How to Make a DAO for Complete Beginners
And how you can do it without writing a single line of code for less than $50
Terminology
The world of crypto uses some terminology that can be hard to understand if you’re not fully versed in the community. These are some terms that should help you get through the article, though I will try and use jargon as little as possible
- DAO — Decentralized Autonomous Organization
- Gas fees — Similar to a credit card company’s transaction fees, it’s the cost of sending your currency wherever it’s going
- Coin — The primary cryptocurrency for a given blockchain (e.g., Ethereum, Polygon, Bitcoin, etc.)
- Token — A cryptocurrency that piggybacks on another blockchain (e.g., UDST is a token on the Ethereum blockchain)
- Liquidity pool — the amount of coins that backs a given token, generally used to help determine the price of the token
- DeX — Decentralized Exchange, where anyone can list their cryptocurrencies for others to buy
What is a DAO?
If you’re unsure of what a DAO is, it’s an acronym that stands for Decentralized Autonomous Organization. The best metaphor I’ve heard to describe it is “a group chat with a bank account”. Basically, you and anyone else who owns the DAO’s token gets to have a say on what the organization does. It’s democracy in its most basic form but powered by the decentralized web, so anyone with an internet connection can have a say.
One of the most popular examples of a DAO was the ConstitutionDAO project that raised $47 Million to place a bid on an original copy of the United States Constitution. Unfortunately, that project failed, but if you’re even the slightest bit familiar with the world of cryptocurrency then you’re probably familiar with a lot of more established DAOs without even knowing it. All the major blockchains have Decentralized Exchanges where you can swap the blockchain’s main coin for various other tokens (cryptocurrencies that piggyback on another blockchain). The most popular of these being UniSwap for Ethereum and PancakeSwap for Binance. Those DeXs are all DAOs themselves, and you can vote on what they do in the future by holding their governance token.
Okay, great, but how do I make one?
It’s actually way easier than you may think at first. My two goals for this project were:
- Establish a DAO and know how to take it to market for as cheap as possible.
- Do so without writing a single line of code.
Because price was a big factor in my decision, I knew founding my DAO on the Ethereum blockchain was out of the question. Gas fees alone would make the project cost-prohibitive when a single transaction could cost as much as $80 on top of however much I was trying to put into the project. I’d have to make several transactions in testing alone to make sure things worked, and I would be turning away a significant number of people because of such high costs. Therefore, I landed on using Polygon for my DAO. This made things more difficult, as a lot of the code-free resources are designed for DAOs on Ethereum. However, the significantly lower transaction fees are worth it. Polygon also has a significant advantage of being more environmentally friendly. I know that may be an afterthought for some people but I, for one, want to keep my contribution to climate change minimal.
Great, so now I know what blockchain I’m putting it on, how do I actually MAKE the DAO? There are several options for Polygon DAOs, but the one that served me the best was the Aragon platform. They had recently added the ability to make DAOs through their tool on the Polygon network, and they specialize in enabling people to create code-free DAOs. It led me through a very user-friendly interface of naming my DAO, selecting what kind of DAO to make, and what I wanted my DAO’s token graphic to be. After that, I was given a prompt to pay 3 Polygon (about $6 at the time I was doing this) to cover the fee of creation, and this is where I hit my first snag. While Polygon has incredibly cheap transaction fees, its network can get slowed down easily because of the way it processes transactions. While simple wallet transfers are easy enough, the transaction to create a DAO is much more complicated and took quite a while. This isn’t really that big of a deal, I wasn’t in a hurry to create it. But since Polygon is a newer network for Aragon, a quirk of the system made it think the long transaction time was an error and told me to reverse the transaction. Thankfully, this didn’t cost me anything, but it was annoying until I figured out to just ignore the error message and sit on the screen for about a half hour until it went through. Once it went through though, I was greeted with a dashboard where I could issue new tokens and propose votes. I could also change the default permissions and just allow myself to perform actions without a vote. Changes like this are useful when you’re setting up your DAO because votes cost a small gas fee every time you do them. While on their own they’re inconsequential, but they can add up and there’s to reason to spend the extra Polygon when you don’t need to.
Once you’ve established your DAO, you can issue as many tokens as you’d like. While you can distribute them however you’d like, probably the most common way is by selling them on a DeX. These DeXs make setting up a token sale incredibly easy. All you have to do is provide the number of tokens and a certain number of coins that back those tokens. This creates what’s called a Liquidity Pool. The number of coins you have backing your tokens will set up the initial value of the tokens, and then the market will take it from there. However, I wanted to have this done for as cheap as possible, so having a large number of coins to back my DAO’s Liquidity Pool was out of the question. This is where another website called DxSale comes in. DxSale specializes in token pre-sales, where people can list a token for a lower price than it will be when it goes to market. The coins used to purchase those tokens will then be used to back the liquidity pool on the DeX. DxSale lets you set up a presale on the Polygon blockchain for only 7 Polygon (about $12 when I did it). From there, it’s just a matter of marketing your presale so that when it’s done, you have sufficient liquidity to go to market on a DeX.
Once your tokens are out in the world for anyone to buy, you’ll want to invest some time into setting up some other tools to help manage the community around your DAO. Discord is great for having a designated space on the internet for your token-holders, and there are server plugins that can help validate token-holders. Another great tool is Snapshot, which allows for voting on your DAO without the gas fees. But those are all options to consider once you have a community around your DAO, and they can help make those decisions.
The Final Cost
So that’s how you found a DAO without writing a single line of coding. But what does the final cost come to?
In total, excluding gas fees, you’ll pay 10 Polygon to get your DAO founded and put up for presale. Depending on the market, that’ll be anywhere between $15 and $20. Moreover, if you want to sell your tokens, you’ll probably want to set up a website where people can read about what your DAO is trying to achieve and provide links to how-to guides on getting involved in your DAO. You could, of course, do this for free on Wix or a similar site with a subdomain. However, domains can be purchased on Google Domains for as little as $12 and that comes with a basic site building tool they provide for free. This comes to a final total of 35 dollars in the absolute worst-case scenario to get your DAO founded and up for sale.
Conclusion
In conclusion, while the world of the decentralized web is fascinating, it can be incredibly hard for newcomers to break in. I hope this article can serve as guide for anyone who wants to start a project using a DAO but doesn’t have coding experience or buckets of money. From the research I did while doing this experiment, I also learned about Harmony One, another blockchain project that is trying to serve as a sort of accelerator for DAOs that start on their platform. They have many promising projects and resources for developers, creatives, and builders that I didn’t have time to look into while doing this research but plan to look into further in the very near future.
