Cryptocurrency has been hugely popular. However, the terms used in the Crypto market are highly confusing. One such term is DAO. What is a DAO? You must have heard this term a lot of times. If you are unaware of it, this post will guide you. It includes information on What is a DAO and what are the examples of DAO crypto projects.
We can see new trends in the crypto space and blockchain. Many enterprises have identified huge potential in crypto and blockchain as new advancement like DeFi has become noticeable. DAO or Decentralized Autonomous Organization is also a technological advancement for driving DeFi governance.
You must have wondered about What is a DAO and why people are talking so much about it. Well, in this post, we will discuss What is a DAO. We will also focus on examples of DAO crypto projects.
What Is A DAO?
DAOs are the Decentralized Autonomous Organizations. DAO in very simple terms means a smart contract agreed upon by people sharing similar interests. They decide a collective goal or organization’s purpose and thus raise native tokens or funds for the goal accordingly. DAO is an entity that has no central leadership.
You must be thinking how is a DAO different from traditional business contracts, right?
It is different because people who take part in DAOs are also a part of collective decision-making. If any changes are proposed within a DAO community, they need to be approved by the people who have invested in the project. Though goals and rules for every DAO project are individually decided, each project needs to be published as a smart contract. Let us see how a DAO works.
Working Of A DAO
The working of a DAO simply depends upon three steps. These are a creation of a smart contract, funding, and deployment. DAOs are based upon a smart contract that doesn’t include a single point of authority influencing it.
When a smart contract is created or deployed, community voting is the only option to alter the regulations of these smart contracts. It is because these smart contracts are defined using code-based logic. So, no changes in rules will be successful until it is decided through voting. Similarly, the money which is collected by DAOs cannot be spent until it is approved by the members. It is the definition of decentralized projects as these contracts live on a blockchain and anyone can view who has the address of such contracts.
Once, the smart contracts are hard-coded and deployed to a blockchain, the DAOs can begin the collection of funds for project goals. It can be done with native tokens which is a form of currency and is tied to smart contracts associated with DAOs themselves. When users start investing in these projects, they can earn special rights such as feedback, voting, and potential goal setting for the ideas in future projects.
The inner working of every DAO project is unique due to the way smart contracts are written. As we discussed the working of a DAO, let’s have a look at the pros and cons of a Decentralized Autonomous Organization before moving towards the examples of DAO crypto projects.
Pros And Cons Of A DAO
Let us see what are the advantages of a DAO.
- Lesser chances of errors because no human factor is present.
- A high degree of transparency is due to the blockchain element.
- Listen to every single opinion.
- Higher efficiency.
Some of the cons or disadvantages of a DAO are as follows.
- No guarantee of security by the creators of a DAO.
- Members of a DAO need to obey what the majority decides.
- Delay in the decision-making process.
- Lack of critical thinking.
We have discussed What is a DAO, how it works, the pros of a DAO, and the cons of DAO. Let us now move on to the examples of DAO crypto projects.
Examples Of DAO Crypto Projects
Many DAO projects are currently going on. Let us have a look at some of the examples of DAO crypto projects.
VitaDAO is known for democratizing longevity. It provides the means for biotech scientists for attracting funds for longevity research. However, VitaDAO creates an IP-NFT or an Intellectual Property-Non-Fungible Token for every project that it invests in. Ip-NFT provides several advantages like attracting funds without formulation of a foundation or registering for a patent, involving people with your research directly, etc. The peer members are allowed to decide on the availability, pricing, and other data exposure as the IP-NFT is attached to a DAO and smart contracts.
2. Tornado Cash
The Tornado Cash DAO protocol gives a completely decentralized solution to make private transactions on an Ethereum network. It is simple to use this.
You simply need to connect the wallet, create an Eth deposit, and specify a secret note. After that, Tornado Cash will make and deploy a custom smart contract that will accept the withdrawal. You can make use of a new wallet for withdrawal of the deposit from a smart contract. This method is also called the ZKP method or the Zero-knowledge proof method. The service of Tornado Cash operates as a DAO. The developers of Tornado Cash are unable to interact with smart contracts as it lives on the blockchain entirely.
Julian Assange had teamed up with Pak, a digital artist, in 2021 to form the AssangoDAO.
AssangoDAO is based on the dynamic NFT project that is dubbed Censored. The dynamic NFT is known as Clock which is a display of the number of days when Julian Assange had been imprisoned for. The total funds raised for the DAO was roughly around $50 million. When the fundraising part was finished, AssangoDAO purchased the NFT itself. So, the money that is collected from the project goes to the WikiLeaks fund.
The project is known for highlighting how grassroots movements can deal with uncertain situations controlled by outside sources.
4. The LAO
Various Ethereum users launched The DAO in 2016. It attracted numerous people and broke various records for a public crowdfunding campaign. However, it experienced security vulnerability and faced a downfall. It set the premise for The LAO project.
The LAO project is built as a replica of the same. It includes the same features with a goal to help sponsor and promote the Blockchain ecosystem. One can participate in this project by buying investment tokens with Ethereum. You can earn special rights depending on the amount invested. You can also enjoy returns if the project supported by The LAO turns out to be profitable. It is dependent on the number of LAO units you hold or have invested.
GnosisDAO is one of the examples of DAO crypto projects. It is a new DAO from Gnosis. It helps the developers of the DeFi. It formulates the supervision around the forecast markets. It delivers useful proposals to its decentralized representatives based on the needs and status of the market. GnosisDAO will be managed using a SAFE token.
Rocket is also one of the examples of DAO crypto projects wherein the members accept NFTs either for the US dollars or dollar-fixed token DAI. Non-Fungible tokens cannot be traded for other tokens as cryptocurrencies. It provides the NFT holders with an approach for getting liquidity without giving up the NFT stake they own.
Certain other examples of DAO crypto projects are also available presently like Blockster, Aave, Metaverse DAO, Aragon, etc.
This post discusses What is a DAO and examples of DAO crypto projects. We have provided you with all the necessary details related to What is a DAO, how it works, and other things. We can expect that a DAO has a major role in control and autonomy. It will be seen as an encouraging element that will help to increase user participation in DeFi projects.
Decentralized Autonomous Organizations have the potential to change the ways through which corporate governance works. It can be assumed that many more organizations will adopt the DAO model to help govern their activities in the future. It is also expected that DAOs will improve in the future.
Frequently Asked Questions
Q1. Is Bitcoin A DAO?
A. Yes, the famous cryptocurrency Bitcoin can be a DAO. Here investors or traders come into an agreement to purchase or sell cryptocurrencies as per the terms and conditions. Everything here is tracked on the Bitcoin blockchain.
Q2. What Is DAO Invest?
A. DAO Invest is a cryptocurrency community-based project. It focuses on the use of a collaborative approach in investment in cryptocurrency.
Q3. Is Uniswap A DAO?
A. Uniswap earlier was a protocol that later became a DAO without changes in fee splits.
Q4. Does A DAO Need A Token?
A. Yes, a DAO usually receives its funding by the issue of DAO tokens. Such tokens provide voting rights to the members of a DAO.