What does a DAO need?
1. A DAO needs a purpose.
DAO’s are simply a way of organizing projects or funds. Without a good underlying project and reason, your DAO will have nothing to run.
2. A DAO needs a voting mechanism.
This is the primary way people interact with the DAO and make changes. There are multiple ways to do this. You could create your own voting mechanism or use a third-party provider, as we discuss later. Your DAO may even vote to change the mechanism later, but you need to start with something.+
3. A DAO needs a governance token or share system.
How will people prove their right to an opinion in the DAO? A governance token is very common, and the token often might also be a utility token. A shares system is more common to funds where users deposit cryptocurrencies with the DAO to be invested.
4. A DAO needs a community.
Decentralization gets stronger as more people join and participate in the governance of your DAO. This way, power is spread across more stakeholders.
5. A DAO needs a way to manage its funds.
Most DAOs will have a treasury or access to some crowdfunding. This is usually held in a multi-signature wallet, which can only be used if all key participants agree.
How to create a DAO?
The best way to create a DAO is through an established platform. Applications like Moralis offer code templates, which you can copy and paste to quickly set up your project.
Aragon is one of the most popular choices for decentralized autonomous organizations. We’ll show you how to create a DAO on Aragon through the following steps.
- First, set up a crypto wallet. You’ll need it to pay for the setup fees. Metamask is by far the best option for this type of transaction.
- Go to Aragon and click on Create Your DAO. This will take you to the welcome page where you will see two options: Create an organization and open an existing organization.
- Connect Metamask or a crypto wallet to Aragon. Make sure to use the Ethereum Mainnet if you have other networks connected to the same wallet.
- Fund your crypto wallet with at least 0.3 ETH. You’ll need a little over 0.2 ETH to create a DAO.
- Click on Create an Organization and select your template. What you choose has little impact on your DAO except for Open Enterprise, which is a center for Dapps.
- Enter a name for your DAO.
- Now, you’ll need to configure your organization. These include Minimal Approval Percentage, Support Percentage, and Vote Duration. The recommended settings for voting percentages are 50% approval. This means more than half of token holders must agree on a proposal for it to pass. You can, however, adjust these numbers to your liking.
- Set up a native token for your DAO. Name it anything you like and create a symbol for it. You can also distribute tokens to the DAO members in the same step.
- Confirm the transaction on your crypto wallet to create a DAO.
- Create the first proposal question once your organization is live. Token holders will then vote yes or no on the issue.
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Best DAO Tools & Platforms to Use
Blockchain enables greater human coordination. With greater human coordination comes great power and the capability to resolve humanity’s major existential threats. However, we need tools built to address needs within the DAO ecosystem. DAO tools allow us to organize, manage funds, align incentives, vote, and reward contributors.
Aragon allows you to create a DAO organization on Ethereum, Polygon, Andromeda, or Harmony. The project provides open-source software through its Aragon client enabling the creation of customized DAOs. The project is also run via a DAO and has its own non-profit organization to manage Aragon’s raised funds.
Creating an Aragon-based DAO is quite simple. You’ll need to:
- Own an Ethereum Name Service domain.
- Make sure you have enough crypto to pay the DAO creation fee (0.2 ETH plus gas fees).
- Create an organization linked to the ENS domain through the Aragon DApp. There are several preset organization structures you can use.
- Configure your settings, such as vote duration and percentage support needed, and then launch the DAO.
Snapshot is a customizable off-chain voting mechanism. It uses digital signatures via wallets to cast votes based on a snapshot of token owners. A certain block is chosen, and all token holders and/or stakers have their holdings noted. This stops users from purchasing more tokens to influence an open vote. Keeping votes off-chain works well for multi-chain projects where users have governance tokens across many blockchains.
To create your voting system on Snapshot, you’ll need to:
- Own an ENS domain. This must be on the Ethereum mainnet regardless of what blockchain your project operates on.
- Link Snapshot to your ENS domain.
- Customize your space’s settings, such as admins, voting power strategies, terms, etc.
- Verify your space. This will include having at least 1,000 members and proof of ownership of the related project.
DAOstack Alchemy is a tool for creating DAOs on Ethereum and Gnosis Chain (formerly known as xDAI). Through their UI, you can create a fairly simple DAO, add DAO members, and open your organization. As of writing, the fee for setting up a DAO on Ethereum is roughly 0.2 Ether (ETH), but you don’t need an ENS in this case.
To create a DAOstack DAO, connect your wallet to their DApp, go through the four steps shown, and pay your fee. You will need roughly 0.2 ETH to successfully deploy the DAO.
It is now possible to model all or parts of legal agreements using code. You can easily find and create legal agreements that work with Ethereum and facilitate the legality questions with Open Law. With their platform, you can wrap smart contracts in legal agreements, then execute and sign the contracts.
JuiceBox mainly works as a fundraising tool, making it easy to fundraise cryptocurrency. You can build a community around a project, fund it, and program its spending with the platform. The user interface is made so that it looks inviting. If you want to raise money, you can go for JuiceBox.
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DAOs use Tally to create and pass proposals, enable delegation, and power voting. It’s a powerful platform for analyzing and voting on crypto protocols. You can connect your wallet and see all the DAOs you are involved with in one place. It’s effortless to develop and submit proposals. Tally supports Ethereum, Polygon, and Avalanche. Use Tally if your DAO involves submission and voting of proposals.
DAOs are autonomous, meaning participation usually happens voluntarily. Creating a suitable compensation mechanism for members who write, moderate, and work for the DAO is paramount. Recognition and compensation of people who add value to the DAO will be essential for long-term success. Coordinape helps DAOs incentivize participation and creates rewarding mechanisms for active members. Most DAOs, if not at the start, then during their progress, will need a couple of people to spend most of their time on the initiative.
Trusted by names such as Friends with Benefits, PleasrDAO, and Yield Guild, Utopia Labs is a collaborative payroll and expense management tool. It helps to manage payments, accounting, and reporting for DAOs. You can automate payroll (using fiat or crypto), keep track of DAO expenses, and assign roles to contributors to ease organization. What is impressive is you can batch execute all invoices and recurring payroll into one single multi-sig transaction without paying any gas.
Many NFT projects utilize Collab.Land to verify ownership of NFTs to create token-gated communities. Leveraging the power of identity and ownership, Collab.Land enables various groups to form token-gated tiered communities. You could issue different NFTs to create different sub-communities or create a tiered system where the more tokens one holds, the more exclusive access one gets. Their bot can be added to Discord, as well as Telegram.
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Summary
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