Whether the encryption project adopts the DAO mode should first consider these 8 factors

As more and more companies seek innovation in management and organizational strategies, we are seeing growing interest in DAOs, while also having a huge impact on people’s digital lives. However, not every project is suitable for adopting the DAO pattern, and before making the right choice, you need to consider the following 8 points:

1. DAO is not recommended for centralized services and large-scale projects

For Web3 startups, DAOs are an attractive alternative to the traditional enterprise management model, but if your project is large and needs to provide centralized services, then DAOs are not suitable. Once you adopt the DAO model, you need to manage hundreds or thousands of shared decisions, and just communicating and coordinating will consume a lot of energy and cost.

In addition, the low voting rate is also a headache. Although technology can simplify the voting process and speed up the voting, it cannot completely solve the problem of low voting rate. Off-chain voting takes a long time to finally pass the proposal. Not suitable for projects that provide centralized services. Most importantly, even if you start with a small project, it will continue to grow in size over time, so adopting DAO governance also needs to consider the challenge of project scalability, which is important for determining the mission and goals of the project, and judging whether the DAO is a The right choice is crucial.

2. Clarify the overall needs of the team and the project

Every DAO needs a strong core team to build smart contracts, whether you need to start a team or gather a group of friends, ask yourself if everyone on your team is passionate about the task. The team fully discussed why DAO is needed and verified the needs of the project and its community, and discussed how to encourage community formation through DAO instead of relying on a centralized management model.

Disagreement among team members is a red flag as this may affect subsequent governance structures, so choose DAO members with similar views but complementary skills – remember that even development teams can have technical complexities and differences.

3. Trust is the foundation

In the DAO governance structure, you cannot see any “leadership”, because DAO encourages collective ownership and collective autonomy. All work and organizational rules are determined by the voting of DAO Token holders, and decision-making also relies on intelligence when meeting predetermined standards. contract to automate execution.

Before deciding whether to embed a project in the blockchain technology and smart contract trust layer, you must understand one thing – trust is the key to effectively manage a DAO, because any member can verify the DAO code, so you need to measure how to be safe Collaborate in a transparent manner.

Not all encryption projects are suitable for DAO, please understand these 8 points before deciding

4. Establish the right governance structure

You need to confirm whether the community really wants to use smart contracts to automate decision-making, or does it still want a traditional top-down governance model based on seniority and leadership?

Frankly, many DAOs today still rely on “centralized decision-making” – 1% of token holders actually have 90% of decision-making power – which may prevent new members from joining the project. The core DAO team should determine key members and governance principles so that voting rights are equally distributed to the community. Generally speaking, on-chain voting is usually based on the number of tokens held by DAO members, while off-chain voting relies on tools such as Snapshot.

Whether it is one-person-one-vote, delegated voting, or weighted voting, the ultimate goal is to make it easier for every member to vote on and review proposals.

5. Determine community ownership and value standards

The process of joining a DAO can be time-consuming, and if you want to form a DAO, you determine how to expand the community, and how to bring new members on board and ensure they have a voice in the DAO. Usually DAO members can join in the following three ways:

Invitation to join

Automatically open to all token holders

Only accept applications

Setting barriers to entry, or requiring DAO members to contribute to the organization, is critical for DAOs, so you need to make it easy for any potential contributor to join and learn about the project, but also Providing clear and complete rules and standards is a surefire way to avoid disputes in the future – after all, decentralization doesn’t mean frictionless.

6. Vault and Token Economics

In a DAO, token uses usually include:

Reward Organization Members

vote on proposals

Unlock more income

Whether the Token can be used to vote on the direction of the organization, provide added value and revenue opportunities is up to you. It is very important to design a high-quality token economic model. For example, a reasonable token release time can ensure long-term support from investors, and unissued tokens can be used to motivate those long-term loyal DAO members. On the one hand, you need to ensure that there are enough reserves in the DAO treasury to achieve greater development goals; on the other hand, you also need to allocate Tokens reasonably to motivate the community, and a balance needs to be struck between the two.

7. Transparency issues

Decentralization slows down decision-making, which is a problem for startups looking to move fast, so you should tell DAO members how to handle decisions quickly, and which decisions need to be voted on. Therefore, you need to form community committees, or set different voting thresholds, such skills ensure that the DAO follows the principle of decentralization and can quickly promote the growth of the organization. During this process, you need to maintain a high degree of transparency. The data is public, and you need a clear understanding of how native tokens are distributed (although tracking token distribution is a lengthy process), as well as publishing revenue metrics and financials so DAO members know all the truth when making decisions.

8. Think long-term

Governance, collective ownership, trust, and scalability are not enough to build a DAO, you also need to explore community communication, outreach to new users, and an ongoing review of governance principles, especially as DAOs grow in size In this case, these issues become even more important.

If you decide to adopt a DAO to govern your organization, not only need to have a flexible, long-term view, but also take decisive control measures when necessary while maintaining transparency for members and contributors.

All in all, the above 8 points are essential if DAO is to be successful.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/whether-the-encryption-project-adopts-the-dao-mode-should-first-consider-these-8-factors/
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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