Types of DAOs
Background info: DAOs are decentralized autonomous organizations. They are a group that lacks a governing body, instead using a bottom-up management approach. This approach involves creating proposals and voting on those proposals. With power split among the members, DAOs use a decentralized model to enforce security. The number of DAOs currently in existence is quite numerous, each with its own purpose and goals. The first DAO was The DAO, created on Ethereum. However, a bug in a smart contract was exploited to steal about 3.6 million Ethereum. Since then, numerous other DAOs have been created. Let’s dive into a few types of DAOs.
Protocol DAOs: This type of DAO focuses on governing applications like decentralized exchanges, running dApps, and borrowing and lending crypto. Protocol DAOs use a voting system to implement changes in the protocol or to change the governing structure. Moreover, many of these types of DAOs have their own tokens. Here are a few examples of Protocol DAOs: MakerDAO, Uniswap, and Yearn Finance. MakerDAO was one of the first DAOs; it was made to allow users to borrow and lend cryptocurrency. It also has its own stablecoin: DAI. This stablecoin is an algorithmic stablecoin, backed by ETH. Uniswap is another protocol DAO based on the Uniswap application. This DAO was created to govern the Uniswap application, control the funds, change the protocol, etc. This DAO, like other DAOs, uses a voting system to implement any changes. Yearn Finance is also similar to MakerDAO. With the goal of offering crypto investors and crypto holders lending and trading services, Yearn Finance has numerous applications.
Investment DAOs: A decentralized group of investors that pool their money to invest in startups. They, like Protocol DAOs, have their own tokens. A few examples of Investment DAOs are the Orange DAO and The LAO. The Orange DAO is a group of over 1300 members who have the goal of advancing web3 development. This DAO runs numerous funds and organizations to help developers, builders, etc. in web3. The LAO is a group that funds new projects. It has helped numerous startups and has a large pool of money. Furthermore, they have voting principles like other DAOs, with the number of tokens holding representing voting power.
Grant DAOs: This DAO group is extremely similar to investment DAOs. The major difference is that they give out grants instead of loans to web3 developers and builders. There are two major Grant DAOs: Aave Grants and MetaCartel. The Aave Grants provide a consistent amount of funding per time period for web3 developers, innovations, and Aave development. This group is made up of numerous community developers. MetaCartel awards large grants up to $10,000 to ethereum developers, DAO developers, etc. Overall, Grant DAOs are similar to investment DAOs.
If you want to learn more, check out the links below:
Types of DAOs and how to create a decentralized autonomous organization
The Ultimate Guide to DAOs (with 10 Examples)
If you like this article, consider reading my other articles
