How to Create a DAO under Minutes?
DAO; It is a type of governance frequently used by DApps, projects, and crypto mutual funds. DAOs are very popular due to their openness and decentralization, as well as their ability to work with self-executing smart contracts. Creating a DAO requires a technical solution that can manage your bids and votes. There are different open-source options available to suit your needs. So, how to create a DAO? For the answers to the question, continue reading our article now.
How DAOs work?
Initially, Bitcoin was considered the first fully functioning DAO; because it has a set of pre-programmed rules, functions autonomously, and is guided by a shared consensus. Since then, the use of smart contracts has been introduced on the Ethereum platform, and the creation of DAOs has become more commonplace, gaining their current appearance.
So what does a DAO need to be fully functional? First, some rules to follow. These rules are coded into smart contracts, a type of computer program, and while they exist on the internet autonomously, they simultaneously require humans for tasks that they cannot do on their own.
Once the rules are set, the DAO enters the funding process. This is very important for two reasons. First, the DAO must have an internal property; tokens that can be spent by the organization or rewarded for certain activities. Second, by investing in the DAO, the user gains voting rights, with the ability to influence how it works.
What is required for DAO?
A successful DAO must have at least the following five attributes, among other things:
1. The DAO needs a purpose. DAOs are a way to organize projects and funds. If there is no good project and reason, your DAO will not have a working purpose.
2. A voting mechanism is required for the DAO. Votes are the primary way people interact with the DAO and make changes. There are different ways to create a voting mechanism. You can create your voting mechanism or use a third-party provider, as we'll talk about later. Your DAO can even vote to change the mechanism later on, but you need to have a mechanism to get started.
3. The DAO must have a governance token or share system. How can people prove that they have a say in the DAO? The use of governance tokens is quite common, and the token can often be a service token. A stock system is more common in funds where users deposit their cryptocurrencies with the DAO for investment purposes.
4. The DAO needs a community. Decentralization is also strengthened as more people participate and become involved in the governance of the DAO. In this way, power is distributed among more stakeholders.
5. The DAO needs a method to manage its funds. Most DAOs have a treasury or have access to community funding. These funds are usually held in a multi-signature wallet and this wallet can only be used if all major participants approve it.
How can You Create Your DAO?
Technically speaking, you will need a mechanism to handle votes and bids. You can use one of several open-source solutions. Aragon is a popular option for the Ethereum blockchain. Snapshot is another alternative that works on multiple blockchains. All of these offer roughly the same structure, but the way they are presented may differ. Some DAO systems work with on-chain voting, in others, the voting is off-chain. Which one you choose depends on what your DAO puts more emphasis on.
Examples of successful DAOs
If you want some inspiration from the rules and regulations that work best, you can check out some of the well-known DAOs in the crypto world. Some of these run highly detailed and open organizations that operate like large businesses. Some of the examples you can review are:
MakerDAO
MakerDAO is one of the oldest, most successful DAOs on the market. The organization manages the crypto-backed DAI stablecoin. Proposals are divided into Governance Surveys for non-technical decisions and Executive Votes for smart contract changes. Anyone holding the project's governance DAO token MKR can become a participant.
Aave
Aave is a DeFi platform on Ethereum that allows anyone who owns or stakes the ERC-20 token AAVE to become a participant in its DAO. Apart from changes to the project, Aave governance also votes on Aave Scholarships to fund ideas and new projects to be built on the protocol.
Uniswap
Uniswap is a multi-chain Automated Market Maker (AMM) that has inspired the creation of DeFi projects. It is one of the largest decentralized exchanges and UNI holders can create or vote on proposals. To submit a new bid, you must own at least 0.25% of UNI's total supply. There is a governance forum where community members can discuss changes to encourage sound decision-making.
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