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Intro to Web3: What is a DAO?

Updated: Oct 18, 2023

Do you know what a DAO is? If you are curious about it but don't have a clear idea, you have come to the right place.

Intro to web3: What is a DAO?
A DAO is a virtual, online club where members collaborate and operate under a shared goal.

What is a DAO?

A DAO, or “Decentralized Autonomous Organization,” is a member-owned community without a central authority. It is quite like a virtual, online club where members collaborate and operate under a shared goal. It is completely governed by the members. Each member has a say in the decision-making process. Some DAOs shape decision-making around who owns more tokens and other DAOs are still managed by their core team in periods of transition. The most amazing thing about a DAO is the drive to become autonomous.

How does a DAO work?

The rules of a DAO are established by a core team of community members and written in the source code, in most cases. These rules are established through the use of smart contracts. The smart contracts serve as the framework upon which the DAO operates. These contracts are published on the blockchain after they are finalized. They are highly visible, verifiable, and can be publicly audited. This transparency helps any member understand how the protocol is to work at every stage.

A DAO needs to determine how to acquire funding and provide governance once these rules have been formally recorded on the blockchain.

A DAO cannot be modified or amended unless the majority of members agree to do so. The smart contract protects the funds in a DAO, preventing any one entity from accessing the assets without the consent of the majority of the DAO's members. In a DAO, collective voting is used to make decisions, which are then automatically carried out via the smart contract.

What are the different types of DAOs?

DAOs are generally categorized by their mission and it is not uncommon for a DAO to fall into more than one category.

  • Public Good DAOs facilitate the collection and deployment of nonprofit donations. Donors usually receive some type of governance token so that they can help decide how to use the community's funds to further their cause. These groups will often support the creation and/or distribution of open source software.

  • Impact or Philanthropic DAOs seek to solve daunting societal problems like water scarcity or provide support to the Ukrainian people during the invasion.

  • Investment & Venture DAOs allow members to pool capital and invest in projects as a group, lowering the barriers to entry for individual investors.

  • Collector or NFT DAOs seek to identify and collect NFTs with long-term value. The DAO might support a specific artist, platform, or series. Some of these clubs also pool funds to buy blue chip NFT art or other expensive collectibles like a copy of the US Constitution.

  • Community focused Social DAOs are the web3 version of social media, allowing members to meet people with similar interests and then work together toward a common goal.

What are the steps for launching a DAO?

DAO formation platforms such as Aragon, Syndicate, Superdao, and DAOhaus are great resources for getting started. There are at least 6 steps for launching a DAO.

1. Creating a Mission Statement and Define Goals: This initial and most crucial step is comparable to a business plan you might see in more conventional business entities. It gives the perfect opportunity to practice transparency.

2. Building a Community: In this important step, you will need to decide about the size of your DAO and whether it will be public or exclusive. This is the step when you need to find and choose community members. Social media groups or platforms like Discord can help you a lot in this step.

3. Using Community Tools: It is really important to keep your community alive by staying in touch with your community members. Discord, for example, can help you a lot to communicate with your members and also safeguard your community. Another great DAO tool is CharmVerse. CharmVerse is a web3 community platform for managing members, coordinating tasks, facilitating decisions, and holding each other accountable. CharmVerse allows members to login with their crypto wallet or Discord.

4. Establishing Funding Goals: This step helps the community to use the funding to carry out its mission.

5. Discovering Governance: This step will determine your DAO’s growth. Discussions and voting decisions made by the community will dictate how the DAO will work.

6. Determining Ownership: This step will define how you will represent membership access and allow members to vote on decisions.

Examples of successful DAOs:

Alliance DAO, Nouns DAO, BitDAO, Story DAO, and Orange DAO are all great examples of successful DAOs.
Alliance DAO, Nouns DAO, BitDAO, Story DAO, and Orange DAO are all great examples of successful DAOs.

Alliance DAO, Nouns DAO, BitDAO, Story DAO, and Orange DAO are all great examples of successful DAOs.

Is a DAO in your future?

DAOs have taken birth to announce the new era of the internet and to ensure a better future for everyone. From the very first step of building a DAO to how a DAO operates, you will notice the practice of transparency and democracy. If you are really interested in this topic then learning about the successful DAOs will definitely make you logically feel and understand that you have enough potential to not only be a member of a successful DAO, but also you can launch your own DAO and reach your dreams.


This post was researched and drafted by a humanDAO Pocket Assistant!


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