DAO – Decentralized Autonomous Organizations

How to create a DAO? Five things that you need to know Mr.Bean doesn’t work in an office, but he still gets paid. Mr.Bean 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. What do they do?

Mr.Bean 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. 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.

So the first point is the objective of a DAO.You need to understand why you even need one.

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. Anyways, the Dougy ecosystem has been expanding extensively over the past few months. As of today, there are hundreds of DAO, each with its own purpose.

Here’s an entire DAO ecosystem mapped out –

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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. 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.

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 is 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 on it.

Don’t get me wrong, they too want profit, but they tend to have long 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.

  1. Go out on Twitter. Announce that you are creating a DAO.
  2. Outline its purpose.
  3. Create a custom hashtag and invite your friends to follow.
  4. Go to different preexisting DAOs online.
  5. Seek permission to promote your idea.
  6. Go out on Discord.
  7. 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.

Do 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.

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.

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 has 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 that once deployed, these contracts in the rules that are written in them cannot be changed.

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 pre-existing DAO tools such as Aragon

Alternatively, you can also look for developers who can both help write the code and deploy 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.

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 is necessary.

No one human being decides 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.

I can use it to vote on crucial decisions.

Or how frequently should meetings be held and who should hold them?

Thus, these tokens can be used for making all types of decisions.

Examples of successful DAOs

If you need some inspiration on the rules and set-ups that work best, take a look at some of the established DAOs in crypto. Some run incredibly detailed and open organizations that operate like large businesses. A few examples to look at include:


MakerDAO is one of the oldest, most successful DAOs on the market. The organization manages the crypto-collateralized DAI stablecoin. They split proposals into Governance Polls for non-technical decisions and Executive Votes for smart-contract changes. Anyone holding MKR, the project’s governance DAO token, can participate. 


Aave is a DeFi lending platform on Ethereum that lets holders of the ERC-20 token AAVE or staked AAVE participate in its DAO. Along with project changes, Aave governance also votes on new projects built on the protocol and Aave Grants to fund ideas.


Uniswap is a multi-chain Automated Market Maker (AMM) that has inspired a generation of DeFi projects. It’s one of the largest decentralized exchanges, and UNI holders can vote on and create proposals. To submit a new proposal, you need to hold at least 0.25% of the UNI’s total supply. To encourage healthy discussion, there is a governance forum for community members to debate changes.

DAO – Decentralized Autonomous Organizations