One article to understand DAO ecology: development context, types, governance

The development of DAOs

DAO Concept Origin: A New Way of Social Collaboration

In 2006, science fiction writer Daniel Suarez published a book called Daemon, which is regarded by the industry as the original text about DAOs.

In 2013, Daniel Larimer, CEO of Invictus Innovations, first proposed the concept of “DAC” (Decentralized Autonomous Corporation), thinking that DAC is an effective metaphor for a decentralized system that provides useful goods and services to society. , copyright and next-generation intellectual property, insurance, courts, escrow and arbitration, empowering anonymous voting, prediction markets, and next-generation search engines to play an efficient role. The core of DAC is “having its own blockchain to exchange DAC shares (note: tokens)”, and must not rely on “any individual, company or organization to have value”, “cannot have private keys”, “cannot Reliance on any legal contract”.

Later, Vitalik Buterin proposed DAO, distinguishing DAO from DAC, thinking that DAC is only a subclass of DAO, and since DAC introduced the concept of shares, it is a for-profit entity, and he emphasized that DAO should be a non-profit entity, even if it can be obtained through Participate in its ecosystem for profit. In 2014, Vitalik published the article “DAOs, DACs, DAs, and More: An Incomplete Terminology Guide”, which introduced the potential of this blockchain-based organizational governance in detail. The definition of DO and DA has also been a research topic of DAOs in recent years. focus of the field.

What is a DAO: an essential part of a Web3 infrastructure

In the simple version of the DAO picture, we can see that all the systems, regulations, norms, remuneration, and bonuses in the company are written into smart contracts and stored on the blockchain. All decisions and governance of the company will be pre- The rules written to the smart contract are complete.

The full English name of DAO is Decentralized Autonomous Organization. From the conceptual disassembly, it can be seen that it contains two important characteristics, namely decentralization and autonomy, while the existing DAO currently relies on the blockchain to achieve a decentralized operation and decision-making system. , with the advantages of distributed systems have also ensured the openness of the network. Autonomy, that is, automatic operation that does not require human intervention, can be further understood as the specific operation activities in the organization are generated by pre-written codes. After the organization activities trigger a certain condition, the smart contract will automatically start the execution, and the organization will govern itself. However, almost all DAOs have not yet realized the concept of Autonomous. Only the distribution of tokens relies on the blockchain algorithm, which is still dominated by human rule. This is also more in line with Vitalik’s three-dimensional definition of DAO: autonomy as the mainstay, rule of man as the supplement, and internal capital.

DAO is an open and transparent organization based on smart contracts, controlled by all stakeholders and not affected by centralized institutions. DAO’s financial transaction records and procedural rules are stored in the blockchain, and the organization adopts public management rules and tokens. The incentive of the economic model can realize the self-operation, self-governance, and self-evolution, and then realize the organizational form of the maximum efficiency and value transfer of the organization. DAO originated from decentralized financial DeFi, which requires higher decentralized autonomy. Through this form of autonomy, smart contracts, on-chain transactions, and fair project and platform management can be realized. At present, most DeFi projects in the world use DAO for to manage its funds and issue tokens.

Benchmarking Modern Corporations: Why Do We Need DAOs?

In the past few centuries, the large-scale production of machines brought about by the industrial revolution has greatly improved the productivity of the human world, concentrating the means of production in the hands of a few capitalists, and the Internet revolution has put information in the hands of a few Internet giants, and continues to Widening the gap between the rich and the poor, web3.0 was born under this background, and DAO has become an indispensable part of the web3.0 ecosystem.

One article to understand DAO ecology: development context, types, governance

Organizational Design of DAO

Source: “The DAO “Organization Lego” Tool Ecology from the Perspective of Organizational Design

@lastofours co-founder Nichanan Kesonpat

As a native digital organization, DAO is not a complete organizational model subversion because it has similar characteristics to the existing organizational model, but we can observe by benchmarking the company system that DAO, a human-machine symbiosis To a large extent, it has achieved the improvement of the existing organizational model and the problems of the original organization.

Modern companies can use huge levers such as labor, capital, technology, and propaganda to amplify their advantages and leverage greater production with low input. And this also makes modern companies face three main problems: 1. Investor advantages widen the capital gap between owners and laborers, 2. Financial strength and ability base requirements raise the barriers to entry for entrepreneurship, and 3. Profit-driven leads to continuous inequitable distribution of resources.

Compared with modern companies, the DAO model can theoretically avoid this series of problems. First of all, the members of DAO become the benefit participants of the company’s activities through the tokens they hold, and the appreciation of the tokens will also get due rewards, which to a certain extent realizes the co-governance and sharing state of the owners, that is, the workers; the establishment of the DAO also It is more like an ideal state of a fully market-oriented market economy. Eliminating monopoly and barriers will help DAOs to fully compete; the primary purpose of DAOs is to solve problems and create value. Profits become a by-product of value creation, and profits are accompanied by problem solving. and value creation, it is a task-driven organization.

