Want even more alpha?
Get Icy PremiumPublished on September 22, 2022
How to Join a DAO?
We cover the basics of DAOs — how they work, how to join or create a DAO, the benefits of DAOs, and a few popular DAOs.
10 min read
When you join any organization, there are usually three things you want: your voice to be heard, your opinion to matter, and to have influence over key decisions of the organization. Nobody likes having their opinion minimized or deemed inconsequential, yet this is how most conventional organizations operate.
In the dawn of web3, the birth of Decentralized Autonomous Organizations (DAOs) sought to solve this problem. In a world where power is concentrated in a few hands, a decentralized autonomous organization is what we regular folks need to have an equal say.
This guide covers the basics of DAOs, how they work, how to join or create a DAO, the benefits of DAOs, and the best DAOs to join in 2022.
Understanding DAOs
The rise of blockchain technology, as well as the education around it, has led to a more open and decentralized world.
The centralized structures that have dominated our very society for centuries are losing prominence now more than ever. This is especially true when it comes to information distribution, for example. The centralized media model is broken, and we need new ways to disseminate information that allows people to share their ideas freely.
Traditionally, an organization's structure resembled the shape of a pyramid, with most of the power accumulating at the top. DAOs seek to turn this on its head. Instead of being pyramid-shaped where top-level members govern those beneath them, DAOs are peer-to-peer networks powered by the collective action of their members.
In the words of John Westenberg, MODA DAO's Director of Marketing, "A DAO is a commune where nobody is in charge but everybody is equally responsible for what the organization does."
How Does a DAO Work?
A DAO operates with smart contracts encoded in blockchain technology (which is a radical change to how organizations conventionally operate). A smart contract is a computer program that executes the terms of a transaction specified in its source code. They are self-executing, self-enforcing, and self-sustaining.
Smart contracts have many benefits over traditional financial instruments. There is no need for third parties or intermediaries, allowing for greater transparency and lower fees. They also provide an immutable record of agreements, removing any risk of fraud or corruption associated with traditional third-party services.
This technology can be used by businesses and individuals alike to create new types of organizations.
One famous example is the Big Green DAO, founded by Elon Musk's brother, Kimbal Musk. Kimbal Musk and the members of the DAO decided how to divide the approximately nine million dollars provided by a giant food justice charity, Big Green.
The main idea behind DAOs is simple. They should be transparent, fair, and democratic. A DAO is known as an "open-source" organization since anyone can join and contribute to its development.
Everyone has equal access to information about how their money is being spent, preventing corruption and mismanagement within the organization. Overall, it transforms the traditional corporate system into something fully transparent.
Functionalities of DAOs
DAOs can be created for anything from organizing a music festival to running an ICO, from managing a community-owned solar plant to working on an open source project. They allow anyone to create an organization with no central authority or single point of failure.
For example:
It seems DAOs will overtake other types of organizational structures in the future, but why should I need to join one?
Why You Should Join a DAO: Benefits of DAOs
There are many benefits when it comes to joining DAOs. Some of them are:
Community Oriented
DAOs aim to be more democratic and transparent than traditional corporations, allowing for direct participation from members. Instead of looking at the organization as being owned by a single person or a committee of people, DAOs look at it as a living being composed of people with their own ideas and contributions.
All of this allows for a stronger sense of community.
Decentralized Governance
In a DAO, decisions taken by the community are final and cannot be overruled by any third party. There is no breach of trust as the rules are already defined and there are really low chances of it failing.
Effective and Immediate Decisions
There is no longer a need to wait for approval from a board or the support of your peers. DAOs are governed by their participants, and they can make decisions immediately.
Decisions are made without having to go through some sort of bureaucratic approval process — wasting time and resources.
Now that you know how easy and beneficial it is to join a DAO, let's talk about things to remember while joining one.
Tips to Getting Started With A DAO
Here are a few pointers that will help if you are looking to join a DAO:
Identify your objectives
DAOs are quite mission-focused; therefore, which organization you join should be heavily influenced by your particular area of interest.
Locate a DAO that suits your objectives
Since different DAOs come with different goals, you could go through Twitter, Quora, or Reddit pages of different DAOs. This will help you find the one whose goals match your preferences.
Furthermore, the majority of DAOs will have a plan or value system outlining their objectives, rules, and governance. These can help you get a sense of what to anticipate and how you can help.
