nodes are operated by community members, and the decisions regarding the ecosystem’s future increasingly involve community voting and participation, which mirrors the decentralized governance seen in DAOs. Nearly all important decisions about $GALA tokenomics are presented to the Founder’s Node community for a governance vote before being put into practice.
Gala’s Path Toward Decentralization
Gala is not just stopping at community feedback. The long-term vision is to move toward greater decentralized autonomy, similar to what a DAO offers. This means that as GalaChain evolves, Gala wishes to see control over the ecosystem gradually shift more toward the community, aligning with the ultimate goal of decentralization.
Even if Founder’s Node operators do not technically represent a DAO themselves, the goal is to see GalaChain channel creators ultimately having the ability to create DAOs for their project, platform, service, etc. We are creating a secure and scalable web3 ecosystem built on a layer-1 blockchain with the power to host numerous community-created DAOs.
In summary, while Gala isn’t a DAO in the strictest sense today, it embodies many DAO principles and is progressing toward a future where the community could have even more say in the governance and direction of the ecosystem.
Thanks for reading our latest web3 explainer article! Hopefully you learned a little something!
Imagine you’re digging for gold. You have your shovel, a lot of patience and the hope of striking it rich. Cryptocurrency mining is somewhat similar, but instead of using physical tools to dig in the ground, you’re using a computer to solve complex mathematical problems.
What is Cryptocurrency Mining?
Mining is the process through which new cryptocurrency coins are created and transactions are verified and added to a blockchain. The most well-known example of this process is Bitcoin mining. Just as gold miners invest time and resources to extract precious metals, cryptocurrency miners invest computing power and electricity to discover new coins.
How Does Cryptocurrency Mining Work?
The Basics
Cryptocurrency mining typically involves solving cryptographic puzzles. These puzzles are complex mathematical equations that require significant computational power to solve. When a miner successfully solves a puzzle, they can add a block of transactions to the blockchain and are rewarded with new coins. This process is known as “proof of work” (PoW). Once it can be proven that a miner has done the work, the tokens are effectively “mined.”
Transaction Verification: When someone sends a cryptocurrency transaction, it needs to be verified to ensure that the sender has enough funds and is authorized to send them.
Block Creation: Verified transactions are grouped together into a block.
Puzzle Solving: Miners compete to solve a cryptographic puzzle associated with the block. This puzzle is hard to solve but easy to verify once solved.
Block Addition: The first miner to solve the puzzle gets to add the block to the blockchain and is rewarded with new coins.
Reward Distribution: The miner receives a reward, typically in the form of newly minted cryptocurrency and transaction fees.
Why is Mining Important?
Mining plays a crucial role in maintaining and securing the blockchain network. It ensures that all transactions are legitimate and prevents double-spending. By requiring miners to solve complex puzzles, the network remains decentralized and resistant to attacks. This decentralized nature is a core principle of cryptocurrencies, promoting security and trust without relying on a central authority.
Different Methods of Cryptocurrency Mining
CPU Mining: This was the original method of mining Bitcoin, using a computer’s central processing unit (CPU). However, it’s no longer effective due to the high difficulty of mining puzzles.
GPU Mining: Graphics processing units (GPUs) offer more computational power than CPUs and are more effective for mining.
ASIC Mining: Application-specific integrated circuits (ASICs) are specialized devices built specifically for mining cryptocurrencies. They are the most powerful and efficient miners but are also expensive.
Cloud Mining: This allows individuals to rent mining hardware from a provider. It’s a way to mine cryptocurrencies without having to buy and maintain mining equipment.
Energy Conversion: Turning Electricity into Digital Gold
Mining is essentially the conversion of energy into digital value. Miners use electricity to power their hardware, which performs the complex calculations needed to mine cryptocurrencies. This process consumes a significant amount of energy, leading to debates about the environmental impact of mining. However, the energy used also serves to secure the network and verify transactions, making it an integral part of the blockchain ecosystem.
Mining on GalaChain: Rewarding Founder’s Nodes
In the Gala ecosystem, the equivalent to mining is the operation of Founder’s Nodes. These nodes provide the computational power necessary to maintain the decentralized network and are rewarded with $GALA tokens. Founder’s Node operators play a crucial role in supporting GalaChain’s infrastructure, similar to how miners support the Bitcoin network.
How Founder’s Nodes Work
Computational Contribution: Node operators contribute their computing power to support the network.
Reward Mechanism: In return for their contribution, operators are rewarded with $GALA tokens.
Decentralization: This system helps maintain the decentralized nature of the Gala ecosystem, ensuring that no single entity has control over the network.
Interested in running a Gala Founder’s Node for daily $GALA rewards? LEARN MORE
Proof-of-Work (PoW) is a consensus mechanism used in blockchain networks to validate transactions and secure the network.
