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5 Ingredients to Cook Up Your Own DAO

Cointelegraph Magazine | Julian Jackson | Aug 9, 2022

Cooking up your own DAO - 5 Ingredients to Cook Up Your Own DAOA DAO is an online community that collectively controls a cryptocurrency fund to achieve a particular goal — whether buying a copy of the United States constitution or running a DeFi protocol — explains Delman from Aragon, an organization that has helped usher almost 4,000 DAOs into existence.

See:  Blockchain-based replacement for traditional crowdfunding: DAOs

You’ll also need a set of tools — and unique ingredients — and some collaborators to help you bring this banquet to the table for more people to enjoy.

Just five ingredients

  1. Establish a common goal, mission or objective.
  2. Build a community of like-minded people using Discord or Telegram.
  3. Create a shared fund to finance your goal.
  4. Construct a governance framework.
  5. Communicate to the group how the project is developing and disburse rewards as appropriate to contributors.

Some different DAO flavours include Protocol, Philanthropy, Collector, Investment and Grant DAOs.

“The idea is attempting to automate as many exchanges between people as possible and making it trustless so you don’t need to trust people,” Delman explains. “This makes it easier to collaborate with people that you meet online or to create a global team.”

Cooking Up Your DAO Recipe

Step 1:  Lightly toast governance:  You need to know what you want to do, and you need a strategy for how to achieve that. You also need research and planning.  You essentially create a mini economy around a token. You have to decide what the different activities and priorities and contributions are. “You have a token, which might not just be a unit of value, but also symbolizes all the incentives and goals, so you can align different stakeholders to your objective,” Hof says.

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Step 2:  Add some expertise:  If you had an investment project, you might want to be guided by five people who were experts in the field — 90% of the members might agree to delegate authority to them to make the decisions.  Hof also stresses the importance of getting good technical people to program your smart contracts because that is a major area where things can go wrong.

Step 3: Create staking incentives:  Delman of Aragon says, “I see a DAO as a little like Kickstarter. Instead of giving you a free T-shirt or free product, a DAO gives you a stake in what you are building.”

Step 4:  Confirm voting method(s):   Snapshot’s taken off because it is a simple and free method of voting in DAOs, which is off-chain and efficient in utilizing resources. On-chain voting is effective but quite resource-intensive, so keeping voting off the main blockchain is often desirable.

Step 5:  Pop it in the oven until ready for eating:  Delman says, “The tool that Aragon operates is basically you can press a few buttons and then you are ready. If this proposal passes, then the money should move to this account. Everything is tied together with smart contracts.”

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NCFA Jan 2018 resize - 5 Ingredients to Cook Up Your Own DAOThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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