What is a DAO anyway?
The word “DAO” is also Chinese for “way” or “path” — but in the world of decentralization — it is a “Decentralized Autonomous Organization” and it is a system for making decisions with no central leadership. (A DAO can also be known as a “DAC” or “ Decentralized Autonomous Company.”)
Each DAO is an internet-native organization completely owned and managed by its members. Any community can organize a DAO for any reason, but typically it is done to manage software code and a pool of money.
Governance is What Governments Do
Let’s take a moment to talk about the difference between these terms.
- Government is a group of people who rule or run an organization (typically a nation or country).
- Governance is the act of governing — a process of making rules and then changing those rules.
A DAO or DAC is new system of governance that facilitates decisions to be made completely transparently. All of the proposals made to a DAO, the votes on those proposal, the execution of those proposals, and (if there is a payment as part of a proposal) — are all public to be viewed by anyone online. In many cases, the chat groups regarding the decision making are also made public.
A DAO typically gives decision-making power to the holders of a token. That token is known as a governance token. The governance can be literally any decisions that are made by a group.
A can be governed directly based on weighted voting of token holders (plutocracy) or the token holders might elect a board to make decisions (oligarchy).
Companies are Becoming DAOs
There is growing evidence that traditional corporate structures will be replaced by a DAO/DAC model or become more DAO/DAC-like using tokenized issuance of their shares. Equa is one such company that will help facilitate either the tokenization of equity shares, or the foundation of a company with tokenized equity.
Traditional private equity has very little to no liquidity at all, whereas a tokenized company could list their shares for sale on a public DEX (compliant with laws in whatever nation).
How do you make a DAO?
Basically you have to choose a purpose for your DAO, the following questions may help:
- Why do you need a DAO?
- What decisions do you want to make collectively?
- Will the DAO have a treasury?
- How would someone earn or acquire the governance token?
- Do you want to allow token holders to vote directly on proposals or vote to elect someone to make decisions?
- Will you use a DAO generator or build it from scratch?
List of (functioning) DAO Generators
This is a list of (DAO) generation platforms (where one can make a DAO). The benefit is that you don’t have to write any code, the downside is that some of them cost a lot to use:
- DaoHaus → DAO generator for ETH. Many fully functioning DAOs.
- DaoStack → DAO generator for ETH/xDAI networks.
- Daclify → DAO generator for EOS networks. Hard to tell if any of these are functioning.
- Pool-Party → DAO generator for shared investment pools.
- Seeds → DAO generator for DAOs that focus on the care of self and the earth.
List of (functioning) DAOs
These are the DAOs that I’m aware of which are functioning today:
- Compound → decentralized finance governance for the Compound protocol.
- SeedClub → Incubator for creators, give up 3% for their support and network.
- Flamingo → US based DAO that sold tokens to accredited investors for ETH and bought NFTs in exchange. Fractional ownership.
- Moloch DAO → first major successful ETH investment DAO I know of... I think Zapper was built out of their grant program.
- Jenny Metaverse DAO → Rare NFTs fractionalized; bought Steve Aiko & 3blau NFT song and are looking to buy more ultra rare NFTs for fractional ownership across token holders.
- Please DAO → ETH big hands coming together (10 ETH + entry) to buy the Edward Snowden NFT and other rare NFTs.
- Krown DAC → EOS-based DAC rewarding community-driven content creation.
It’s a growing list — if I’m missing any that you are aware of, please let me know and I’ll add them here. Coopahtroopa also has a nice list of DAOs on his mirror.xyz blog — but it seems to be completely ETH-focused.