Proof-of-Work (PoW) was the pioneering consensus mechanism that laid the groundwork for blockchain technology. It has since been joined by several other alternatives, each with its own strengths and weaknesses. Several of these alternatives will be explored below.
It is the method by which network participants, known as miners, solve complex mathematical problems to add new blocks of transactions to the blockchain. Think of it as a competitive puzzle-solving race where the first participant to solve the puzzle gets to add the next block to the blockchain and is rewarded for their effort.
Gold Fever
Bitcoin has often been referred to as “digital gold” for several reasons: First, it has a finite total supply, just like gold buried within the rocks of the earth. Next, it acts as a store of value in the same way as gold, providing an alternative way to hold wealth to the world’s Fiat* currencies.
* “Fiat currency” is derived from the Latin “fiat,” which means a determination by an authority, or an arbitrary order. Basically, Fiat currencies are those decided upon and approved by governmental authorities… they have value because an authority told us they do.
Finally, Bitcoin resembles gold because it must be mined, converting time and energy into the retrieval of BTC for miners. In the same way, gold miners must commit financial resources, time and energy into their operations. A miner who only expects to find a few specks of gold can probably do so in a wise location with only simple panning equipment, but a large company with employees and equipment expenses needs to mine a great deal more gold to prove a profitable venture.
How Does Proof-of-Work Work?
Transaction Bundling: When users initiate transactions, these are grouped together into a block by miners.
Puzzle Solving: Miners compete to solve a cryptographic puzzle, which involves finding a hash (a fixed-length string of characters) that meets specific criteria. This process is computationally intensive and requires significant processing power. Most of these computations are executed by GPUs (Graphics Processing Unit) because of their ability to quickly perform extremely complex calculations.
Block Validation: The first miner to solve the puzzle broadcasts their solution to the network, which is then verified by other miners. If the solution is correct, the block is added to the blockchain.
Reward: The miner who successfully adds the block is rewarded with newly created cryptocurrency and any transaction fees from the transactions included in the block.
Security: PoW secures the blockchain by making it computationally expensive to alter any part of the blockchain. To change a block, an attacker would need to redo the PoW for that block and all subsequent blocks, requiring immense computational power.
Decentralization: PoW allows a decentralized network of miners to compete to validate transactions, reducing the risk of central control.
Integrity: It ensures that all transactions are processed in a trustless manner, meaning participants do not need to trust a central authority but can trust the network’s consensus rules.
“Consensus” in web3 – An agreement between all participants in a blockchain network on the order and content of blockchain blocks.
Proof-of-Work Simplified
Imagine a large-scale Sudoku competition where participants race to solve the puzzle. The first one to complete it correctly gets a prize and publishes their solution, which others can quickly verify as correct or incorrect.
Think of the PoW puzzle as a lock and the solution as the key. Each miner tries different keys (hash values) until one fits (meets the criteria). The first one to unlock the lock (solve the puzzle) can add a new block to the blockchain and collect its associated rewards.
Energy Consumption: PoW requires significant computational power, which translates to high energy consumption, raising a plethora of environmental concerns. This concern has been the primary driver of development of alternative consensus mechanisms in web3.
Centralization Risks: Despite being a decentralized mechanism, PoW can lead to centralization of mining power in regions with cheap electricity or in the hands of entities that can afford specialized hardware. Some people worry that mining operations will become overly centralized with this approach, especially if reward value continues to increase at a level that will justify large scale operations and great expense.
Scalability Issues: PoW networks, like Bitcoin, face scalability challenges due to the time and resources required to solve the cryptographic puzzles and add new blocks.
Alternatives to Proof-of-Work
In response to these challenges, alternative consensus mechanisms have been developed, such as Proof-of-Stake (PoS), which relies on validators who stake their cryptocurrency to propose and validate blocks, requiring less computational power.
Proof-of-Stake (PoS)
The main alternative to Proo-of-Work is Proof-of-Stake, in which Validators stake their cryptocurrency to participate in the network. They are selected to create new blocks based on the amount of staked cryptocurrency.
Strengths
Energy-efficient: Significantly less energy consumption compared to PoW.
Faster transaction times: Can process transactions more quickly.
Weaknesses
Potential for centralization: Wealthier validators can have greater influence.
Security risks: Vulnerable to attacks like the “nothing-at-stake” problem (when the cost to create blocks becomes too low).
With this mechanism, token holders vote for delegates who validate blocks. With fast transaction times, this method closely resembles PoS but with increased scalability. However, decentralization is reduced because more staking power can be concentrated in the hands of fewer delegates. Plus, if delegates are compromised for any reason, things can go awry for the chain.
Other Consensus Mechanisms
Proof-of-Authority (PoA): Relies on a pre-selected group of validators to validate transactions.
Proof-of-Burn (PoB): Requires users to destroy cryptocurrency to become a validator.
