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What are Decentralized Autonomous Organizations(DAO)?

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Via Medium

What are Decentralized Autonomous Organizations(DAO)?

A DAO is an online community with a shared treasury owned by its contributing members. DAOs use tokens to give contributing members an ownership stake in the community. DAOs are communities where…

A DAO is an online community with a shared treasury owned by its contributing members. DAOs use tokens to give contributing members an ownership stake in the community.

Why should I care about DAOs?

DAOs are communities where creators and fans can own the upside from their work. Fans that hold your community token are more motivated to:

  1. Help you grow your audience
  2. Provide feedback on your content (e.g., vote on what videos you should make)
  3. Co-create or invest in what you’re planning next

DAOs shift the focus from individuals to a community that wants to succeed together.

How does a DAO work?

The simplest way to describe how a DAO works is to compare it to a company:

Practically speaking, most DAOs use:

  1. Communication tools like Discord to stay in touch.
  2. Governance tools like Snapshot for members to vote on decisions (e.g., hiring someone).
  3. Asset management tools like Gnosis Safe to manage the DAO’s treasury.

What are some examples of DAOs?

Examples of DAOs include:

  1. Social DAOs to interact around similar interests. For example, Friends with Benefits is a private social club that builds products and offers IRL private events. To join, you need to hold 75 $FWB tokens.
  2. NFT DAOs to invest and own NFTs (non-fungible tokens) as a community. For example, Flamingo DAO bought an Alien Cryptopunk NFT for 605 eth (~$761K) in January 2021.
  3. Protocol DAOs to transition a project from a core team to community ownership. For example, Uniswap DAO issued UNI tokens to let its community vote on how to evolve the protocol.
  4. Commerce DAOs to let a community co-own a retail or ecommerce business through tokens. For example, E1337 DAO (pronounced elite) is a luxury apparel brand owned by 1337 token holders.
  5. Media DAOs to empower a community to produce content around a mission. For example, Forefront DAO produces content around social tokens.

How do I get involved in DAOs?

You can get involved in DAOs in three steps:

  1. Find a DAO who’s mission resonates with you. You can get recommendations on DAOs to join by browsing Twitter.
  2. Join a DAO’s community and hang out. Make an effort to get to know the DAO’s active community members. Be helpful, genuine, and make yourself useful.
  3. Start contributing to earn tokens. Get involved in a project or pick a task from a DAO’s bounty board. Start earning tokens so that you can get ownership stake in the DAO.

How do I create a DAO?

Setting up your DAO typically includes the following steps:

  1. Set up a community of core contributors. Find people who you trust and enjoy working with. Define the DAO’s mission, vision, and key values together.
  2. Create a community token. Make sure you define your tokenomics first. Work with core contributors to answer questions like:
  • What percent of tokens should be given to core contributors?
  • Should the token be distributed via fixed supply or bonding curve?
  • How will governance work? (e.g., what vote % is needed to approve an action?)

Design incentives for community members to earn tokens.

For example, you can create a bounty board where members can do tasks to earn tokens (e.g., write a blog post or make a video thumbnail).