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Rundown of the DAO

The main components of all Decentralized Autonomous Organizations (DAO) are the same. They are an organization that takes action based on what the community wants. They do this through voting, using the number of tokens held to determine the weight of their vote. Just like all houses have a foundation but can be designed in almost limitless ways, DOAs come in all shapes and sizes. When a DAO starts, they have a funding round where they sell its tokens to build a treasury. The Treasury is then put to work completing tasks assigned to it based on the DAO's use case. Sometimes a DAO is put in place to raise funding for an organization or cause. Other times, groups of people pool their money into the DAO and have a Treasury Manager invest in crypto for them while earning dividends on the total earnings. A risk you take when funding a DAO is similar to funding any other project in crypto. You run the risk of the DAO’s Treasury going to zero and losing your investment. Another problem that has plagued some DAOs is the founders taking control of the Treasury and cashing out and taking all the tokens. This is why a lot of successful DAOs implement a multisig wallet. This is the wallet that stores all the funds of the DAO, which is controlled by multiple people, either appointed or voted on by the community. The people overseeing the multisig wallet cannot move any funds unless a predetermined amount of the people controlling the wallet approve of the transaction.


Eight ways of the DAO

Protocol

Philanthropy

Protocol

When dealing with any lending, borrowing, or decentralized exchange, you would follow the protocol of the DAO system. For the most part, these DAOs act as DEXs. The difference is that token holders in the DAO can suggest and vote on changes. Also, if the DAO is a lending service, the community can vote to fund or not fund different projects. By buying the token of this particular DAO, you add funds to the Treasury, which helps expand its ability to process transactions. Some DAOs that follow this method are Maker DAO, Uniswap, and Yearn Finance.


Grant

Philanthropy

Protocol

You would look for a grant DAO if you wanted to raise money for a cause that was important to you or if you need help building on the blockchain. These DAOs specialize in funding non-profit organizations and deploying capital assets. The members of the DAO use their voting power to decide which group or project receives the funding. Since it is a grant, this means the DAO does not require payment from the individuals they send money to. Some examples of a grant DAO are AVE Grants and Meta Cartel.


Philanthropy

Philanthropy

Philanthropy

Just like a grant DAO, the philanthropy DAO raises money for a cause. The difference is that most of these DAOs are made for short-term usage. An example is the conflict in Ukraine, where a DAO was set up to help the Ukrainian people. This is not meant for long-term use but more as a fund-raising event. However, some philanthropic DAOs do continue for a long time, such as Big Green DAO, which is part of a long-standing organization that teaches the importance of growing your food and reducing carbon emissions.


Social

Collector

Philanthropy

A social DAO is more for bringing people together over a certain topic. These groups tend to have a barrier to entry that requires you to own a certain NFT and or a certain number of tokens. Some of these DAOs require you to wait to get voted in by the community. These resemble social media groups. The main purpose of these DAOs is not to make large amounts of money but to connect people who share similar beliefs or interests. Developer DAO and Friends With Benefits DAO are two examples.


Collector

Collector

Collector

If you like collectibles, whether they be NFTs or the US Constitution, try joining a collector DAO. These DAOs are meant to either run for a long time or just for one purchase. The Constitution DAO became famous when they raised over 47 million dollars in ETH to buy the US Constitution. For better or worse, they did not have the winning bid. Sometimes this style of DAO will have its members buy its token and generate a pool of money to buy very expensive NFTs. When one is purchased, its ownership is split among the community  

Venture

Collector

Collector

The good old venture capitalist funds. These groups pool their money together to use it to support new projects being built. They normally have a treasury manager who decides how to allocate funds. The groups that are funded usually pay the DAO a certain amount of its token. The DAO can either distribute these amongst the community or hold on to them. If the Treasury decides to hold on to them, they will wait until a certain profit margin is hit before they sell the tokens. The community is then paid out a percentage based on how many of the DAO's tokens they hold. Everything from who is the treasury manager and multisig wallet signers to which projects to invest in is up to the community. A few examples are Wonderland, Krause House DAO, and MetaCartel Ventures.


Media

Media

Media

Over the years, there has been a steady decline in viewers for the mainstream media. A lot of people feel that these organizations are pushing an agenda and skewing the data presented. Alternative media outlets, such as Joe Rogen's podcast, have risen as a result. In crypto, people turn to the Media DAO for either entertainment or informational outlets. These DAOs provide information that suits the community's needs. Some, like Bankless DAO, are working for a future where you do not need a bank. They describe themselves as "a decentralized community to coordinate and propagate bankless media, culture, and education." There are other groups like Decrypt that allow users to vote on the content that they want to see.


Sub

Media

Media

So if you are worried about the operations of the DAO getting too big for everyone to follow everything and vote on every proposal, you can create a DAO inside a DAO. For example, Balancer Protocol implemented sub-DAOs into their project so that a group voted in by the community can make a majority of the decisions. This helps with the speed of implementing changes. There are very few examples of sub-DAOs, and not very surprisingly, it is the newest DAO flavor.


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