When we talk about web3 and decentralization, DAO is a very popular cutting -edge field in this field. DAO is out of the traditional hierarchical system; there is no CEO, no boss, no superiors or subordinates. In DAO, each member has equal power. These are communities owned by members who do not have centralized leadership, and are restricted by a set of rules written in smart contracts. In DAO, all financial records, decision -making, and decision -making factors are transparently recorded on the blockchain for everyone to view and verify. In this article, we will explore how to create DAO.
What is DAO?
DAO represents decentralized autonomous organizations. As the name suggests, DAO is an organization that is automated by computer code and opens to anyone involved (as long as they meet some basic requirements). Autonomy means that smart contracts help run most of the processes without people intervention. DAO is created and managed by the community, and the community jointly manage its funds and projects.
DAO is well known for Ethereum's 2016 venture capital fund "The DAO". Unfortunately, after three weeks of token sales, the project was attacked due to code vulnerabilities. Due to hard forks, these funds were later recovered. Despite the early challenges, the concept of DAO has been improved over the years, and it has now become one of the most popular governance models of decentralized finance (DEFI) projects.
Each DAO is different, but most of them follow the same basic principles. Anyone who holds DAO governing tokens has the right to vote directly proportional to the number of tokens it has. The holder can also make suggestions for changing DAO operation methods.
DAO runs on the blockchain according to its own rules. It has no hierarchical structure and is managed by a group of networks. As more and more members join DAO, this group has become bigger and bigger. No member will have power to another member, but may have more voting rights. It is considered a community, and the network involved is the homeowner who lives in it.
Anyone can join DAO. To buy some of its national currencies, you will become a formal member. This usually occurs in the financing stage of the project. When you create a DAO, this step will require most of your attention.
DAO is usually based on a single task. It can be anything, from the management of multi -level companies to local churches. Some do not even need enough reasons to create DAO.
How does DAO work?
Let us know how DAO works? The core team of community members use smart contracts to form a framework for rules and DAO operations. After the rules were written into the blockchain, DAO began to look for funds.
The group needs to figure out how to obtain funds and how the organization will operate. The funds are implemented through the tokens. The agreement is agreed to raise funds and fill in the DAO vault through the sale of tokens. Token holders get a certain voting right according to the proportion they hold. Once the fund target is achieved, DAO can be deployed.
Once the code is put into production, unless the member reaches a consensus by voting, it cannot be modified. No specialized institutions can change the rules at will, and only token holders' communities can decide to modify. Once the contract terms are met, the smart contract will be executed automatically.
DAO type
Members of decentralized autonomous organizations cooperate according to the rules of encoding on the blockchain. If you want to join the space, there are projects from finance to charitable projects to choose from. The type of DAO is,
Protocol Daos manages a decentralized agreement, such as decentralized exchanges or another DAPP.
Grant Dao helps non -governmental organizations strategically deploy capital assets in the entire Web3 ecosystem.
Charity DAO organizes different social liability causes on Web3.0 through common goals.
Social DAO or creator DAO gathers like -minded individuals, such as artists, builders and creators.
Collector DAO is suitable for members who are interested in concentrated funds to invest in expensive NFT and other collectibles.
Investment and Venture DAO brings together funds to invest in early stages, linked investment, and investment portfolio that cannot be obtained in traditional finance.
Media Dao reinvests the traditional media platform, which is driven by the community.
The benefits of starting DAO
There are several benefits to start DAO,
Decentralization is the biggest advantage of DAO. DAO focuses on the maximum power decentralization, and depends on collective participation rather than depends on a person.
The listed company has CEO, and the board of directors has the final decision to operate the company. Employees and customers have no say to the company's future. In DAO, a member of an organization can express their views on the company's future.
DAO enables people around the world to connect and work towards common goals. You will need Internet connection and governance tokens to participate. By participating in DAO, you can contribute to new projects such as Ethereum name services. DAO participants have the consciousness of the owner and shape the future of the organization.
DAO members have positive interests in their qualifications. DAO members have a thoughtful decision during the voting process. Each vote on the DAO blockchain is open, allowing users to be responsible for their voting.
What does DAO need?
Except for other, a successful DAO should include at least the following five points:
1. DAO requires a purpose. DAO is just a way to organize projects or funds. Without a good underlying project and reason, your DAO will have nothing to do.
