In SoftNote 101, we explained how this technology facilitates simple Bitcoin transactions. One of the most essential benefits of this technology is that it gives people 100% control at all times. This is because transactions done via Tectum SoftNote Bills are powered by smart contracts and blockchain technology. However, this is not a very popular crypto solution.
More often than not, similar blockchain solutions often prefer a DAO that is pioneered by members of the community. This article will compare both approaches and identify their benefits and downsides. The aim is to enable individuals to understand why Tectum decided to work with technology rather than people.
Before discussing DAo pools, we need to understand what DAOs are. The Decentralized Autonomous Organization is a blockchain institution comprising people who have a common goal and collective resources. These institutions often use their combined assets to complete tasks like acquiring digital assets or similar decisions.
New members who want to join the DAO must equally contribute to the pool. In return, they get an NFT or other form of representation to signify their rights. These individuals can also vote to decide whether an initiative should be taken, and there is typically a threshold the voting numbers must reach for approval.
While there are various definitions of DAOs, the most defining attribute is the presence of a collective treasury. Since these entities already have a portfolio, what is a DAO pool?
DAO pools are simply the already-pooled resources, and new members follow suit in donating their funds to the community pool. To understand how it works in terms of processing crypto payments, we need to revert to the voting process. As mentioned earlier, members of a DAO vote on decisions regarding the enterprise. This applies to the distribution of funds in the community pool.
The advantage is that community members collectively decide how, when and where to utilize pooled funds. On the downside, funds may not be disbursed or transactions approved if the DAO vote numbers do not reach the required threshold. This means that users cannot access their tokens when they need them. In addition, a successful cyberattack on the community pool can result in a total loss of assets.
To ensure more flexibility and ownership, Tectum SoftNote Bills process transactions using smart contracts. Instead of adding every token to a community pool, this system stores them in individual wallets. Whenever someone wants to send or spend their cryptocurrencies, they simply initiate a transaction. The smart contract completes the process once all conditions have been met.
There are several reasons why Tectum chooses to process SoftNote Bills transactions via smart contract. Some of them include the following:
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