When introducing Ethereum, I mentioned DAOs as one of the applications. Today, I’m going to explain to you in more detail what is a DAO, how they are created, and give you some examples. Let’s start.

What is a DAO

A decentralized autonomous organization is a new type of organization born through token emission in a blockchain. Token holders become members of it with voting powers according to their share. Tokens can be traded freely in open markets, making the membership liquid and open to everyone. As DAOs operate in the blockchain, treasury and all key operations and metrics are public by imposition, making them transparent organizations. They are mission-centered and global.

A way to see it is like a group of people that have shares over a cooperative company in which all have the same voting rights according to their shares.

Generally, DAOs are bootstrapped in two ways:

• By airdropping people tokens according to certain criteria.
• By creating a crowdfund and emitting tokens proportionally to contribution.

As DAOs don’t usually have a hierarchy, is very important that they have a clear mission before starting, so people are focused on one particular topic and be more effective.

DAOs have some governance mechanisms:

• Multisig wallets like Gnosis Safe allow the treasury to be fairly managed by some governance members or by voting.
• For voting initiatives or proposals there are tools that allow only token members to vote on-chain like Snapshot.
• Tools like collab.land allow putting a door over Discord servers or Telegram channels to only allow holders of the token to enter.
• Coordinape helps setting up incentives and rewards.

Legality of DAOs

DAOs are a very recent creation so there’s no legislation almost anywhere. The only place that I know is in the State of Texas, where it has created legislation similar to LLC.

DAO examples

There are several types of DAOs, let’s review some of them.

Protocol DAO

Maker DAO is the DAO that governs the DAI stable coin. Uniswap has the UNI governance token that is used to vote changes and proposals for the Uniswap protocol.

Collector DAO

PleasrDAO‘s objective is to collect quality NFTs. You can think of it as a group of collectors or a cooperative crypto-museum.

Social DAO

Friends with Benefits is a cultural online community centered around Web3 artists, operators, and thinkers.

Media DAO

Bankless DAO is the DAO that promotes a world without banks, it’s basically a media company.

Service DAO

Cabin DAO is a legal DAO in Texas that funds creators living expenses in the Cabins.

Grants DAO

mClub DAO is a grant-giving DAO for creators on the Mirror Platform.

Conclusions

DAOs are a new type of decentralized organization based on tokens centered on a specific mission. It’s self-governed and there is no legislation almost anywhere. There are different types of DAOs and we’re just getting started.

Action points

• Review proposals of a DAO in Snapshot.
• Check the NFT gallery of PleasrDAO.
• Check the wiki of BanklessDAO.

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More info (long reads):

DAO Landscape by @Coopatroopah (June 24th)

Community DAOs by Patrick Rivera (Sept 2nd)