The decentralized finance world and blockchain technology are emerging to a new form of organizational structure which is known as Decentralized Autonomous Organizations or DAOs. DAOs are autonomous entities generated by a community of users through consensus mechanisms by employing blockchain technology.
The development concept behind these DAOs lies in Solidity’s programming language. It is a popular language among the blockchain community and plays a crucial role in Blockchain Development Services, allowing developers to write programs for implementing smart contracts that run on the Ethereum Virtual Machine (EVM). In this article, we will explore the various aspects of Solidity, including its real-world applications. Let’s begin with the basics.
What is Solidity?
Solidity is an OOPS-based programming language for the implementation of smart contracts. It is inspired by popular programming languages such as C++ and JavaScript. It was created to expressly be compiled on the Ethereum Virtual Machine (EVM). As a result, Solidity can create secure Ethereum-compatible smart contracts for any blockchain that supports the EVM.
How does Solidity work?
Developers working in DeFi Development Company can write smart contracts. These contracts are basically programs running on the EVM. Just like other languages, these contracts can have multiple functions, internal states, and public declarations. Here’s how Solidity works to change the state of the EVM:
1. Developers have to write smart contracts in Solidity
2. These contracts are then compiled into bytecode
3. Bytecodes are then converted into EVM opcodes
4. EVM opcodes alter the state of the EVM
The EVM functions as a virtual state machine and record keeper for Ethereum’s “global computer.” To put it simply, the EVM keeps track of the network’s global state, including addresses, account balances, and token holdings.
Solidity smart contracts are used to modify the EVM’s global state. Actions like minting tokens, sending and receiving tokens, and releasing assets modify the global state of the EVM.
What are DAOs?
Decentralized Autonomous Organizations (DAOs) are basically blockchain-based entities that are managed by a set of rules. There is a blockchain in which smart contracts are created to define these rules. Thus, an organization can work autonomously without the requirement of a centralized authority. There is a specific community whose members drive DAO. These members also have voting rights in proportion to the token holdings in the DAO. Thus, there is a democratization approach in the decision-making that reverberates the ethos of decentralization.
DAOs work on the power of blockchain and smart contracts. The DAO gets a decentralized and transparent platform by blockchain for DAOs to operate, ensuring trust and security. The rule-enforcing mechanism is performed by smart contracts. The smart contracts ensure decisions within the DAO are implemented in a secure, unbiased, and automated manner.
Decentralized Governance: Real-Life DAO Examples Built with Solidity
1. MakerDAO:
The MakerDAO is a cryptocurrency protocol which has a set of rules and actions that determine the working of cryptocurrency. It was started in 2014 and runs off the Ethereum blockchain. It issues a government token called MKR, which allows the holder of the token to participate in the governance and policy-making of the DAO along with the DAI stablecoin.
The MakerDAO rules define the governing mechanism of the DAI cryptocurrency. The value of one DAI is always “soft-pegged” to $1 because it is a stablecoin, a sort of cryptocurrency token. Given that its value does not vary continuously, it is a more stable type of cryptocurrency—thus the moniker “stablecoin.”
2. Aragon:
Aragon DAO is built on the Ethereum blockchain and offers a robust framework for creating and managing DAOs in a user-friendly way. There are three key aspects around which its core feature works: decentralized governance infrastructure enabling communities to make collective decisions; modular design providing customization options; and a strong emphasis on transparency.
Additionally, it is changing our perspective on governance in a variety of organizations. It can be used by communities to manage resources, decide on project direction, and exercise democratic self-governance.
3. LexDAO:
LexDAO is a decentralized legal engineering guild that focuses on building tools and practices at the intersection of Web3 and traditional legal systems. It stands for Lexicon of Decentralized Agreements and Organizations. It is a non-profit association that aims to bring traditional legal systems to code and create a bridge between legal professionals and developers.
Decentralized Finance (DeFi) Platforms Built with Solidity:
a. Uniswap:
Uniswap is a decentralized protocol which works like an automated market maker for peer-to-peer cryptocurrency transactions. It allows users to provide liquidity and swap cryptocurrencies. Its cryptocurrency, UNI, is used for protocol governance. It is hosted on the Ethereum platform and is governed by the UNI holders. The Uniswap blockchain is open-source i.e. anyone can view and contribute to the code of the blockchain.
The Uniswap platform allows for the decentralized exchange of a wide range of digital assets via blockchain-based smart contracts. Pairs of digital assets are traded through liquidity pools, which use smart contracts to automatically rebalance after each trade. The Uniswap blockchain, which operates as an electronic ledger, is constantly updated to reflect trade activity among Uniswap users.
b. Aave DAO:
This is a decentralized autonomous organization for lending and borrowing cryptocurrencies. There are Aave token holders and contributors who collectively shape the future of the protocol through a governance process.
There is no central authority involved in making the decisions, instead, the decisions are made collectively by its members. It is a community-driven portal where participants propose, discuss, and vote on changes to the protocol.
How does Solidity help Build Secure Voting Systems in DAOs?
Solidity helps in creating smart contracts which in further are used for voting. It is a primary programming language for writing smart contracts on the Ethereum blockchain. It plays a crucial role in building secure and transparent voting systems in Decentralized Autonomous Organizations. It helps in the following ways:
1. Transparency and Unchangeable Logic:
After the deployment of the smart contracts, no changes can be performed in the code. Thus it ensures that no party can manipulate the vote outcome. Voting records are stored on-chain, and visible to all so that there is high transparency and trust.
2. Results are Tamper-Proof and Verifiable:
With Solidity, each vote in the blockchain is cryptographically signed and permanently recorded. That’s where there is no chance of double voting or any form of tampering without detection.
3. Role-Based Access Control:
There are role-based access controls to restrict proposal creation to specific members such as DAO token holders or a governing body.
4. Automation of Results and Execution:
After the completion of voting, smart contracts can automatically count votes, verify quorum, and execute the outcome. This removes human error or manipulation from the decision process.
Wrapping Up
In this article, we have gone through all the major aspects of Solidity and its role in DAO along with the real-life applications. It is being used in various industries such as gaming, metaverse, supply chain management, and others. At A3Logics, the best dApp development company, we can help you build smart contracts by using the Solidity programming language. Our expert developers have vast experience in developing smart contracts and other blockchain-based applications. Let us know your requirements.
The source of this information is Fapello.
