DAO’s: A NEW WAY OF COLLABORATION IN WEB3
The rise of decentralized autonomous organizations (DAOs) brings new insights into alternative ways we can organize communities in Web 3.0. In this sense, DAOs form because of varying reasons but the underlying ideology remains the same, it is principally about communal ownership.
This accounts for how the first DAO, or decentralized autonomous organization, was created. Since then the pace and development of the Web3 tool have exploded. Today, communities across the globe use DAOs to help gather, organize, and distribute funds to causes that matter.
DAOs drive community goals and outcomes through decentralized models of governance and incentive structures. While there are seemingly endless types of DAOs, from “protocol DAOs” to “service DAOs” to “collector DAOs,” each hinges on decentralized models of governance to bring communities together through collective ownership and interest, and we will also see its interplay in the field of web3 as an essential and emerging ecosystem in Blockchain technology.
While we drive towards discussing in full detail, the other viable DAOs available and the collaborative role they stand to play in web3, a need to discuss one of the principal DAOs will suffice. “Ecosystem DAOs” are one of the iterations of what’s possible with DAOs. This set of DAOs is unique in that they are built from a project rather than brought together by a singular or short-term goal.
In an ecosystem DAO, the aim is to move the entire ecosystem towards becoming self-sustaining and self-servicing. In many ways, ecosystem DAOs are an extension of the organization to increase their efforts tenfold by aligning the community through incentives
Put simply, a DAO is an online collective that enables distributed stakeholders to achieve a certain goal or meet a condition (of any kind), by coordinating through an agreed-upon set of rules. These rules are coded into smart contracts and enforced on a blockchain.
Leveraging this community power means more innovation can take place than in traditional structures, as idea generation is open to many rather than a few.
Web3 brings an enabling set of technologies that has the potential to completely reshape many different fields, including research and education. Today we are faced with challenges around regulation, data safety and privacy, as well as governance and bureaucracy — to name just a few.
As Web3 gains more traction globally, it activates new paradigms to engage, govern, create, iterate, and implement research results in ways that were previously complex and arduous. The Decentralised Autonomous Organisation (DAO) is one such empowering Web3 utility and this collaboration will be bigger in the coming days.
To have a better understanding and grasp of the grits underneath this synergy, let’s have a glance at some DAOs which you need to know.
8 MOST IMPORTANT TYPES OF DAO TO KNOW
As the world of blockchains and crypto continues to mature, launching decentralized autonomous organizations (DAOs) are becoming a popular option for managing digital-native collectives.
In 2016, a few members of the Ethereum community came together to create a platform that would allow individuals to pitch project ideas. Community members would vote on these ideas using tokens they bought in exchange for sending Ether to a unique wallet address.
Unfortunately, a smart contract bug exploit lost The DAO 3.6 million ETH, and they did not recover financially. Regardless, The DAO paved the way for many more successful DAOs.
The Summer of DeFi in 2018 brought flagship Decentralized Finance projects to the Ethereum blockchain such as Compound Finance (COMP), Uniswap (UNI), and Aave (AAVE), which offered attractive ways for community members to demonstrate their commitment to decentralization through governance tokens and DAO governance.
Ultimately, the success of DAOs was the result of innovations in blockchain technology such as smart contracts, on-chain governance (voting), empowered community members redefining how decisions are made, and new organizational legal structures without a central authority.
As the web3 ecosystem grows, blockchain technology evolves, and innovators experiment with new kinds of models, it’s likely we’ll continue to see DAOs push the limits of what’s possible and more so how it seamlessly creates a balanced economy flow with web3.
Below is a list of the types of DAOs available which can have a place in the world of web3 with time.
TYPES OF DAOs
There are eight main types of DAOs:
- Protocol DAOs
- Grant DAOs
- Philanthropy DAOs
- Social DAOs
- Collector DAOs
- Venture DAOs
- Media DAOs
1. Protocol DAOs
A protocol DAO is a kind of DAO that is designed to govern a decentralized protocol such as a borrow/lending application, decentralized exchange, or another type of dapp.
There are some outlined examples under protocol DAO: Three of the most notable protocol DAO examples are MakerDAO, Uniswap, and Yearn Finance.
2. Grant DAOs
Grant DAOs are designed to facilitate nonprofit donations, strategically deploy capital assets throughout the web3 ecosystem, and are either a charitable extension of a larger project or an entirely separate entity in the DeFi space.
