Create a DAO in 3 steps
Create smart contracts: First a developer or a team of developers must create the smart contracts behind the DAO. After creation, they can only change the rules set by these contracts through governance. So that means they have to make sure the contracts don’t overlook important details.
Funding: After smart contracts are created, the DAO must determine a way to receive funding. Most of the time tokens are sold to raise some capital.
Integration: After everything is ready the DAO must be integrated with the blockchain. From this point onwards, the members who have locked up their tokens decide on the future of the organization. Its creators after incorporation no longer influence the project more than the rest.
Why do we need DAOs?
Unlike traditional organizations that exist on the internet, DAOs have many advantages. A major advantage of DAOs is the lack of trust required between two members. While a traditional organization requires a lot of trust in the people behind it specifically on behalf of investors, while in DAOs only the code needs to be reliable.
Such an organization that does not have a hierarchical structure completes tasks and is developed by stakeholders through their token. The lack of hierarchy means that each stakeholder can submit an innovative idea that the entire team will consider and improve.
How can we use a DAO?
We already know that DAOs were created to promote a fair, transparent, democratic system of governance by design. But that still doesn’t explain how DAOs can be used in our lives. Surprisingly, DAOs are so tailored that they can be used for just about anything we want to bypass the hierarchy.
Take, for example, social media platforms. It is becoming increasingly difficult to navigate all the boundaries to which major social applications limit us. Sometimes, information may be hidden from the public or specific topics cannot be discussed openly because a central entity (in this case, the organizations that manage these applications) decides to block or prohibit open discussion on specific topics within the communities.
With the creation of a type of social media DAO, the above scenario disappears, as it is up to all members to vote on what is or is not allowed.
Currently, there are several functional DAOs operating all around us:
- Friends with Benefits – Originally created as a private Discord group, FWB has since grown into a thriving crypto culture community that evolved into DAO, to maintain a community fund.
Because FWB operates its entire platform using its native token, $FWB, it embodies all the principles of a DAO. All members share a stake within the platform by investing in its token, allowing the community to self-govern while sharing great content.
- PleasrDAO – PleasrDAO distributes the ownership of the DAO in the form of tokens. This gives each member a fraction of their assets. Each member participates in the governance of the DAO through a group chat.
They also collected the historic creation of NFTs at Edward Snowden’s foundation because, as they said, it is important that these NFTs “belong to the people.”
- Aave – Aave has been busy pioneering the concept of peer-to-peer lending. Also, like a DAO, Aave is a DeFi protocol that allows anyone to either lend or borrow cryptocurrency, without having to overcome the hurdles of traditional lending bureaucracy.
The AAVE token is the backbone of the Aave Protocol’s governance. When one is in possession of the AAVE, one can participate in the vote, along with all other members, to decide on the outcome of the Aave Improvement Proposals (AIPs).
Last thoughts
The global cap of the crypto market continues to grow, and when you think about it, the entire market is based on the very principles of DAO.
Imagine that your phone’s current apps are being replaced by apps that don’t track your every move, that don’t sell your personal data, and, most importantly, aren’t controlled by groups and companies.
Traditional platforms can either choose to adapt to today’s evolving landscape or they can simply be left behind by not implementing innovative blockchain solutions like DAOs.