​The overview of DAO ecology How to create a DAO?

This article is divided into six parts:

1. What is DAO and how it is different from traditional companies

2. According to the purpose, DAO is divided into 7 categories

3. How to create a DAO

4. Those commonly used DAO tools

5. How does DAO replace the traditional company model

6. The future of DAO

In the past 5 years, DAO has created a large number of high-value cryptocurrencies on Ethereum. Whether it is the theft of The DAO of Ethereum in 2016, the ConstitutionDAO which is trying to acquire the US Constitution and Law, or the Klima DAO which is working hard to solve the climate problem, as long as you go online every day, you must have heard the word “DAO”.

Cooper Turley, a well-known builder in the DAO field, once said: “DAO is just a chat room for sharing bank accounts.” This statement has some truth, but it does not reflect the goals that DAO can achieve.

At the time of writing this article, there are more than 100 active DAOs in the world, and only the first 20 manage more than $14 billion in digital assets.

​The overview of DAO ecology How to create a DAO?

This number is sufficient to prove that DAO is a very important thing. Looking at this amazing growth, DAOs are not only threatening the traditional company system, they are becoming a new “limited liability company.”

Due to the rapid development of the DAO ecosystem, it has experienced explosive growth this year. For some people, DAO is a “new” blockchain concept. However, it has existed and developed for a long time-what is it? How do they contribute to the encryption field?

Before understanding DAO, let us start with a short story.

A long time ago, in the early stages of business management development, there were two basic organizational structures- hierarchy and network.

In the beginning, the hierarchy seemed to be the perfect structure to accomplish the task. A boss and some employees with titles. However, with the development, this structure began to disintegrate: management can not effectively manage those employees who have not talked to, and the decision-making process is slow due to too many people being passed on. The important thing is that it isolates employees -of course, except Beyond the top.

People are trapped in the company and are dissatisfied with their work. Traditional organizations have many problems: hierarchical system, internal politics, unfair salary, lack of feedback, relying on experience, etc. They are forced to adapt to traditional work patterns. They thought it would be great if there was no hierarchy at all and the work was completely decentralized. Perhaps it was one of these people who worked to make it a reality, and therefore, the DAO was born.

How is DAO different from traditional companies?

DAO is an autonomous, Internet-based community. This is completely unavailable in traditional companies. The community unites contributors through shared bank accounts and the same goal : creating value by implementing a set of rules on the blockchain.

This set of rules is created by DAO members, managed by an open source blockchain protocol, and can act automatically without the need for an intermediary. This is what we call the “social contract” , which is an important feature unique to DAO and different from traditional companies.

  • Decentralized power

The owner of DAO is not a small group of founders and investors, but people who create value for it. Ownership, power, and control are all over the community, and everyone has influence regardless of their “experience.” It subverts the idea that a person or an entity “owns” an organization.

This concept of “decentralization of power” is effective because everyone is a stakeholder, and no one is the only holder or decision maker. Everyone who is committed to the development and realization of the common mission of DAO is in an equal position.

  • transparency

Since on the blockchain, anyone can see all the operations and funding of DAO, which makes DAO more transparent than traditional companies. This transparency greatly reduces the risk of corruption within the company.

This structure deprives the company of information control, and the open source of information means that many people can help a project without the permission of external resources.

This transparent operating framework is the most important part of DAO , and it is also an important reason why DAO has become the center of Web3.

  • autonomy

Since DAO is decentralized, it does not belong to an individual or entity, so it cannot be managed in a traditional way.

The governance and rules of each DAO are coded in the smart contract and cannot be changed unless the DAO members vote.

DAO makes the ecosystem more fair by giving all members equal decision-making power. Every decision in the DAO is publicly proposed, discussed, voted and recorded, which further increases its transparency.

  • efficient

When people with common goals and passion work together, they ensure the best and effective results.

The hierarchical structure may become an obstacle. When you have too many levels to manage, speed, efficiency and participation will all be affected. Most importantly, it isolates everyone except managers. Because DAO has a social contract, all decisions and changes to the network will be automatically executed, which is impossible in a limited liability company because of the hierarchical relationship.

  • anonymous

DAO does not require or force you to disclose your identity.

DAO allows investors to send money from anywhere in the world. Since members remain anonymous on the Internet, they can be more flexible and experimental in terms of funding decisions and investments.

