How to create a DAO?
five things that you need to know
Adam doesn't work in an office, but he still gets paid.
Adam wakes up at the time of his choice and he goes to bed
whenever he feels like it.
He doesn't need to answer to any boss because he doesn't work for one.
In fact, he works for millions of people from all over the world.
Who are these people and where do they live?
What do they do?
Adam doesn't know, and frankly, he doesn't care.
He just finishes the tasks assigned to him and he gets paid.
If you think that sounds like a dream, well, stay tuned.
Because Wood, working with a decentralized autonomous organization, or DAO,
feels like
you've probably heard a lot about DAOs,
but have you ever thought about creating one?
If you have, but you're not sure where to start,
this is the definitive guide on how to create one.
We will go over all of the things that you must know before creating one.
But first, my name is Trev,
and here at CoinMarketCap, we love making videos about all things
crypto, from crypto news to market moves and to even educational videos
just like the one that you're watching right now.
So if you want something more than just hype and actually learn about crypto,
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So let's dove right in.
So the first point is the objective of a DAO.
You need to understand why you even need one.
What's the objective of your decentralized autonomous organization?
Do you want a DAO that decides which movie of the year was the best?
Or perhaps which of the music albums really touched your heart
and should be nominated for a Grammy?
Or you want to create a DAO to support emerging artists creators
in the crypto space and beyond?
As you can imagine, a DAO can be driven by any purpose.
You can even create a DAO to just share memes among yourselves
and then vote on the best ones.
Sounds like a crazy idea, right?
Anyways, the Dougy ecosystem
has been expanding extensively over the past few months.
As of today, there are hundreds of DAO, each with their own purpose.
Here's an entire DAO ecosystem mapped out by the team at bloc research.
Protocol DAOs like Uniswap and Compound have the objective of providing liquidity
in the crypto markets.
Venture deals like the LAO funds, emerging projects and crypto,
and some collector deals like the DAO
collectively buy expensive NFTs or other crypto collectibles.
There's even a social DAO called Friends with benefits
that is a community of creators, collectors and everyone in between.
The objective of the DAO matters to the underlying community.
If I were to create a DAO today and deploy it, then what's the incentive
for anyone else to join?
You could potentially be joining the DAO just to make a profit off of my DAO
tokens.
But as you can imagine, that is not sustainable over the long term.
That said, you don't have to go crazy with your objective.
Just be clear about what it is, what you would do and so on.
Don't think too hard.
Just think about something
that you are deeply passionate about or have a strong opinion about.
Once you have that, we move on to the next step,
which is building a community.
So the next part is finding and building community.
Finding a community in crypto is hard, but building a community is even harder.
The prospect of standing in front of 1,000,000 people on social media
and shouting about your next crazy idea for a DAO seems exciting,
but that's not so easy.
There are so many doubts in existence today,
and so many already have a dedicated community that supports them,
and new doors are springing into existence every single day.
So how can you distinguish yours so you can do two things?
The first is to have an almost unheard of idea and start acting on it.
The second is to convince
a community of people that your idea works and is worth supporting.
And if you combine both you, my friend or the next legend.
Now, when you are building your community for your DAO,
there is one thing that you must understand
Crypto has two types of people the speculators and the settlers.
The speculators are those that are actively hunting for the next moonshot.
They're the ones who just want to get in when the price is low and get out
when the price goes up.
They don't want to use the DAO, they don't want to contribute to crypto.
They just want to make money, which is absolutely fair, to be honest.
But they are not really helping us.
You wouldn't want millions of settlers on a DAO that you just created
because they will run away the moment that they have made their profit.
The second type are settlers,
and these are the ones that look for cool projects and tend to settle with them.
They associate themselves with the project because they like working for it.
Don't get me wrong, they too want profit, but they tend to have longer associations
with the projects, and these are the types of people
that you should be looking for in your DAO.
So how can you find them?
Well, use every single social media platform available to you.
Go out on Twitter. Announce that you are creating a DAO.
Outline its purpose.
Create a custom hashtag and invite your friends to follow.
Go to different preexisting DAOs online.
Seek permission to promote your idea. Go out on Discord.
Send people requests and tell them about the purpose of the DAO.
The more you expose your idea, the more likely people are going to come
to your door,
entice people by giving incentives, for example, giving the early members
additional tokens or more voting power for the first three months.
Tweet voting What does that mean and who gets the vote on what exactly?
Well, that brings us
to understanding governance, and this is an interesting question.
Does our self-governed entities?
That means no singular entity is responsible for making.
Decisions for the entire DAO, and this is where governance comes in in a DAO,
governance is shared by all the members.
Thus, if you create a DAO today and invite me as a member,
then I can vote on any decision that the DAO makes in the future.