Proof-of-Capacity (PoC): Uses hard drive space as a measure of stake.
Proof of Storage (PoS): Validators prove they are storing data to secure the network and earn rewards.
GalaChain is a highly advanced blockchain, first built by our web3 experts to accommodate the rapidly expanding and evolving needs of gaming and entertainment.
It uses a special hybrid model of pluggable blockchain consensus. GalaChain was built on the Hyperledger Fabric protocol, which allows consensus to be highly customizable on individual channels. An Ordering Service works with predesignated peers on the network to sign transactions in a multi-step, asynchronous system.
Despite its criticisms, PoW remains a foundational technology in the blockchain space, particularly for major cryptocurrencies like Bitcoin. Innovations and improvements in mining technology and energy efficiency are being explored to mitigate its environmental impact. Even as other consensus mechanisms are introduced, Proof-of-Work elements will still be used in a growing variety of hybrid consensus models.
Even if Proof-of-Work is gradually phased out of prominence as a consensus mechanism, it will continue to work well as an educational basis to help anyone understand the decentralized nature of blockchains and cryptocurrencies.
Proof-of-Work is a vital component of many blockchain networks, providing security, decentralization and integrity. Understanding PoW is essential for grasping how blockchain technology works and its implications for the future of digital transactions and decentralized systems.
Imagine an unchangeable digital ledger that records transactions across numerous computers in a way that guarantees the security and transparency of the data. This is the fundamental idea behind blockchain technology.
A blockchain is a decentralized, distributed ledger that records transactions in a way that is secure, transparent and immutable.
The Gala ecosystem has its own blockchain, built first for gaming but prepared to power projects from numerous industries beyond entertainment. It’s called GalaChain.
How Does Blockchain Work?
To understand the meaning of blockchain, let’s break down its key components and processes:
Blocks
A block is a collection of data or transactions. Each block contains a list of transactions, a timestamp and a unique identifier called a hash. The hash is like a digital fingerprint that uniquely identifies the block and its contents. No hash is identical to any other.
Chain
Blocks are linked together in a linear sequence, forming a chain, hence the name “blockchain.” Each block contains the hash of the previous block, creating a secure and chronological order of transactions. This linkage ensures the integrity and immutability of the blockchain.
Decentralization
Instead of a single central authority, a blockchain is maintained by a network of nodes (computers). Each node has a copy of the entire blockchain and participates in validating and recording transactions. This decentralized nature eliminates the need for intermediaries and increases security.
For example, the GalaChain ecosystem is largely powered by a decentralized network of Founder’s Nodes, operating through software on the home computers of community members. This is vastly different from a single warehouse that hosts all the data on centralized servers.
Consensus Mechanisms
To ensure all nodes agree on the state of the blockchain, consensus mechanisms are used. Common mechanisms include Proof of Work (PoW), where nodes solve complex mathematical puzzles to validate transactions, and Proof of Stake (PoS), where nodes are chosen to validate transactions based on the amount of cryptocurrency they hold and are willing to “stake” as collateral. We’ll dig deeper into these concepts in a future blog.
Cryptography
Blockchain uses cryptographic techniques to secure transactions and control the creation of new units. Public and private keys are used to sign transactions, ensuring that only the owner of the cryptocurrency can transfer it. The cryptography involved in public and private keys cannot be broken by any current computing methods, making it a secure and reliable way to store and transact data.
Why is Blockchain Important?
Blockchain technology offers several unique advantages, coming together to make it the cornerstone of the web3 revolution:
Security
Blockchain’s decentralized and cryptographic nature makes it highly secure. Once data is recorded in a block, it is nearly impossible to alter without changing all subsequent blocks, which requires consensus from the network.
Transparency
All transactions recorded on a blockchain are transparent and can be viewed by anyone. This transparency builds trust among participants and ensures accountability.
Immutability
A transaction cannot be altered or deleted once it has been added to a blockchain. This immutability ensures the integrity of the data and prevents fraud.
Decentralization
Blockchain operates without a central authority, reducing the risk of central points of failure and increasing the system’s resilience.
Efficiency
Blockchain can streamline numerous processes by eliminating the need for intermediaries, reducing transaction times and lowering costs.
Real-World Applications of Blockchain
Cryptocurrencies
Bitcoin, Ethereum and other cryptocurrencies like $GALA (commonly referred to as “altcoins”) rely on blockchain tech to enable secure and decentralized transactions. Cryptocurrencies use blockchain to record all transactions to transparency and prevent double-spending.
Supply Chain Management
Blockchain can enhance supply chain transparency by providing an immutable record of the journey of goods from origin to destination. This helps in verifying the authenticity of products and reducing fraud.
Healthcare
In healthcare, blockchain can securely store and share patient records, ensuring data privacy and improving interoperability between different healthcare providers.