DAO is a complex subject with many parts that can be adjusted flexibly. However, in the final analysis, they are just companies run by teams of different individuals, not by a single leader. The rules and functions of the management team may change over time, but the spirit of the organization’s operation is always the same.

DAO provides its members with a unique opportunity that is not available anywhere else in the market: complete freedom. What can arouse people’s enthusiasm more than a digital and decentralized space?

DAO for various purposes

The Generalist divides the currently active DAOs into two categories: technology-oriented and social-oriented .

​The overview of DAO ecology How to create a DAO?

(DAO divided into categories)

The technology-oriented DAO focuses more on building an encrypted space and maintaining on-chain governance.

Social-oriented DAO is mainly to gather like-minded people together and create a community for them to facilitate their interaction and brainstorming. Governance may occur outside the chain, or it may not exist at all.

  • Establish an agreement

Rules are very important to DAO . Some DAO agreements can provide community members with an operational framework to help people quickly build a DAO.

The DAO protocol introduces transferable ERC20 tokens with secondary market value. These tokens are used to manage the agreement. Token holders have the right to propose ideas, vote and implement changes to the network.

Projects usually vote on the distribution of tokens, which opens the door to liquidity mining, income farming, and fair release.

  • Bring people together

In a world where financial capital is concerned, social capital is often overlooked or underestimated. Social DAO narrows the gap by prioritizing social capital.

The goal of Social DAO is to create a strong community of people with common interests, while enjoying the benefits of DAO, such as shared ownership and permissions. Social DAO aims to create digital indigenous tribes and challenge traditional community forms.

Friends with Benefits: FWB describes itself as the ultimate cultural member, a community composed of their favorite Web3 artists, operators and thinkers, and connects them through common values ​​and common incentives (FWB).

Seed Club: Seed Club is a community with social tokens, creator economy and crypto space. As a Web3 incubator, it gathers the most promising social projects together every year to provide services for them.

CabinDAO: Probably the most interesting and unique DAO on the list. If you want to meet other online creators, entrepreneurs, remote workers and digital nomads, then CabinDAO is for you. They built a nearly 120-square-meter log cabin in the Texas mountains to provide collaborative living and working spaces for independent online creators.

  • Aggregate capital

Although various DAOs have brought various tokens to the world, we need to have DAOs that focus on investment. Unlike social DAOs, the goal of these investment DAOs is financial return.

The goal of these DAOs is to allow members to pool their funds and invest in the early stages of the project. Unlike traditional venture capital companies, this decision is fair.

The LAO: The LAO is a global group of Ethereum enthusiasts and experts. Their goal is to “allow people from all over the world to use the power of capital to inspire and support their favorite projects.”

Neptune: Neptune’s goal is to invest in various liquidity opportunities in the DeFi ecosystem. Neptune members pool their funds and then vote on investment strategies.

MetaCartel: It is an ecosystem of decentralized applications built by creators and operators. DAO helps early teams enter the next stage through funding and operational support.

  • Funded project

The funded DAO aims to promote a broader ecosystem, it supports promising projects, and through funding to open the way for new Web3 contributors.

The community donated funds and decided to distribute the funds to various contributors in the DAO in the form of governance proposals.

Uniswap Grants: UGP’s goal is to ensure that this passionate ecosystem can continue to grow. It has provided $1.4 million for 38 project parties involved in tools, usability, security reviews, documentation, community work, and education.

Compound: The Compound funding program aims to provide funding for projects, ideas, and activities that benefit the Compound ecosystem. The community allocated 5000 COMP as a financial grant.

  • Talent allocation

A community with a surplus of talent needs to direct creativity to the right place. Service-oriented DAO is essentially a talent agency in the crypto industry , which gathers human resources and uses them for specific projects. Here, efforts are usually rewarded with erc20 tokens.

RaidGuild: RaidGuild refers to itself as “the premier design and development agency for the Web3 ecosystem.” Create positive and value for the Ethereum ecosystem by sharing resources, brands and collaboration tools.

DAOhaus: DAOhaus is a community where contributors directly collaborate to design, build and exchange actual products. It is the center of each working group’s budget request.

Yam DAO: Yam DAO describes itself as “a launch pad for a DeFi project supported by a community-managed vault.” They are currently developing multiple projects, including Umbrella (smart contract insurance), Degenerative and Yam DAO Set.