So what are these decisions? Well, they could be anything.
But let's take an example to understand this further.
Let's just say that you have created a DAO that votes on the best means in crypto
every month.
Here are some governance related questions that you will have to address.
Who gets to present the qualified means?
Who can vote on the means?
How many votes do the creators get and what happens when there is a tie?
These are just some of the questions,
and you can imagine how many of these questions
you will have to consider to set the governance bill. Wait.
Does that mean that you have to think of
every scenario possible and set the rules for it?
Well, ideally yes,
but there's no limit to the number of scenarios
for which you have set the governance.
In fact, your role
as the creator of the DAO would be to set the basic rules of governance.
These could be around who gets the source of the means,
who gets to qualify and what happens when there is a conflict.
So you don't have to imagine every scenario possible.
You just need to think about
the underlying causes of conflict and then you need to set
how those conflicts will be resolved.
A part of all of this is understanding who will be able to vote.
Can every member participate in voting?
Do members need to qualify a hurdle before becoming eligible to vote?
These are just some of the many questions that you might want to tackle,
or you can just set DAO a simple set of guidelines for the DAO .
Once a significant portion of members have joined, they can collectively decide
on detailing the rules.
But remember, once you've cemented the rules
and deployed the smart contract with those rules on the mainland of the protocol,
you will not be able to change that.
So don't worry, I'll break down exactly what I just said.
So that brings us to our next step, which is encoding rules and deployment.
You've probably heard that smart contracts are immutable.
So what that means is once deployed, these contracts in the rules
that are written in them cannot be changed.
Adobe rules are encoded into custom smart contracts.
The objective is to ensure that no human entity
is able to control or manipulate these rules later on.
Many DAO entities generally spend a significant amount of time
in understanding
what those rules would look like and how conflicts can be managed
before they deploy the smart contract of the DAO .
Now, when it comes to deployment, there are several ways of doing it.
If you don't want to get into the technical side of things,
then you can simply rely on preexisting DAO tools.
And we're going to be uploading a video just on that topic soon.
So make sure to subscribe so you're not going to miss out on the next video.
Alternatively, you can also look for developers
who can both help writing the code and deploying the smart contract.
So we have covered the fundamental aspects of creating a DAO and all of the things
that you need to keep in mind.
And in addition to this, there are some features of a DAO that truly set it apart.
Here are some of them.
So next up, let's talk about the unique features.
There are some intrinsic features that help us distinguish it DAO for me,
traditionally structured organization.
The first feature is transparency.
Everything is on the blockchain.
All the transactions, the voting results and everything in between can be viewed
by everyone. Pretty cool, right?
We don't have to worry about the obfuscation of data,
and that isn't really present with a traditional organization like a company.
The second crucial feature is governance.
It simply means that all of those who have purchased
the membership of the DAO have an influence over its decisions.
Let's take an example.
Let's say that we have a DAO
that aims to decide who gets to present their next creative piece
at the next meeting.
Using my tokens, I can vote for myself or any other member,
and so can you and any other member of the DAO,
and whoever gets the largest share gets to present in the next meeting.
No mediation necessary.
No one human being deciding for everyone else.
At this point, you're probably wishing this was possible in school.
Well, a third feature, and possibly one that is the most
significant one, is the presence of an underlying financial structure.
So that's a big complex to understand.
But let's break it down.
So a DAO has its own
native tokens, and whoever holds the tokens is a member of the DAO.
These tokens can be used for trading.
If I want to leave the DAO,
then I can simply trade it with a friend for some USD team, or
if I want to stay within the DAO, then I can use it to vote on crucial decisions.
So what could these decisions be?
Well, they could be decisions about how the Dallas funds should be used
or about how much a team working for the DAO can be paid,
or how much should a designer creating a design for the DAO be paid?
Or how frequently should meetings be held and who should hold them?
Thus, these tokens can be used for making all types of decisions.
Now what if I hold 20 tokens and you only hold ten?
Well, that means my influence over the vote is greater than yours,
but that is how the structure of a generic DAO is designed .
The more tokens you have, the heavier your voting influence is.
Now you might think that this isn't fair, but this is how some DAOs are governed.
And the best part is
is that if you don't like something, you can propose to change it.
In fact, some doubts have three different structures within them.
An example of this is Aragones Dao Stack.
It consists of three structures.
The first is the legislative structure where proposals are presented
and the voting is done,
and the second is the execution structure that carries out transactions and the.
third is the court where the disputes are resolved.
The beauty about this is that every member gets to participate
and this inclusivity is what makes every day feel special.
This has been the definitive guide on how to create a doubt.
My name is Trev and make sure to comment below what DAO you'll be creating next
and if you have any questions.
Make sure to ask Alex in the description below.
And anyways, guys, we'll see you next time.