In the era of web3.0, project developers and users pursue the “ownership economy”, the right to speak determines the ownership of their assets, and the distributed right to speak determines the economic model from a centralized system to a crowdfunding and crowd-sharing system, which is also the reason for all kinds of DeFi One of the reasons why projects continue to attract traditional investment fund organizations.

DAOs landscape

The ecology of DAO

“2020 will be DeFi, 2021 will be NFT, and 2022 will be the year of DAO,” Messari wrote in its annual report. DAO is considered by many to be one of the most potential directions in the future social organization structure. Therefore, at the beginning of 2022, many investors will focus on DAO when looking forward to the market opportunities this year.According to the data on March 12, 2022 on DeepDAO, the total assets under management of the DAO ecosystem is 7.9 billion US dollars, and there are 78 DAOs with more than 1 million US dollars in management assets, accounting for about 40% of the total number of members, with more than 100 members There are 112 DAOs, accounting for 56.9% of the total, which is still 44 in September 2021.

One article to understand DAO ecology: development context, types, governance

DAOs Overview (Source: DeepDAO as of 2022.3.12)

One article to understand DAO ecology: development context, types, governance

Dapps with TVL≥$2.00B

Those who refuse to allocate some stablecoins or protocols with more liquid assets such as Bitcoin and Ethereum face greater risks of currency price fluctuations such as sharp declines in currency prices, contract loopholes, and flash loan attacks. According to DeepDAO data, most of the top ten DAOs by assets are closely related to DeFi projects, such as Uniswap, Compound, etc., and all use native tokens, stablecoins or Bitcoin and Ethereum as their reserve assets, which is also DAO The diversification of fund pools promotes the healthy development trend of sustainable financing.

One article to understand DAO ecology: development context, types, governance

Top 10 Dapps by Asset

(Source: DeepDAO as of 2022.3.12)

From the perspective of token holdings, the top ten are UNI, BIT, ETH, LDO, stETH, USDC, COMP, B-stETH-STABLE, RAD and AAVE, of which UNI holdings have reached 2 billion US dollars The circulation of other native tokens, including Bitcoin and Ethereum, also exceeds $2 million.

One article to understand DAO ecology: development context, types, governance

Top 10 Tokens by Token Holding

(Source: DeepDAO as of 2022.3.12)

DAO’s operating system and DAO tools

DAO’s operating system projects provide different templates, frameworks and tools for the community to gather resources and form DAOs. They usually provide smart contracts and interfaces to drive the on-chain actions of decentralized communities. The DAO operating system enables anyone to Easily start a DAO with limited technical capabilities. At present, the main types of DAO tools include DAO launcher, reward & income, salary management, governance & voting, information transmission & interaction, content, NFT, fund management, identity authentication, security. The project categories that are more numerous in DAO tools are DAO Launcher, Rewards & Earnings, Governance & Voting, Fund Management.

  1. The functions of the DAO launcher include creating DAOs, running DAOs, voting, etc. The more popular ones include Aragon, Moloch, DAOhaus, and OpenLaw.
  2. There are many social token issuance platforms and token reward platforms in the reward & income tool. Typical social token issuance platforms are Coinvise and Roll, and typical token reward platforms are RabbitHole and Layer3.
  3. Governance & voting tools cover governance history query, governance voting, governance Dashboard, etc. Snapshot and SafeSnap are commonly used for voting. Other tools include Tally and DeepDAO.
  4. Gnosis Safe and Parcel are mentioned more in the fund management tools, and Utopia is the most potential project.

One article to understand DAO ecology: development context, types, governance


Types of DAOs

The DAO ecosystem was not formed overnight in the past two years. Since 2019, DAOs with different functions have gradually emerged, including infrastructure, protocol, funding, investment, service, collection, and social networking. As well as DAOs such as media, and now DAOs are constantly exploring the utility and value of DAOs in the realization of diversified purposes, multi-scenario applications and ecology. According to the different voting methods, it can be divided into DAO based on Token voting and DAO based on share voting, and according to the DAO code execution environment, it can be divided into two types: on-chain governance and off-chain governance.

One article to understand DAO ecology: development context, types, governance

Evolution of the DAO (Source:

One article to understand DAO ecology: development context, types, governance

DAO ecological basic framework


Protocol DAOs (Protocol DAOs)

The protocol DAO gives every user the right to vote on network decisions, rather than leaving every key decision to a small development team. Typically, protocol DAOs issue governance tokens directly to users based on past usage and contributions to pass voting power, any user can propose ways to improve the project, and token holders can vote on whether developers should move forward with the proposal, Having more tokens is equivalent to having more voting power. Uniswap token holders, for example, are currently voting on which layer 2 network the decentralized exchange protocol should be deployed on, and token holders are also making recommendations from marketing plans to how to manage Uniswap’s $2 billion+ vault .