  • Production content

Media-based DAOs generate public content, usually by collaborating together and sharing rewards, so as to maintain the autonomy of governance.

The media-based DAO breaks the traditional relationship between authors, streaming media, and readers, allowing people from all over the world to participate in content production.

Forefront: As a curator, influencer and creator, Forefront’s goal is to become the content and community center of the thriving social token. Forefront claims to be a pioneer in the exploration and construction of the Web3 playground.

Bankless: Bankless DAO is a decentralized community whose mission is to promote the adoption and awareness of the currency system by creating and disseminating Bankless media, culture and education.

DarkStar: DarkStar’s goal is to “become a constructive medium, thinking about the development direction of cryptocurrency.” DAO members are currently writing about understanding encryption and its extensions on Mirror.

  • Accumulate assets/collectibles

There are some DAOs that unite contributors around specific assets or collectibles (mainly NFTs). Collectible DAOs also act as curators for certain projects, mainly seeking to curate NFTs with long-term value.

SquiggleDAO: SquiggleDAO is a DAO foundry that generates art on the chain. This DAO exists to support and collect generative art.

MeebitsDAO: The goal of MeebitsDAO is to fund innovative projects around the Meebits ecosystem.

PleasrDAO: The mission of PleasrDAO is to “collect and fund digital art.”

How to create a DAO?

Starting a DAO is like creating an NFT, which is easier said than done.

Although this process is quite convenient, and there are many tools to help you create, but you do need to have some technical prerequisites .

DAO needs to build a good structure in advance to work smoothly. This will go through four stages to help get the right structure and ensure a smooth start.

  • lay a solid foundation

If you want to try to create your own DAO, there is one thing you must have: an encrypted wallet. Prepare your wallet and look for fellow travelers who also want to build a DAO.

Clarify the collective goal, and determine the rules of the DAO together with your peers. Determining at an early stage why the DAO exists, what it will do, and how it will work is the key to establishing a strong foundation. You can build your own community on this basis, greatly reducing the possibility of failure.

  • Establish ownership

Once you have clarified the intent of the DAO and gathered a group of people who are as excited about it as you are, then next, you need to assign ownership. Well-distributed ownership helps DAO’s further growth and development.

Ownership is usually tokenized, and DAO can distribute ownership to its members in a variety of ways.

Some DAOs will conduct “airdrops” and distribute tokens to members based on their contributions and behaviors in the community. Another method is to “reward” , which is to give bonuses to members who complete tasks and goals. Members gain ownership by earning rewards denominated in native tokens. Some DAOs are open to purchase tokens through decentralized exchanges, such as Uniswap.

  • Set up a governance structure

Setting up the governance structure is the most important stage in the DAO setting process.

In this part, you can decide how to make decisions after the DAO is up and running. The most common decision-making method in DAO is called “token weighted voting” .

Token holders are voters, and one token represents one vote. Members put their suggestions on a tool like Snapshot , then vote according to the preferences of other members, and finally execute the results automatically through smart contracts.

There are similar decision-making structures in other DAOs, but with minor adjustments based on their priorities. These governance structures often evolve over time.

  • Set up incentives and rewards

When members make a collective effort towards a collective goal and promote this effort with an incentive mechanism, the DAO will grow. The victory of the members is the victory of the community, which is why it is necessary to inspire and reward their efforts.

DAO usually starts by distributing native governance tokens to early members and contributors. These tokens do not have any direct market value, but they represent shared ownership of the collective value of the DAO. Some DAOs also reward contributors with grades and titles, as well as widely circulated cryptocurrencies (such as USDC or ETH).

Once the DAO is conceptualized and concretized, there are unlimited possibilities to improve and reward innovation. We are only beginning to touch the surface, and what happens next and new attempts are very worth looking forward to.

DAO tools

Understanding what a DAO needs is the first step in building a DAO. Now that you have started a step, you should now be familiar with the most commonly used and important DAO tools in this field.

​The overview of DAO ecology How to create a DAO?

(Various DAO tools)

Web3-based DAO tools allow you to manage assets, and make governance easier through voting platforms, rewarding contributors, finding other DAOs, and so on.

Here is a DAO tool set to help your community move forward:

DAOstack: An open source software stack designed to build and support DAO.

Gnosis Safe: Multisig wallet, used to manage the digital assets of DAO on Ethereum.