Join the group
Engaging in the network will help you understand a DAO's culture better. The DAO's Discord channel is the most popular entrance point; you can participate in discussions and discover how you can contribute to the community.
Participate
Although DAOs are very well-liked by developers, they can also benefit from a variety of other skill sets, including project management and design.
Your individual contribution will be based on your skills, the requirements of the community, and its governance.
Take caution
DAOs offer distinctive advantages and charms. They can offer democratized governance, openness, shared resources, the opportunity to have a significant effect, as well as money.
In contrast, there is also a chance of losing your money due to the flawed code or fraud community. So, always Do Your Own Research before joining any DAO. And keep up to dat with the latest in crypto and NFT security precautions.
With that being said, there are two ways to become a part of DAOs, either by creating one or by joining one. Let's discuss each one of them in detail.
How to Join a DAO
DAO Discord Communities
The majority of DAOs have Discord channels, which are an excellent way to begin and observe a group's activity to see if its goals and interests coincide with yours.
DAO Project Websites
Another way to join a DAO is through their website. Most DAOs have a section on their website that tells you more about the organization and how to get involved. You can also find contact information to get in touch with them directly.
Once you've found a DAO you're interested in; the next step is to get involved. The best way to do this is to participate in their online community and start contributing. DAOs are usually open to anyone willing to put in the work, so don't be afraid to reach out and get started.
How to Form a DAO
Here are the steps to follow while forming a DAO:
Prerequisite: Knowledge of Technicalities
Anyone with technological know-how can form a DAO, which is typically focused on a common cause or objective.
However, it may be easier to launch a DAO if you have a member with experience in blockchain development.
Create a Mission Statement
The first step in creating a DAO is to create a mission statement and define goals for your organization.
The mission statement should be clear, concise, and easy to understand. It should define what goals your DAO targets and how it aims to serve its community.
Build a Supportive Community
The next step is to build a community of members willing to be a part of your DAO. It is important to interact with them regularly and communicate the progress of the project too.
You should also make sure that their goals coincide with the goals of your DAO. They should know what to expect from your organization and how they can contribute to its development.
Finalize the Governance of the DAO
Once your team is established, it's time to explore governance options available to DAO organizations.
You should know whether to choose direct democracy or representative democracy; how many members constitute an "active" member; how much voting power each member has.
Further, you need to give utmost importance to issues such as consensus mechanisms and dispute resolution methods.
Gather Your Resources
Lastly, take stock of what resources you have at hand right now and what you could reasonably obtain. Determine whether they meet the needs of those who might join forces with you in the future. You might need money, storage space, a technical expert, and other resources not available in abundance at present.
As discovered already, creating a DAO is more difficult than joining one. But the benefits of being a founding member can be more fulfilling than entering a DAO!
How Much Does It Cost to Join DAO?
The cost of joining DAOs is nothing more than holding a minimum number of tokens as per the DAO. These tokens can either be bought from an existing member or the DAO itself.
These tokens are of extreme importance to raise funds, provide voting rights and propose a change if ever needed in the DAO.
How Does a DAO Make Money?
As discussed, a DAO is run by its members. Each member has a token that is specific to their DAO. Members can use this token for two purposes:
The native token and be bought or sold in exchange for governance and voting rights. This is how the DAO can raise money.
Another way DAOs make money is through the buying or selling of assets, investments, and NFTs, given the fact that the majority of the members agree to such a trade.
What Are Some Noteworthy DAOs?
Some of the best DAOs to join in 2022 are:
- Uniswap
- ApeCoin
- MakerDAO
- Aave
- Dash
- LinksDAO
These are good ones to start with, but as we have already mentioned that the right DAO must align with your goals. Also, you must always do your own research before joining any DAO.
Is the DAO life right for you?
Decentralized Autonomous Organizations (DAOs) are a new type of organization powered by blockchain technology.
DAOs are not controlled by any central entity. Instead, they are governed by a set of rules that are encoded on the blockchain.
DAOs have already had a major influence on the world, bringing about significant change in a variety of domains. From finance to governance to social impact, DAOs are making the world a more open and fair space.
DAOs are an exciting and important development in the world of crypto. As DAOs continue to grow in number and size, they will only become more powerful and influential.
More Guides