One article to understand DAO ecology: development context, types, governance

Introduction to key Protocol DAOs projects (Source: Deep DAO)

One article to understand DAO ecology: development context, types, governance

B.Protocol Dashboard

(Last 360-day TVL data Source: Footprint Analytics)

One article to understand DAO ecology: development context, types, governance

Curve Market Cap & Ranking

(Source: Footprint Analytics)

Funding The DAO (Grands DAO)

Funding DAOs, also known as Grants DAOs, aim to fund organizations or individuals that build decentralized projects on the blockchain, similar to investing in DAOs. Gitcoin is a precursor to this model, funding critical open source infrastructure that might otherwise struggle to get funding. Likewise, large protocol projects like Uniswap, Compound, and Aave have specific Grants DAOs that allow the community to vote on how to deploy their funds to support builders and developers to advance their own development.

One article to understand DAO ecology: development context, types, governance

Investment DAO (Investment DAO)

In the past, most DAOs were basically non-profit in nature. After a long period of non-profit DAOs, investment clubs began to set about allowing members to get returns. Investment DAOs Compared with traditional financial investment institutions, investment DAOs have a richer field of intellectual investment, and at the same time enjoy the social capital and network of community members, further forming a new way of cooperation and investment. The for-profit DAO created by MetaCartel is aimed at investing in decentralized applications (DApps). The community orientation stimulates collective wisdom and promotes the DAO organization to have the ability to make decentralized investment decisions that may be better than a single decision maker.

One article to understand DAO ecology: development context, types, governance

Service DAOs (Service DAOs)

Service DAOs are trying to reinvent the way people work, where people can allocate work according to their time and take ownership of the networks they care about. While early service DAOs were crypto-focused, it is envisioned that in the future traditional organizations could also be replaced. Service DAOs are similar to online talent agencies, bringing together strangers from all over the world to build products and services. Most of the early service DAOs, such as DxDAO and Raid Guild, focused on pooling talents to build a crypto ecosystem. For example, all contributors to DXdao can participate in proposals and get paid through on-chain, transparent governance.

One article to understand DAO ecology: development context, types, governance

Introduction to key Service DAOs projects (Source: DeepDAO)

Collector DAOs (Collector DAOs)

Collection DAO provides a fast and efficient way of capital formation, and is more transparent and fair, allowing all members to directly audit on-chain transactions. Inject funds to gain voting power to decide to invest in specific assets, such as the purchase of rare historical collectibles or professional sports franchises, and participate in co-creating a portfolio that aligns with their mission and investment goals. Specific projects include ConsistutionDAO, PleasrDAO, KrauseDAO, Flamingo, etc.

One article to understand DAO ecology: development context, types, governance

Social DAO

Social DAOs are more focused on social capital than financial capital, where like-minded people gather in online communities to coordinate and organize participation around tokens, together creating a valuable community – sharing insights, throwing meetups or big parties, and unlocking more Access to a broad community, etc. Social DAO is still in its infancy, and it will take time to understand and verify the effectiveness of various models, and the rapid rise of Social DAO also shows that it represents a powerful new form of social organization. Leading examples are Friends With Benefits, Meta Gamma Delta, Minty, Proof of Humanity, Seed Club, etc.

Among them, key projects such as Friends with Benefits are a new type of DAO with strict entry review. Joining the FWB requires a written application, which is reviewed and voted by the community itself, and a minimum amount of FWB tokens to represent the ownership in the DAO. Since opening as a social experiment in September 2020, FWB has grown to nearly 2,000 members, launching a “token-gated events” app, NFT galleries, Web3-centric editors, in addition to a series of parties around the world Businesses, virtual music studios, and more, the upcoming “FWB Cities” will aim to expand the DAO’s footprint in real life and work with specific spaces, communities, etc. in the city to bring real-world benefits to FWB members.

One article to understand DAO ecology: development context, types, governance

Introduction to key Social DAOs projects (Source: DeepDAO)

Media DAOs

Media DAO aims to reshape the way content producers and consumers interact with media. The biggest difference between it and traditional media is that it redefines the rights of producers and consumers by incentivizing contributions.BanklessDAO is a typical example, where users earn revenue by producing content, researching, designing, translating, marketing services, and voting on key decisions that guide the DAO. Media DAOs offer a compelling alternative to realign the interests of readers and producers.

The more active MediaDAOs include BanklessDAO, which aims to promote the adoption and awareness of the unbanked currency system, Rekt, an anonymous media public platform, Global Coin Research, an investment and research company focusing on the Asian blockchain market and technology, and a company covering encryption and decentralized networks. Decrypt et al.