Examples of Grant DAO include;
Aave Grants DAO is a community-led program to fund ideas and projects that power the development of Aave Protocol, focusing on supporting a more comprehensive network of community developers.
3. Philanthropy DAOs
Philanthropy DAOs aim to help progress social responsibility by organizing around a shared purpose to create an impact in the world of Web3.
Philanthropy DAO Examples;
The first nonprofit philanthropic DAO, Big Green DAO, is tied to Big Green, a national 501(c3) food justice charity that teaches people how to grow food to improve nutrition security, mental health, and climate impact. Big Green DAO latched onto the decade-old charity to restructure grant-making and put the nonprofit in a favourable financial position.
The speed at which DAOs organize and execute is a testament to the power of Web3. UkraineDAO raised over $3 million in ETH to support the Ukrainian Army in less than a week.
Coordinated by members of PleasrDAO, Trippy Labs, and Russian art collective Pussy Riot, UkraineDAO uses the ENS domain, ukrainedao.eth, to send donations to Ukrainian soldiers, and support the Ukrainian organization, Come Back Alive.
Simply put, the popularity of the crypto combined with the simplicity of international remittances allow philanthropy DAOs to create a meaningful impact at record-breaking speed.
4. Social DAOs
Social DAOs, or creator DAOs, are focused on the self-organizing community aspect of DAOs by bringing together like-minded individuals such as builders, artists, and creatives.
While Social DAOs are community focused, typically they have a barrier to entry such as owning a specific number of tokens, owning an NFT, or being personally invited.
Creator DAO Examples;
Developer DAO is a collective of web3 developers focused on building the future of web3. To join Developer DAO, members must hold a genesis NFT or be one of the lucky developers invited into the private Discord server.
5. Collector DAOs
The main purpose of Collector DAOs is for members to pool funds together so that the collective community can invest treasury funds in blue chip NFT art and other collectibles, where each member owns a share corresponding to their investment.
Collector DAO Examples;
Notable collector DAOs such as FlamingoDAO rose with the explosion of NFTs which collected incredibly expensive NFTs from digital artists like Pak, Hackatao, XCopy, and CryptoPunk #2890 NFT, which was purchased in 2021 for $760k USD.
Another group of collectors formed ConstitutionDAO in an attempt to buy the United States Constitution. Remarkably, ConstitutionDAO raised $47 million worth of ETH in one week to try to buy a first-edition copy of the U.S. Constitution at a Sotheby’s auction.
Though not every collector DAO will pay off, it is a new medium for investors to get financial exposure to expensive NFTs without risking large amounts of personal capital.
6. Investment and Venture DAOs
Venture DAOs pool capital to invest in early stage web3 startups, protocols, off-chain investments, and get access to portfolios not available in traditional finance.
Venture DAO Examples
Krause House DAO is a Venture DAO trying to buy a professional NBA team that is made up of investors and basketball fanatics. Krause House DAO members would participate in decisions affecting the operating procedures of a National Basketball Association team, including but not limited to general management, ticketing, merchandising, and partnerships.
Other notable venture DAOs include MetaCartel Ventures (MCV) which is a for-profit DAO established by the MetaCartel community to invest in early-stage Decentralized Applications (DApps), and BessemerDAO, which was launched by the San Francisco-based VC firm Bessemer Venture Partners, to discuss trends in the crypto industry and sharing resources.
7. Media DAOs
In contrast to a top-down approach where content is produced with a central agenda or influenced by advertisers, Media DAOs reinvent traditional media platforms by creating content driven by the community.
Media DAO Examples
BanklessDAO is a decentralized community to coordinate and propagate bankless media, culture, and education. Its goal is to drive the adoption of a truly bankless money system.
Decrypt is another media DAO example that empowers users to vote on what types of content they want to see.
Media DAOs are especially powerful for up-and-coming communities looking to reward their users as the crypto community and Web 3.0 culture grow.
A SubDAO is a new kind of DAO that is a subset of DAO members that are organized to manage specific functions such as operations, partnerships, marketing, treasury, and grants.
Balancer Protocol saw an opportunity with its growing DAO membership and proposed to create subDAOs to manage DAO-related decision-making and facilitate execution, without requiring every proposal to be passed by the entire DAO.
In a unanimous vote, Balancer DAO successfully integrated subDAOs into their structure and are now able to move more efficiently as a Decentralized Autonomous Organization.
The creativity of the community is truly the limit of what can be built within the DAO framework.