2. DAO requires the voting mechanism. This is the main way for people to interact with DAO and change. There are many ways to do this. You can create your own voting mechanism or use a third -party provider, and we will discuss it later. Your DAO may even vote for changes later, but you need to start with something.
3. DAO requires governance token or sharing systems. How will people prove their right to express their opinions in DAO? Governance token is very common, and token is usually a practical program token. Stock systems are more common in funds that users deposit cryptocurrencies into DAO for investment.
4. DAO needs a community. As more and more people join and participate in your DAO governance, power decentralization becomes stronger. In this way, power will be scattered into more stakeholders.
5. DAO requires a way to manage its funds. Most DAOs have a fund library or can be crowdfunded. This is usually preserved in a multiple signature wallet, and can only be used only when all the main participants agree.
How to create DAO
To build your own DAO on the Ethereum blockchain, the best way to create DAO is through the established platform.
Aragon is one of the most popular choices for decentralized autonomous organizations. We will show you how to create DAO on Aragon through the following steps.
1. First, set a encryption wallet. You will need it to pay the setting fee. Metamask is the best choice for such transactions so far.
2. Go to Aragon and click "Create your DAO". This will bring you to the welcome page, you will see two options in it: creating organizations and opening existing organizations.
3. Connect Metamask or encrypted wallet to Aragon. If you have other networks to connect to the same wallet, make sure to use the Ethereum main network.
4. Use at least 0.3 ETH to bet on your encryption wallet. Creating DAO requires 0.2 ETH more.
5. Click to create an organization and select your template. What do you choose to have little effect on your DAO, except for Open Enterprise, it is the center of Dapps.
6. Enter a name for your DAO.
7. Now you need to configure your organization. These include minimum approval percentage, support percentage, and voting duration. The recommendation setting of the voting percentage is 50% approval. This means that more than half of the token holders must agree with a proposal to pass. However, you can adjust these numbers according to your preference.
8. Set up native currencies for your DAO. Name it as a name you like and create a symbol for it. You can also distribute to the DAO member in the same step.
9. Confirm the transaction on your encryption wallet to create DAO.
10. Create the first proposal after your organization is launched. The tokens will then praise the issue or oppose the ticket.
What you need to consider before creating DAO
DAO members may face unlimited responsibilities.
DAO is not a company. They do not follow any legal procedures for official companies. The risks you risk may be more than just your capital investment.
DAO faces many legal challenges.
Due to the decentralization of power, DAO is not considered a legal entity, especially in the United States. They do not enjoy corporate privileges or government protection. In other words, legal disputes within DAO are extremely difficult to resolve.
DAO members are anonymous.
The structure of decentralized autonomous organizations allow employees to conceal their identities. Kyc suddenly became a luxury. Except for their wallet address, you will not know any information about the person you work with you.
FAQs of how to create DAOs
1. How much does it cost to build a DAO?
If you want to create a DAO on Ethereum, it does not have a fixed cost because ETH price fluctuates. The approximate cost of establishing DAO is $ 350 or 0.2 ETH. If you want to set up DAO as a limited liability company, you need to pay $ 100.
2. Does DAO have to have registered agents?
From a legal perspective, DAO is neither a company nor any other type of legal person. DAO does not have a registered office or physical office, and cannot have property or contact. If members want to avoid responsibility or taxes, preventive measures need to be taken.
3. Can DAO have property?
As an emerging business organization, DAO is breaking through the traditional boundaries. Most DAOs have not yet registered, and the legal status is unclear. DAO is difficult to meet the legal standards of traditional organizations, such as being prosecuted or owned by property.
4. How does DAO make money?
Those who have DAO tokens can profit from investment from corporate investment by earning dividends or benefits from tokens. DAO is in the center of the Defi boom. The funds in the DAO state treasury make the owner have the right to share profits or speak to how to invest in profits.
As DAO becomes more and more mainstream, there will be more tools to provide more one -stop solution tools. However, although the number of tools that can be used to start DAO continues to increase, the most critical problem is to organize and incentives Members of DAO adopt actions and the ability to work and go to DAO. The overall view of DAO shows that they are very effective in creating an independent environment in the organization. DAO makes decisions and voting more practical, transparent and open source. They act as catalysts to pave the way for the global expansion of Web 3.0, blockchain and cryptocurrencies.