What DAO you want?

Introduction

To give you an example, bitcoin can be considered a primitive DAO, since it works with a series of given rules, is autonomous, and is managed in a decentralized way following a consensus protocol. Although, the use of Smart contracts, typical of DAOs, did not reach the Ethereum platform, which allowed their creation, and has given them their current structure.

Initially, Bitcoin was considered the first fully functional DAO, as it has a set of pre-programmed rules, works autonomously, and is coordinated through a distributed consensus protocol. Since then, the use of smart contracts and dApps has been made possible by the Ethereum platform, which has brought the creation of DAOs closer to the general public and shaped their current look.

How it works

The launch of development of a DAO is composed of 3 different steps easy to understand. This is how DAOs work and the distinct phases before it becomes totally decentralized.

First phase

The first phase is setting the rules according to which it will work. Those rules are codes as a smart contract, existing autonomously on the Internet, but at the same time requiring developers to perform some specific tasks.

Second phase

Once the rules are established, the next phase is the financing phase. This is a very important milestone part for two reasons. First of all, a DAO has to have some kind of internal property. In this case, these are tokens that can be spent by the organization or used to reward certain activities within it.

Second, by investing in a DAO, users gain voting rights, as if they owned the shares of a company. Consequently, you can give your opinion and take part in the decisions of the DAO.

Third phase

Once the funding period ends and a DAO is deployed, it becomes a fully autonomous body and completely independent from its creators, as well as from anyone else. They are open-source, which means their code can be viewed by anyone. Also, all financial rules and transactions are recorded on the blockchain. This makes DAOs transparent, immutable, and incorruptible.

Once the DAO is up and running, all decisions about where and how to spend your funds are made by consensus. Everyone who bought a stake in a DAO can make proposals about its future. To prevent the network from being spammed with proposals, a monetary deposit may be required to submit such a proposal.

Subsequently, the interested parties vote on the proposal. To perform any action, the majority needs to agree to do it. The percentage required to reach that majority may vary depending on each DAO, as may be specified in its code.

Essentially, DAOs allow people to exchange their funds with anyone in the world. This can be done in the form of an investment, a charitable donation, fundraisers, loans, etc. all without a middleman. One potentially important problem with the voting system is that even if a security hole was detected in early code, it cannot be fixed until the majority votes on it. While the vote is taking place, such hackers can exploit a bug in the code.

There are diverse DAO categories and more and more DAOs created in those

How to invest

Investing in a DAO is relatively easy, especially if we know have experience buying other cryptocurrencies and we already have a wallet to store the coins. All we really need to do is buy tokens of a particular DAO. As described before, buying tokens would be the equivalent of buying shares of Amazon, Apple, or Microsoft. In some cases, there are dedicated channels like Discord where some interesting information is shared.

Once the financing phase is over, we will be able to make proposals, vote on them and even obtain benefits. The number of tokens purchased will correlate to the amount of voting power we will get within the DAO.

However, before investing, we must be sure about the project to know exactly what we are getting into. DAOs are completely transparent and their underlying code is always open source, which means that only we have the opportunity to review the code to make sure there are no bugs in it.

It is undeniable that the very concept of DAOs is extremely exciting as it strives to solve everything that is wrong with the way modern organizations are managed. A perfectly structured DAO gives each investor the opportunity to shape the organization. There is no hierarchical structure, which means that each innovative idea can be submitted by anyone and considered by the entire organization. With a set of pre-written rules that every investor knows before joining the organization, as well as the voting system, they leave no room for discussion.

Furthermore, since both submitting a proposal and voting in favor of it require the investor to spend a certain amount of money, it pushes him to evaluate his decisions and not waste time on ineffective solutions. Finally, as all the rules, as well as each of the financial transactions, are registered in the Blockchain, available for review by anyone, the DAOs are completely transparent. Everyone who participates helps decide how to spend the funds and can track how those funds are spent.

Examples

Depending on the purpose, there are several types of DAOs. Some of them are the following ones:

• Investment DAOs
• Collector DAOs
• Entertainment DAOs
• Grant DAOs
• Protocol DAOS

In this article, we will focus on some names related to different DAO categories, with no preferential order.

1. Maker DAO

This is probably one of the most famous DAO out there. We have seen that with DeFi, we can reach the democratization of finance and we can make many products available to almost everyone around the world.

MakerDao, not to be confused with DAO Maker, has world’s first unbiased currency, Dai, which is a Maker Dao’s star product. DAI is a stable, decentralized currency that does not discriminate. Any individual or business can take benefit from the advantages of digital money.

