What is a DAO?

DAOs can be defined as decentralized autonomous organizations where the decisions are governed by proposals and voting so that everyone has a voice in the organization.DAOs are not subjected to any central authority, corporate leaders, or third-party decision-makers. Here, the decisions are made ground up and governed and organized by a specific set of rules coded on a blockchain.

These organizations are 100% transparent and community-driven, where they have built-in treasuries so that no one has the authority to access them without the approval of the group.

The backbone of a DAO is its smart contract, and it defines the organization’s rules. Once these rules are live on the Ethereum blockchain, no one can change them except by a vote. Similarly, no one can spend money without the group’s approval either. The group makes the decisions collectively without a central authority, and the payments are only passed with the passing of votes. There are different types of DAOs, so let’s look at them.

Based on the structure, technology, and modus operandi types of DAOs can be classified into the following:

Protocol DAOs

Protocol DAO is designed to govern decentralized protocols where the tokens serve as voting metrics to implement any changes in the protocol. It includes borrow /lending applications, decentralized exchange, or any other type of dapp. Examples of protocol DAO include Uniswap, MakerDAO, etc.

Grant DAOs

Grant DAOs facilitate nonprofit donations, and innovative DeFi projects and are funded using grant DAOs showing how decentralized communities are more flexible with funding than traditional organizations. One of the famous Grant DAOs is Aave Protocol, where Grants infrastructure is used to foster and grow the DeFi initiatives. They are generally designed to facilitate nonprofit donations and are a charitable extension of a larger project or a separate entity in the Defi space.

Philanthropy DAOs

Philanthropy DAOs help progress social responsibility by organizing around a shared purpose to create an impact in the world of Web3.

Social DAOs

Social collaboration platforms like Blockstar are known as Social DAOs, where digital democracy is offered, and people can share their common interests. They bring together like-minded individuals such as artists, builders, creators, etc. However, they have a barrier to entering, such as owning a specific number of tokens, owning an NFT, or being personally invited.

Related article: DeSo Blockchain: Decentralized social network for social media platforms

Collector DAO

Collector DAOs are used for pool funding, and the collective community can invest treasury funds in the blue-chip NFT art and other collectibles.

Investment DAOs

They are also known as venture DAOs, and they allow the pooling of funds for the investment purpose of various DeFi operations. These DAOs are transparent and open to everyone. For example, Krause house is a venture DAO governed by basketball fans to operate the National Basketball Association.

Related article: What is DeFi 2.0, and why does it matter?

Entertainment DAOs

Entertainment DAOs provide decentralized fun and bring innovation and control over the governance. Examples of entertainment DAOs include Flufworld members and Bored Ape yacht club etc.

Related article: What are Non-fungible tokens or NFTs?

Media DAOs

Media DAOs help the owners or readers directly contribute without involving advertisers for the native token as a reward in return for their contributions. For instance, Forefront offers oodles of opportunities to DeFi enthusiasts and growth options for incubated projects.

Related article: NFT DAO: How do NFTs and DAOs coexist in DeFi?

Wrapping up

DAO provides a platform where an entire community can crave profit from the organization without a central authority governing it. It helps bond the people together and provides an ecosystem that does not require a call for a central governing authority.

DAOs offer creative opportunities, and all you need to do to get started is connect your wallet and buy some tokens. The different types of DAOs will help you understand this crypto movement with human collaboration.



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