Everything You Should Know About DAOs
What if you could create something with a community of like-minded individuals and pool your resources to promote shared objectives? The good news is that the underlying principles of how you can achieve that are becoming more flexible, open-ended, and reachable to a wider audience with DAOs.
DAOs are becoming a more significant component of the blockchain-enabled puzzle as NFTs continue to catch the attention of creators and collectors. Collaboration and creativity are inseparable, and DAOs open up a whole new world of opportunities for projects led by artists, cooperative gallery formats, joint investment funds, and much more. In light of this, we are here to provide some advice on how they operate, what is required to get started, and the potential they can open up for creating a more collaborative future.
What exactly is a DAO?
A decentralized Autonomous Organization is referred to as "DAO." A DAO is essentially a group of people working toward a common objective who use a blockchain to make decisions in an effective and transparent manner. A DAO can be compared to a cooperative organization that is governed by rules that are hard-coded on the blockchain.
With a DAO, there are countless things you can accomplish. They are a flexible technology, much like NFTs. A DAO can be as straightforward as a few friends pooling money to purchase supplies for a road trip or as complex as a well-known nonprofit with hundreds of donors, dozens of board members, and millions of dollars available.
How does a DAO work?
DAOs make it possible for groups, collectives, grantmakers, and more to collaborate smoothly over the internet, even if no members have ever met. As they provide a radically open and effective means to organize and work together online, DAOs have grown in popularity as a tool to govern all kinds of procedures, assets, and projects.
DAOs are "autonomous" in the sense that they function similarly to software and don't require human leadership to accomplish their goals. A DAO's smart contract, for instance, would specify how money is saved and allocated if it were to receive any. This information would then be handled automatically. They are also autonomous in the sense that they are self-governing and grant the DAO's whole membership independent agency. They are an excellent tool for open and effective collective organizing because everyone may propose and vote on proposals for the group.
What have DAOs accomplished, and what are some examples of DAOs?
You may be familiar with PleasrDAO, a group of collectors who got together initially on Twitter to arrange the purchase of pplpleasr's NFT commemorating the release of Uniswap V3. Because it's crucial for these NFTs to "belong to the people," they also gathered Edward Snowden's historic origin NFT on Foundation. Other notable collector DAOs with $1M+ treasuries include FlamingoDAO and $WHALE.
However, DAOs don't necessarily have to concentrate on investment or art acquisition. DAO-based social groups are also starting to take shape. Friends With Benefits, sometimes known as $FWB, is a well-known Discord group for fans of culture and crypto. In the initial version, users had to buy $FWB tokens to access the service. Prospective members can still buy $FWB tokens at this time, but the community as a whole now votes to determine who can join next. One of the most effective methods a DAO may enable is community building.
DeFi (decentralized finance) applications for DAOs exist as well, including MakerDAO, Uniswap, and Synthetix. As more people partake in the billions of dollars safeguarded within their smart contracts, they are fostering the establishment of a global, digital-first economy.
There are numerous other instances of DAOs, each with their unique objectives and governing structures, and they range in size from a few to a million members, with treasuries between $0 and $230 million. You can look at Snapshot's directory of Ethereum-based communities to get a sense of the variety of DAOs that are currently available.
What advantages come from taking part in a DAO?
DAOs are a crypto-native method of organizing a group of people in the pursuit of a common objective or vision. Contributors are encouraged to spend their time and money since they each have a stake in the organization's future success, which is similar to a cooperative company model. However, because DAOs' decision-making procedures are fully automated and transparent, they are significantly more effective than conventional commercial structures. Because of this, there is less chance for misuse of authority and more possibility for cooperation, creativity, and experimentation.
What are some of the legalities around DAOs?
DAOs currently exist in a legal gray area because regulations have lagged behind technology. Because they aren't officially recognized as legal actors, creating a DAO is typically easier than creating a legally recognized cooperative, firm, or fund. This gives them greater flexibility and makes it simpler for them to get started, but it also means that they are not regulated and receive little to no scrutiny.
However, things are changing swiftly. DAOs recently achieved a significant victory in Wyoming, where they are officially accepted as LLCs. It is possible that additional governments will eventually follow suit, paving the road for the widespread adoption of DAOs by other corporations and organizations.
What impact will DAOs have on the internet's future?
By putting control in the hands of the community that developed it, DAOs disrupt the conventional model of a centralized firm or organization and regain ownership of what is generated.
In contrast to centralized corporate structures, a DAO's community makes all choices based on what will best serve the interests and desires of the group as a whole. Imagine if any of the Web 2 tech behemoths, like Facebook or Twitter, were DAOs. How would that alter how the platforms and the technology that powers them were created? DAOs are paving the way for new forms of community ownership and governance to emerge, allowing for a more democratic, communal, and inclusive internet in the future.
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