Dai is a stable coin, hence there is no volatility and for that reason, it is used in different financing projects. With this coin, you can exchange your assets for Dai and use this money in various aspects of finance.

Regarding governance, a community of MKR token holders governs the Maker Protocol, the smart contracts that power the stable coin Dai.

Over 400 apps and services such as wallets, DeFi platforms, or games have integrated Dai as an allowed payment method.

2. KlimaDAO

With the importance of climate change and small reactivity from some governments and companies, it is time that we do something about it. While our actions may not have had much positive impact in the past. we can start pushing for a change with KlimaDao.

With KlimaDAO, users can make a better more sustainable and greener world, by fighting against climate change. Via this mechanism, owners of this token can earn rewards with the KLIMA token. KLIMA is a digital currency backed by real carbon assets.

They have started a decentralized and open market for carbon. Besides, the KLIMA token incentivizes investors, citizens, and organizations to participate in and govern this new economy.

By increasing access and demand for carbon offsets, KlimaDAO makes pro-climate projects more profitable. At the same time, this process forces companies to adapt faster to climate change.

KlimaDAO's goal is fighting the climate change global problem and at the same time profit from fighting against it.

3. Olympus DAO

With all the central banks printing money and excessive Quantitative Easing, these actions have led to many negative consequences. For example, it has caused the devaluation of our currencies and assets in most countries.

Olympus is building a community-owned, decentralized, and censorship-resistant reserve currency that is deeply liquid, asset-backed, and used widely. The name of this currency is OHM.

With the rise of decentralized finance and economy, these concepts will also need a decentralized reserve currency. In other words, we need a currency that is not pegged to any central bank or fiat system.

Via this, Olympus DAO’s goal is to build a stable but independent currency that achieves purchasing power, broad acceptance, and high utility for all users.

4. Seed Club

Seed Club is a DAO whose mechanisms are similar to those of a modern incubator or accelerator, investing in start-ups. You can make an enormous impact when it comes to deciding what your favorite projects and start-ups are and finance those thanks to Seed Club.

They also state that their goal is to support and help projects for the long-term, and they are not looking for short-term wins.

Overall, Seed Club is a DAO that builds and invests in communities investing in early projects. One of their focuses is on Web3 communities. They have financed to date more than 30 projects and one of their flagship communities is included below.

5. Krause House

Krause House is one of the projects financed thanks to Seed Club. If you like basketball and the best league of the world, you may be interested in this DAO whose goal is to buy an NBA franchise.

Krause House is a Decentralized Autonomous Organization (DAO) ruled through a network of enthusiasts, basketball enthusiasts, and purists. Together, we can write the consensus regulations as an effective way to bring the primary fan-ruled group to the NBA. The collective of formidable participants whose purpose is to very own an NBA crew describes the underlying mission of DAOs in its purest form.

They will permit the contributors to take part in selections affecting the running approaches of a National Basketball Association (NBA) crew along with other actions such as a standard control, ticketing, merchandising, and partnership.

This means that you can be the owner of an NBA team without being Mark Cuban or Steve Ballmer. Imagine signing the next free agent or picking your favorite prospect in the NBA draft? This will be soon possible.

6. Jenny Metaverse DAO

Related to collector DAOs, the goal of the Jenny Metaverse DAO is to build the most amazing NFT collection in the world. In this contemporary art collection, Jenny DAO gives you the chance to be a visitor, user, and director at the same time.

Jenny DAO is built on Unicly and collaborates with different prominent digital artists and influencers. Thanks to these. they have an exclusive collection of unique artworks and photographs.

This is how it works: The DAO pool funds into the treasury, and these funds are later used be used to purchase different NFTs art collections.

In this digital gallery, you may find unique and exclusive art collectibles, such as BAYC, Crypto Punks, Meebits, CyberKong VX or Tom Sachs Rocket Factory.

Conclusion

DAOs and crypto in general have brought different benefits to users. Some of them are access, costs, or transparency. We are happy about the fact that are more opportunities that focus on our goals and that via pooling individuals with the same objectives we can achieve our desired goal. At the same time, there is also criticism related to the level of experience the members may have. The comment is that as opposed to traditional organizations, where a specific number of experience people (e.g. board of directors) make the decisions, granting all members of a DAO the power to make any change may not be the best generating the best results for these autonomous organizations in the long-term.

However, what is certain is that DAOs have created disruption and could shake in the long-term the current organization design and how the interactions within these.

Although there has been an increase in the number of DAOs, we will see many more interesting in the next years. In case you would like to investigate further, please note that the code of these DAOs is accessible. Therefore, please analyze in deep the content and the data in order to detect any problem independent of the topic/goal of the chosen one.