DOA (All you need to know about it)
DAOs are a common governance model in the blockchain realm. You can rapidly get a DAO up and running with a little technical expertise and some tools. But first and foremost, you'll need a solid strategy and a supportive community. Let's go over the fundamentals of what you'll need and how to get your DAO up and running.
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A DAO, as the name implies, is a computer-controlled organization that anybody can join (as long as they meet some basic requirements). Smart contracts are autonomous in the sense that they help run the bulk of procedures without the need for human intervention. A DAO is founded and maintained by a community that handles its funds and initiatives jointly.
With Ethereum's venture capital fund "The DAO" in 2016, DAOs became well-known. Sadly, there was a hack attack on the project barely three weeks of its launch. Due to a hard fork, the money were later returned. Despite its early difficulties, the DAO concept has evolved over time and is currently one of the most widely used governance models in Decentralized Finance (DeFi) projects.
Although each DAO is unique, the majority of them adhere to the same fundamental concepts. The voting power of everybody who owns the DAO's governance token is proportional to their token holdings. Holders have the ability to propose changes to the DAO's operations.
DAOs provide a lot of benefits for crypto projects. The model's reliance on smart contracts is maybe the most crucial aspect. DAOs are less reliant on human input thanks to these on-chain pieces of code. A proposal's results, for example, may be published on-chain and instantly activate a requested change. A new proposal cannot be censored, and votes cannot be manipulated in any way.
DAOs are a good way to organize groups of people, especially if they're mostly anonymous. You have to trust someone you don't know because there is often no responsibility to a true identity. A DAO enables them to efficiently organize themselves while maintaining integrity through technology. Because many projects involve worldwide teams, it's also simpler than forming a regular corporation or business. Finally, because of its usefulness in organizing individuals, a DAO is a low-cost solution. You can either create one for free or for a little cost.
It's important to remember that a DAO will hold you responsible for its judgments. You will lose ultimate control of your project as a result of decentralizing power. There will almost always be negative implications if you opt to ignore governance decision-making.
A good DAO needs several things and amongst them includes ;
- PURPOSE
DAOs are nothing more than a way to pool funds or initiatives. Without a suitable underlying project and goal, your DAO will not be able to function.
- VOTING MECHANISM
Users communicate with the DAO and make changes mostly through this method. This can be accomplished in numerous ways. You can either create your own voting system or hire a third-party provider, as we'll see later. Your DAO may vote in the future to change the mechanism, but you must start somewhere.
- GOVERNANCE TOKEN
A governance token or share system is required for a decentralized autonomous organization (DAO). How will members in the DAO be able to show that they have the right to an opinion? A governance token is a frequent type of token, and it's typically combined with a utility token. Users deposit bitcoins with the DAO to be invested, which is known as a shares system.
- COMMUNITY
As more people join and participate in your DAO's governance, decentralization becomes stronger. Power is distributed across a larger number of stakeholders in this manner.
- FUNDS MANAGEMENT
Most DAOs will have a treasury or will be able to raise funds through crowdfunding. This is typically stored in a multi-signature wallet that can only be utilized if all key participants agree.
You'll need a system to handle votes and proposals on the technical side. There are a number of open-source solutions to choose from. Aragon is a prominent Ethereum blockchain option. Another one that works across several blockchains is Snapshot. They will all provide a similar structure, but the methods in which they do so may differ. Some use on-chain polling, while others use off-chain polling. The one you pick will be determined on what your DAO considers significant.
When deploying your DAO to a blockchain, keep in mind that you'll need enough crypto to cover transaction fees.
- ARAGON
On Ethereum, Polygon, Andromeda, or Harmony, Aragon allows you to build a DAO organization. The project's Aragon client makes it possible to create customized DAOs using open-source technologies. Aragon's raised money are similarly managed by a DAO, which has its own non-profit organization.
- SNAPSHOT
Snapshot is an off-chain voting technique that can be customized. It casts votes based on a snapshot of token owners using digital signatures through wallets. A specific block is picked, and all token holders and/or stakers' holdings are recorded. Voting off-chain is a good idea for multi-chain initiatives when users have governance tokens on many blockchains.
- DAOstack ALCHEMY
DAOstack Alchemy is a tool for constructing decentralized autonomous organizations (DAOs) on the Ethereum and Gnosis blockchains (formerly known as xDAI). You may easily build a DAO, add DAO members, and open your organization using their user interface. Setting up a DAO on Ethereum costs about 0.2 Ether (ETH) at the time of writing, but you don't require an ENS.
Connect your wallet to DAOstack's DApp, follow the four steps, and pay your fee to start a DAOstack DAO. To effectively deploy the DAO, you will need about 0.2 ETH.
- MakerDAO
MakerDAO is one of the most well-known and successful DAOs available. The DAI stablecoin, which is crypto-collateralized, is managed by the organization. They divided suggestions into two categories: Governance Polls for non-technical choices and Executive Votes for smart-contract adjustments.
- Aave
Aave is a DeFi lending platform based on Ethereum that allows holders of the ERC-20 token AAVE or staked AAVE to participate in its Decentralized Autonomous Organization (DAO). Aave governance also votes on new projects based on the protocol and Aave Grants to finance ideas in addition to project modifications.
- Uniswap
Uniswap is a multi-chain Automated Market Maker (AMM) that has influenced a number of DeFi projects. It's one of the largest decentralized exchanges, with UNI holders having the ability to vote on and create proposals. To submit a new proposal, you must own at least 0.25 percent of the total supply of the UNI. There is a governance platform for community members to debate changes to encourage constructive dialogue.
Creating a DAO is really not so difficult as it requires easily accessible tools. The issue with DAO lies in running it successfully as it requires good community support which is really not easy to maintain.
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Brother wrote a lot about DAO. I like it a lot. Thank you.