By Larry Wright
DAOs are proving to be a milestone in the decentralized finance industry. In this article, we’re going to talk about DAO, or Decentralised Autonomous Organisations, and how they might provide us with several benefits.
The hype around web3 and all of its advantages are not for nothing. Different projects like decentralized finance and NFTs are related to web3, and they are doing great out there. Before this, cryptocurrency offered to decentralize almost every financial application. This is where DAOs started gaining popularity for their decentralized, blockchain-based protocols and applications.
Since they provide decentralized governance, the race to find the best DAO is picking up pace. These organizations can prove to be helpful for the crypto market as well. In this article, we are going to discuss some of the biggest and most beneficial applications of DAOs.
Introduction to DAOs
The first thing you should consider before getting involved with DAOs is to know their implications for the crypto industry. Features available in these organizations hello every participant in the company to control various functions of the company. Tokens are used in DAO applications to allow every participant to have a voting right according to the shares they have in the company. Moreover, these organizations allow every participant to take part in the decisions which will shape the future of their organization.
With the passage of time, as DAO enjoys more features being introduced, the popularity of these platforms is increasing rapidly. Many different types of activities, like sports, arts, and others, have seen the introduction of DAOs in their industries. There are so many different variants of DAOs that you might get confused if you start learning the differences between them.
Applications of DAOs
DAOs are popular for their potential and wide range of applications. This is the main reason why people like this feature more with the passage of time. However, you must learn more about DAO applications in the market. Gaining enough knowledge is a must before you can rely on it to invest in a specific DAO app.
As it is evident from its name, DAO-based applications allow you to take advantage of decentralized organizations. Every DAO-based application can be used for decentralized governance. Let’s discuss some of the biggest DAO-based applications you can look upon and follow if you’re interested in this field.
Maker
Maker DAO is one of the most popular DAO applications out there. Maker is supported by the ETH blockchain, and it issues DAI stablecoin. All the features are used to come up with a good alternative to our traditional fiat money currencies.
In order to maintain your balance, you’ll need a minimum amount of DAI tokens in your wallet when trading it. So, maintain a minimum quantity of these tokens in your wallet to avoid getting liquidated by the system.
Decentraland
It is one of the most popular metaverse-based DAO out there. Decentraland is popular for being one of the biggest metaverse-based platforms out there, and it has a huge market cap. DAO of this platform allows all the MANA token holders to govern the land and content-related transactions on the Decentraland platform. With MANA tokens, you can govern other virtual reality features as well.
However, the structure of this particular DAO is way more complicated as compared to others. Depending on your personal preferences, you can choose between committee, community, and the security advisory board when choosing a branch of the DAO to invest in. The community branch pushes for updates.
IBC
IBC DAO has also successfully made its name into one of the most popular and successful applications on web3. In both the crypto and the virtual world, play-to-earn games are becoming more popular with every passing day.
With the transition of play-to-earn games into the metaverse, applications like IBC DAO can definitely make an impact. This application makes sure that every player faces fewer barriers to entry when playing play-to-earn games. It also enables those players to earn income continuously. It supports new projects and makes sure that the play-to-earn games make progress and receive new players continuously.
Gnosis
Gnosis DAO is another valuable entry in the list of top DAOs on the Internet. It focuses on the production markets and supports its features through the Ethereum Blockchain and smart contracts. It provides one of the most reliable prediction tools by using the truly decentralized Blockchain system. With the help of this application, you can make new markets and join any other market without much barrier to entry.
Flamingo
You should also learn about DAOs like flamingo DAO if you want to learn more about and benefit from web3. This application focuses on finding new investment opportunities within the NFT marketplace and other blockchain-based assets for new investors. It presents you with data in the form of a list of the best assets you can invest in right now. The application also allows artists to set their own rules when creating new digital assets.
Curve
Curve DAO has recently made its entry into the list of the biggest DAO projects on the ETH blockchain. The Curve DAO tokens are used to provide governance privileges to members who take part in the consensus process for the Curve Finance platform. Curve Finance is a decentralized exchange and provides liquidity in the market by using its transparent protocols. It supports stable coins to keep the market stabilized. This token is used by stablecoin lenders who wish to earn profit by lending their stablecoins.
Uniswap
In terms of trading volume, Uniswap qualifies as the biggest decentralized crypto exchange. It is one of the biggest DAO just because it has lots of funds under its belt.
Since its inception in 2020, the DAO has sold more than $1 billion of its UNI tokens. Over three hundred thousand people around the globe have governance privileges in Uniswap, and they literally decide the fate of every feature on the platform.
Advantages of DAO
There can be multiple answers to the question, “what are the advantages of DAO?”. Moreover, although the features and advantages of these applications are limited these days, they are expected to increase significantly in the near future. This technology is expected to evolve as Blockchain technology becomes more accessible and easily usable for every person on the planet.
Let’s discuss a few of the most obvious and some potential benefits of DAO.
Decentralization
Being decentralized is truly one of the biggest benefits of DAO. Due to their specific design, these applications always try to remain as decentralized as possible. In other applications of Blockchain, the concept of decentralization is not as important or strong as in the case of DAOs. These applications depend on a group of people rather than taking command from just an individual.
In the case of traditional organizations, the CEO and a board of directors are responsible for all the big decisions which shape the future of that organization. Therefore, customers and workers are not taken into consideration when the future of an organization is being decided. For example, if the customers do not like a specific product or some of its features created by a company, they cannot influence any change in that product unless the CEO or the board of directors considers their opinion. However, in the case of a DAO-based company, users can actually vote to introduce useful features in any product.