Governance and Voting
Blockchain-based voting systems can enhance the security and transparency of elections. By providing a tamper-proof record of votes, blockchain can help prevent electoral fraud and increase voter confidence, no matter the context.
Gaming and Entertainment
Ecosystems like Gala use blockchain to manage digital assets and transactions. $GALA, the native token of the GalaChain ecosystem, facilitates secure and transparent in-game transactions and rewards.
To learn more about the GalaChain ecosystem and the $GALA token, read the Ecosystem Blueprint.
The Future of Blockchain
As blockchain technology continues to evolve, its potential applications are vast and transformative. Here are a few trends to watch:
Interoperability
Future blockchains will focus on interoperability, allowing different blockchains to communicate and share data seamlessly. This will enhance the overall functionality and adoption of blockchain technology.
While nearly every blockchain innovator sees interoperability as a key piece of the mass adoption puzzle, very few have made meaningful progress toward that goal and many blockchains exist “in their own world” with stringent onboarding requirements. This is why GalaChain was built to seamlessly bridge assets to and from the massively popular Ethereum Virtual Machine.
Scalability
Improving the scalability of blockchain networks is a key focus. Solutions like sharding and layer-2 protocols aim to increase transaction speeds and reduce costs, making blockchain more practical for large-scale applications.
Decentralized Finance (DeFi)
DeFi platforms are creating a parallel financial system that operates on blockchain, offering services like lending, borrowing, and trading without traditional intermediaries. This could democratize access to financial services globally, but it presents a unique set of challenges in terms of regulation.
Non-Fungible Tokens (NFTs)
NFTs are unique digital assets stored on the blockchain. They are revolutionizing the way we think about ownership and value in the digital world, impacting industries such as art, music, and gaming. These digital assets are one of the easiest applications of blockchain to understand. Imagine a unique digital collectible with a built-in certificate of authenticity. That’s an NFT
Regulatory Developments
As blockchain technology gains mainstream adoption, governments and regulatory bodies are working to create frameworks that balance innovation with security and compliance.
Blockchain is Here to Stay
Blockchain technology is a revolutionary innovation that underpins the Web3 movement. By providing a secure, transparent, and decentralized way to record and verify transactions, blockchain is transforming industries and paving the way for a more open and inclusive digital future. As the technology matures, its applications will continue to expand, driving innovation and creating new opportunities.
Stay tuned for more blogs in our explainer series, where we’ll dive deeper into the fascinating world of Web3 and its key concepts!
Hot on the heels of our massively successful GALAthon 24 hour hackathon event during GDC 2024, we’re proud to announce a new GalaChain strategic partnership with CoinEasy, the all-in-one web3 education platform. CoinEasy is a pioneering project committed to making cryptocurrency education accessible and understandable in South Korea.
This collaboration is set to revolutionize the way individuals interact with and understand blockchain tech and cryptocurrency. To reach our ambitious goal of onboarding the world’s first billion users to web3, education is an essential piece of the puzzle.
CoinEasy: Your Gateway to Crypto Knowledge
CoinEasy streamlines crypto education, designed with the goal of demystifying the often complex world of blockchain. By leveraging the cutting-edge technology of GalaChain, CoinEasy offers secure, comprehensive, and easy-to-navigate educational content and tools. Whether you’re a beginner curious about crypto basics or an advanced user looking to deepen your knowledge, CoinEasy provides a wealth of resources tailored to the Korean audience.
A Platform Built for All
What sets CoinEasy apart is its focus on inclusivity and accessibility. Understanding that the journey from web2 to web3 can be daunting for many, CoinEasy employs account abstraction to seamlessly onboard users onto its platform, preparing them to interact with GalaChain. This approach ensures that no matter your level of technical expertise, engaging with a robust digital economy has never been easier.
Download CoinEasy Today
To start your crypto education journey with CoinEasy, download the app now available on both iOS and Google Play:
Through this partnership, Gala and CoinEasy aim to empower individuals in South Korea to confidently navigate the digital economy. By providing accessible education and practical tools, we hope to foster a knowledgeable and engaged crypto community, ready to take advantage of the many opportunities that blockchain technology and cryptocurrencies have to offer.
A Vision for the Future
As we join forces with CoinEasy on a mission of crypto education, Gala remains committed to our mission of leveraging web3 technologies for empowerment, innovation and inclusivity. This partnership is not just about providing education; it’s about building the foundation of a more informed and confident crypto community in South Korea and beyond.
Stay tuned for updates on this exciting partnership, and join us in welcoming a new era of crypto education with Gala and CoinEasy. Together, we’re making the world of blockchain and cryptocurrencies accessible to everyone.
Keep a close eye on GalaChain, because the massive rollouts, updates, and partnership announcements are just getting started. Welcome to a new world of user empowerment in the blockchain age.
