Blockchain provides us with decentralized power. Decentralization signifies the transfer of power to users/members instead of having a single centralized authority regulate everything; it provides a variety of use cases in finance, government, voting, and fundraising, among others.
Today, we will examine a DAO-based use of decentralization that is really impressive. You should better understand what a DAO is and how to establish your own by the end of this guide.
What is DAO?
A DAO runs on the blockchain in accordance with its own rules.
It is not hierarchical and is administered by a collection of networks. As additional individuals join the DAO, this group will grow in size.
No member will control another, but some will have greater voting power. Consider it a neighborhood in which the involved networks are the homeowners.
Any individual can join a DAO. You can become a full-fledged member by purchasing a handful of its local currency.
This typically occurs during the time of project finance. This phase will take the greatest attention during the creation of a DAO.
DAOs are frequently created for a particular purpose. It might be anything from overseeing a complex organization to organizing a church benefit.
Some do not even require a valid purpose to establish a DAO.
Also Read: What Is PlaDapp (PLA)
For instance, CityDAO. This platform proposes to sell you a digital representation of physical land in the form of NFT, and users will vote on its fate.
Why should you build DAO?Â
We do know that it is effective. DAOs have been expanding in numbers. Today, almost one million users are engaged across all decentralized networks.Â
Why build DAO?
DAO models will almost certainly develop further in the future.
Charity, fundraising, investment, borrowing, and the purchase of NFTs are just a few examples of the many areas where DAOs are being used to cut out middlemen and save money.
To give just one example, a DAO can accept payments from anyone globally, bypassing the need for a financial institution like a bank. Also, the contributors can vote on how to allocate the donation money.
Smart contracts power DAOs
DAOs are gaining traction as a viable business model because of the smart contracts they employ.
A DAO’s rules and financial transactions are recorded on the blockchain via a smart contract, making them legally binding.
Also Read: Everything You Need To Know About Binance Smart Chain
Members of a DAO can use a smart contract to propose a change that would be implemented automatically if approved by the majority of other members of the DAO.
Because of the immutability and transparency of blockchain technology, no proposal is ever lost, and malicious actors can never manipulate votes.
Legal recognition is not required for a DAO to function.
The vast majority of businesses have some official recognition behind them.
However, the same cannot be said for a DAO, as it can still operate without any problems. In addition, smart contracts can be used without involving an intermediary or any conventional institution.
Community-based governance
Distributed autonomous organizations (DAOs) advocate for community-based governance over private governance, in which a small group of executives, board of directors, or activist investors regulate the organization’s governance behind closed doors.
The functioning of DAOs is completely open and global. As an added bonus, there is no need to instill trust in the members when establishing a DAO, making its establishment much easier than that of a conventional governing body.
Cost-effective
A DAO is your best bet if you need a cheap yet effective way to manage a group of individuals. It requires no money or only a nominal one to get set up. Token-issuing crowd-funding platforms are a primary source of capital for DAOs.
Businesses need to realize that adopting a DAO model would result in a total devolution of authority before developing one. This means they won’t have complete autonomy over the outcome of their work. Consequences may result from disregarding DAO governance decisions.
How to Build a DAO
The most efficient method for creating a DAO is using an established platform. Applications like Moralis provide code templates that may be copied and pasted to expedite project setup.
Aragon is one of the most popular options for independent, decentralized organizations. In the following stages, we’ll demonstrate how to start a DAO on Aragon.
- Create a crypto wallet first. It is required to pay the setup fees. Metamask is the best solution for this type of transaction by a wide margin.
- Go to the Aragon website and select Create Your DAO. This will lead you to the welcome page, where you will find two options: create a new organization or open an existing organization.
- Connect Aragon to Metamask or a cryptocurrency wallet. If you have many networks connected to the same wallet, you must use the Ethereum Mainnet.
- Fund your cryptocurrency wallet with a minimum of 0.3 ETH. To build a DAO, you will need just over 0.2 ETH.
- Select your template by clicking Create an Organization. Except for Open Enterprise, which is a Dapp hub, your decisions do not affect your DAO.
- Provide a name for the DAO.
- Currently, you must configure your organization. These include the Minimum Approval Percentage, the Support Percentage, and the Length of the Vote. The optimal vote percentage setting is 50% approval. This indicates that more than 50% of token holders must support a proposal for it to be approved. However, these numbers can be altered to your preference.
- Create an internal token for your DAO. Create a symbol and give it whatever name you’d like. In the same procedure, you can also distribute tokens to DAO members.
- To build a DAO, confirm the transaction on your cryptocurrency wallet.
- Create the initial proposal question after your organization is fully operational. Token holders will then vote for or against the proposition.
Conclusion
Well done on creating your independence and establishing a truly autonomous, decentralized system.
This tutorial taught us what a DAO is and how it differs from more conventional organizations and how to build a DAO on Aragon and cast votes in one.
