People have been organizing themselves…well, probably since the beginning of time. Figuring out how to achieve, and even, set goals are central to how society functions.
Over time, there have been many different methods, with many skewed towards a centralized hierarchy. This is just part of the reason why blockchain technology — and the new Web3 structures it's introducing — are so exciting.
Enter the DAO
DAOs, or Decentralized Autonomous Organizations, seek to play off of blockchain's decentralized and trustless nature to democratize how this organizing happens. DAOs use code to organize — and unify — decentralized participants under a single goal.
They rely on blockchain its subsequent need for consensus to decentralize how decisions are made. This typically happens through a governance token paired with some sort of governance forum, and potentially further discussion. However, each DAO needs to set their own processes for reaching consensus, limits for who can make proposals, and breakdowns for how governance tokens grant decision-making power.
What can be a DAO?
Many things. You have a goal? Are there other people with the same…or similar goal? You might be eligible for a DAO.
Over their brief history, VCs and investment funds have been possibly the most popular use for this structure, but that is changing, as more and more projects migrate to a DAO structure, and more and more organizations with diverse purposes set up shop with this structure in mind.
Now, DAOs range from DeFi protocols to social organizations, but one thing remains the same: they all still need humans to define and drive them forward. The DAO part is just about how to structure this.
So….to get into it, here are a few of the different types of DAOs, and a couple of examples.
💰 Investment DAOs
As mentioned, this was the first type of DAO, and still remains quite popular….it's funny how easy it seems to be to work towards a singular goal when money is on the line.
🛠 Protocol DAOs
Also an increasingly popular sort, Protocol DAOs hand over the decision-making capabilities of DeFi projects and dApps to the users.
🖼️ Collector DAOs
With the rise of NFTs…and their prices, some enterprising groups joined forces to be able to buy in. And, so, the Collector DAO was born.
💼 Service DAOs
Definitely one of my favorite emerging types, service DAOs are bringing an upgrade to our working lives!
💸 Grant DAOs
Another great type of DAO (probably because they're giving away money to deserving projects) are Grants DAOs. They're often connected to protocols, blockchains, or VCs, where the initial funding comes from, and help build out the ecosystem to the users' needs and wants.
👯 Social DAOs
Looking to network? There's a DAO for that. But, really, the Social DAOs reimagine interaction in Web3, with not only a monetary buy-in, but the collaborative buy-in required by many DAOs.
There are still more types of DAOs, and I expect even more to crop up in the coming months as people keep innovating around how to use this technology, better ways to collaborate,
The Decentralization Issue
This is the recurrent issue of all Web3 and blockchain.
And, to be completely honest, there are many questions related to how decentralized many blockchain projects, including DAOs, are. And, these are valid questions. But, you also have to remember that setting the ground rules for how a DAO will operate — and, perhaps more importantly, why — still requires humans.
Often, due to how people interact, this still requires a small team, typically referred to as a core team, to set. This has also led to what can be referred to as hybrid DAOs, where the core team still plays a large role in making day-to-day decisions, but the tokenholders act almost as a board, albeit one with far more decentralized and democratized access. The core team has to answer to tokenholders' votes and report about the project to them, but still plays a crucial role in making sure the project runs.
Although not as decentralized as much of Web3 strives to be, this model is a step in the right direction, and a highly actionable step. In the meantime, I'm looking for the teams building clearer pathways to find and activate community members, not to mention for it to become normal to join and start collaborating….
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