So, these applications actually allow every investor and user to use their vote in the decision-making process. However, many people think that because of the tokens used in the process, DAO is not completely decentralized. That is because the member with the most amount of tokens gets to decide everything. While it is completely true, it is still way better than organizations with no such system in place.
Active Stake
One of the best features of DAO is that it allows community involvement by allowing an active stake in the game. The whole idea behind DAOs is based on letting every member enjoy their stake in the company. You have to burn your tokens to earn voting rights. This is done to avoid unnecessary voting and to make every voter think twice before casting their vote. So, with the help of governance tokens, you can literally vote and decide the future of a DAO.
Moreover, every vote cast by the members is publicly available. This is to make sure that every member is accountable for their vote. It allows the organization to identify users who want more changes in their product. This feature allows every DAO to avoid spamming bad ideas.
Community Involvement
Community enrollment has to be the biggest feature of DAO. This system is a mood to allow communities from around the globe to collaborate with each other on creative ideas and select the best ones by transparent voting. If you want to invest in web3, all you need is a stable Internet connection and some governance tokens of a DAO.
With the help of community involvement, you can take big benefits, like earning from playing games and getting involved in things like the Ethereum name service. Voting rights provide you with a sense of ownership in everything you do with your DAO tokens. This encourages the members to get involved in the community and get rewarded for their efforts.
As a member of a DAO, you are provided with unique benefits and privileges which you can use to influence the future of that organization. You can push for changes in the protocol and many other things. One of the best things about this process is that no one can limit the decision-making process to a few people. This allows every member to put forward their personal opinion, and it can lead to lots of beneficial innovation in the organization.
In the early stages, blockchain technology and cryptocurrencies primarily focused on staying transparent and decentralized. These features allowed these technologies to become widely popular and beneficial for the entire human race. These features basically eradicated the need for centralized control, where a small group of people can manipulate the market and the financial system for their own interests. While cryptocurrencies and the Blockchain system focus on the entire globe and its financial system, DAO specifically focuses on companies and their structure. It takes the idea of managing the global financial market collectively and applies it to individual companies.
A decentralized Autonomous Organization has the potential to change the traditional working rules and hierarchy of our company. DAO lets the whole community control and organization through governance tokens. This process is carried out with utmost transparency, with the help of Blockchain technology. With the help of this technology, we can build new markets and change the pricing and other standards.
Investing in DAO
In this particular example, we will show you how you can invest in DAO Invest.
Since this cryptocurrency is based on the Ethereum Blockchain, you will have to first buy Ethereum tokens and then exchange them for this cryptocurrency. For this process, you will need a self-custody wallet.
Let’s go through the steps you’ll need to follow to start investing in DAO Invest. Even if you want to invest in some other DAO, you’ll only have to search for its name, and the rest of the process remains the same.
You’ll need a self-custody wallet from exchanges like Cpunvase to complete this process. You can start the process by downloading the Coinbase wallet on your smartphone or by visiting the official Coinbase website from your laptop’s browser.
Once you start the login process, you’ll be required by the platform to put in a username. This username will be used by other members of the platform to send you crypto. The option to keep your username private is also available, but you’ll need to choose a username nonetheless.
After your account is created, you’ll be provided with a recovery phrase by Coinbase. This 12-word recovery phrase is like a key to your wallet. Anyone with access to your recovery phrase can easily access your crypto wallet and its funds. So, never share this phrase with anyone. You can either use the cloud service provided by Coinbase to store your recovery phrase, write it down on paper and secure it, or do both. Whatever you do, try not to lose your phrase ever, as doing this will leave you with zero options to access your cryptocurrency.
As you might already know, DAO is based on the Ethereum blockchain, and the Ethereum blockchain charges a specific fee per transaction based on the amount of crypto you’re looking to transact. So, take time to calculate the network fee before you go through the transaction, and have enough ETH available in your wallet while doing the transaction to avoid any mishaps.
Once the account is ready, you’ll have to buy Ethereum and deposit it into your wallet. You’ll need a Coinbase account to buy Ethereum. Keep in mind that the exact steps you’ll have to go through to transfer ETH depends on whether you’re using your smartphone or a desktop computer.
Once you have enough ETH, click on the “Trade” button within the Coinbase application, and you’ll be able to swap ETH for any other ETH-based token. In the “Choose Coin” option, you can select “DAO Invest” or any other type of DAO you want to invest in. While setting the amount of DAO to buy, remember to leave enough ETH behind to fulfill the network fees. Then proceed with other onscreen instructions to complete the transaction. In the case of the Chrome extension, you’ll have to click on the “Convert” button instead of the “Trade” button present in the Coinbase smartphone app. The rest of the process is roughly the same.
This is how you can buy your first DAO tokens and participate in a web3 application. These tokens can later be used to vote for new features in the DAO you invested in. Always interact with the community and support constructive ideas which will shape the future of your DAO.
Conclusion
The huge number of DAO applications and platforms shows how diverse this technology actually is and how it is changing the future of decision-making and governance in organizations around the globe.
There are lots of benefits to implementing DAO protocols in finance and other industries. It allows every investor and token holder to take part in the decision-making process and avoids limiting decision-making power to the CEO and a board of directors. However, since you have to spend your tokens to vote, every vote comes after careful consideration from the member. This feature avoids spamming the community with worthless and ineffective suggestions.
If you want to, you can start investing in different types of DAO today. All you need is the required amount of ETH tokens in your wallet, and you’ll be all set to swap the ETH for a required DAO.