Proof of Humanity: A social identity verification system on Ethereum .

Snapshot: An off-chain voting tool based on the IPFS decentralized storage system.

Discord: A channel for sharing ideas and discussing governance suggestions.

CollabLand: A robot that provides token access and prompt services for communities on discord or telegram.

Coordinape: Use tools to expand the community to reward contributors, encourage participation and manage resources.

SourceCred: A tool used by the community to measure and reward value creation.

Mirror: A publishing platform that allows the funding of creative projects through tokenized crowdfunding.

Tally: Enhance governance capabilities through real-time research and analysis, governance tools, and educational content.

Organization of the future

The current DAO is geared towards the encryption field in its mission and purpose. They share a treasury, and all decisions are centered on how to invest or use these funds. This method can be applied in a wide range of fields, and is not limited to managing cryptocurrencies. DAO can be used to create almost any type of organization, such as organizations that are run more efficiently by artificial intelligence.

So far, we can be sure that DAO has the potential to replace the traditional corporate model to establish medium-sized companies in the future, but mature large-scale corporate entities will not be able to fully transition to DAO.

DAO prides itself on being more transparent and autonomous than traditional organizations. This effective model has the potential to replace many other business models besides cryptocurrency and investment. According to the Stanford University curriculum, there are several ways in which the current DAO mechanism can be implemented in other fields.

  • Platform management

Imagine that your favorite social media, food delivery or transportation apps are owned by users! This idea is to DAO the traditional Web2 companies such as Facebook, Amazon or Uber .

For example, the current Uber model requires all users to agree to their terms. Because Uber owns this platform, it collects commissions from drivers and passengers at the same time.

Think of Uber as an App created by a user community. The driver and the user jointly control its work and development methods. The App is jointly owned by them, not by a single individual or company. Everyone gets their fair share, there is no exploitation by intermediaries, and most importantly, your data is safe.

Large companies will either turn to a model that is more in line with the DAO in the future, or they will eventually become an outlier among a group of companies governed by the DAO .

Encourage and reward early users so that they can become communicators for further development and expansion;

Give the community decision-making power and balance competing interests;

Let employees and users have the benefits of the platform. If the platform is successful, both parties can benefit from it.

  • Startups and small businesses

DAO can achieve more effective governance through Web 3. Many people are inclined to this idea. It is not too surprising if new startups adopt the DAO model and reject the traditional model.

There are many ways that DAO affects startups:

Similar to venture capital funds, people pool their resources to fund projects they trust. With DAO, it also brings the additional benefit of complete transparency.

Administration costs are lower when setting up a company. You can build your infrastructure, incentivize on-chain, and easily track every small transaction.

More and more recognition

DAO is becoming more and more popular, and as web3 gains more attention, it will continue to follow this path.

NFT has taken over the Internet, and it continues to attract the attention of big names in the technology and music industries (even sportswear giant Adidas). As more and more people gather together to concentrate funds on these digital assets, this explosive growth has stimulated people’s interest in DAO.

Some celebrities are entering the Web3 field with some revolutionary ideas and are creating a DAO, such as Kimbal Musk’s charitable DAO, to solve the problem of food inequality. We will soon see more such organizations form DAOs to get better governance and come up with exciting solutions that create value.

The road to DAO has just begun, which means that more interesting use cases have yet to be discovered, and this alone is worth mentioning everyone’s interest in the future of DAO.

DAO may be one of the most exciting things at the intersection of economy, culture, and technology. It represents a fascinating new way that we can organize together and create a new model together to push humanity forward.

DAO also represents a huge change in the way we think about the organization and how the organization operates. We are on the cusp of major changes in the way the system works, and it will be very interesting to observe the developments in the next few years.

I believe that the next wave of business is not about a company or an industry, but about building the economy -in my opinion, the economy is a series of interactions between different entities. These future economies will be powered by the cooperation of many individuals, companies and organizations, and each of them will benefit from participation.

In the future, you will no longer work for the company.

You will sign contracts with various DAOs, and these organizations will become your new employers, customers, and partners.

As technology lowers the barriers to traditional business structures, a large number of opportunities will emerge, and individuals will have countless opportunities to become self-reliant, gain economic freedom, and ultimately do what they absolutely love.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/%e2%80%8bthe-overview-of-dao-ecology-how-to-create-a-dao/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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