Governance of DAOs

Governance Status

The core strength of DAO lies in its diverse governance models and synergies. It is not only a form on the blockchain, but also an extension of the traditional OB and OG (Organizational Behavior and Organization Governance) theories. DAO is mainly divided into two types: Share-Based and Governance Based. The difference between the former and the latter is that the former has its own capital pool to facilitate the exchange of token holders, while the latter’s tokens can only be used as governance tokens.

As the scale of DAOs suitable for various scenarios and functions grows, the management of decentralized protocols has become the focus of emerging DAOs and become a high-quality DAO. These communities are constantly adjusting their governance methods and making collective decisions through high participation rates. To optimize the organization’s capital operation and internal operations. Compared with traditional centralized organizations, the way in which smart contracts run decentralized decision-making itself greatly reduces the cost of governance and coordination. More DAOs connect different roles through encrypted protocols to contribute to the consistent motivation and common interests of individuals. Decision wisdom.

Just like Buterin defines DAO from three dimensions, at present DAO still contains a large part of the “rule of man” component, and the pursuit of a state of complete autonomy still has a long way to go. In DAO’s “rule of man”, a decision-making framework needs to be created to ensure the effective operation of the DAO process. In order to grow and develop these web3.0 communities, attract more network participants and motivate stakeholders to participate in the degree of co-governance, this promotes The development of a series of economic incentives to effectively govern DAOs.There are three common ways:

  1. Growth Incentives: Protocol users control the protocol (and the protocol’s cash flow);
  2. Yield farming: Create various incentive actions on the protocol and distribute governance tokens to protocol users, not just investors and development teams;
  3. Retroactive airdrops: Drop tokens to current or previous users’ wallets to spread awareness, build (protocol) ownership, or retroactively reward early users;

Common governance risks

DAO is increasingly becoming the organizational primitive of Web3, reshaping the way of governance, investment, work, creation and donation. With the continuous development and improvement of the Metaverse ecology, the category, quantity and quality of DAO are in an explosive growth. Of course, it also faces several governance ills that restrict its sustainable development.

  • Legal/Regulatory Issues

DAOs do not exist anywhere and do not operate like corporations, so for now they cannot fully integrate into existing regulatory frameworks. It remains to be seen how different jurisdictions will build regulatory frameworks around these new types of organisations. For example, the SEC shut down the U.S. CryptoFed DAO, which planned to create a crypto payment system, just four months after it launched, saying the business “seriously misled” the public through conflicting documents that failed to disclose key audited financials reports, etc.

  • Lack of effective coordination mechanism

The desirable properties of DAOs (decentralization, immutability, trustlessness) inherently have significant performance and security flaws. The rapid growth of a subset of potential organizations as DAOs is exciting, but they also bring many risks that do not exist in traditional organizations, such as low turnout, inefficient operations, and chaotic decision-making processes. Whether traditional enterprises are efficient, centralized and efficient operation or open participation is still a contradiction that is constantly being discussed.

  • lack of developed infrastructure

The clear structure and efficient decision-making process of traditional organizations benefit from a highly developed operational infrastructure, while the current stage of DAO is to build from the ground up similar infrastructure to traditional organizations for governance, compensation, treasury management, communication, etc. At present, the infrastructure ecology of DAO has just begun. As the application scenarios of DAO are continuously developed, the requirements for its infrastructure will become more and more complicated.

  • Smart Contracts, Fragmentation and Sustainability Risks

News or events such as “smart contracts have security vulnerabilities and attackers steal digital assets” have been heard all the time. The emergence of events such as The DAO of Ethereum and smart contract security vulnerabilities of other projects has gradually caused ordinary users and investors to be more concerned about smart contracts. Questions about safety. The largest encrypted network also has a history of fragmentation caused by internal divisions in the community, such as the fork event of Bitcoin and Ethereum, which is also a major risk that DAO needs to consider in the future development.


DAO is not a new term, and its development process is extremely complex and will be more diverse in the future. Today’s DAOs have become an important part of the web3.0 ecosystem. DAOs play a very important role in the decentralized operation and governance of various projects such as DeFi, cryptocurrencies, NFTs, and GameFi around the world.

Compared with the past organizational model, DAO implements asset management and automatic execution of some decisions through the blockchain, which achieves a larger scale of decision-making decentralization as a whole, which is in line with the open spirit of the blockchain. Although DAO still faces problems such as unclear legal status, the efficient, flexible and transparent value of DAO will inevitably make it have a broad space for evolution. The governance problem DAO is currently facing is not purely at the level of financial operations supported by technology, but how extensive social collaboration can find a home in the web3.0 ecosystem.

Posted by:CoinYuppie,Reprinted with attribution to:
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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