What is a DAO and how can I join one?
A DAO is a decentralized autonomous organization. DAOs are entities that are governed and operated via smart contracts, allowing people to coordinate and deploy capital through the power of blockchain technology.
DAOs were originally conceptualized as a potential application of smart contracts on Ethereum.
How do DAOs work?
The core idea underlying DAOs is that they are collectively owned and managed by their members. DAOs typically have a shared treasury that can only be deployed if members approve. Decisions such as utilizing treasury funds, partnerships with other DAOs, marketing initiatives, and other DAO-wide actions are usually voted on by members via governance proposals, which can be created and suggested by members of the DAO.
How are DAOs different from traditional organizations?
While some DAOs are similar in structure to a traditional organization, DAOs rely on the code in smart contracts in order to carry out certain functions.
Traditional organizations typically require significant funding, networks, and trust amongst members. DAOs attempt to remove these obstacles by automating trustless systems through code. Here is a comparison of DAOs vs. traditional organizations, as put forward by the Ethereum foundation:
A brief history of DAOs
If you haven’t heard of a DAO, you’re probably not alone! After all, DAOs are technically only 6 years old — it was only in 2016 when the first DAO, known as “The DAO,” formed on the Ethereum blockchain.
The DAO was intended to be a decentralized venture capital fund and its code was made to be open source, and had a “creation period” in which anyone was allowed to send ETH to a unique wallet address in exchange for DAO tokens. It amassed over 12 million in ETH (worth ~$150m at the time) during this creation period to invest in crypto-related projects.
But soon after, a hacker exploited a loophole in The DAO’s code, allowing him to drain over 3.6 million ETH from the treasury. The hack was so significant that it led to a “hard fork” of Ethereum in which the community decided to create a new chain of Ethereum that reverted the hack and sent the funds back to investors. The old chain is now known as Ethereum Classic.
DAOs have evolved significantly since Ethereum’s hard fork, and are now being created and operated for a variety of purposes. Just take a look at the following operational DAOs:
- MakerDAO: created a protocol to generate a cryptocurrency-based stablecoin ($DAI) by leveraging collateral assets approved by the DAO
- Index Coop: a DAO governing crypto ETFs and other financial products
- CabinDAO: connecting DAO operators and web3 communities through IRL cabin retreats
- VectorDAO: a design-based DAO where designers can earn equity and tokens for their work
- OlympusDAO: creators of $OHM, a decentralized and free-floating reserve currency for web3
- DeveloperDAO: an NFT-gated DAO where members collectively learn, participate, and contribute to the future of web3
- AssangeDAO: crowdfunded $55m for WikiLeaks founder Julian Assange’s release
- KlimaDAO: a decentralized and open market for carbon offsets, organized as a DAO
- ScribeDAO: a DAO curating and simplifying crypto content through writing
- TwaliDAO: a community of web3 “knowledge freelancers” — made to destroy McKinsey
- DropoutDAO: a DAO to empower and connect college dropouts
How can I join a DAO?
2022 has been deemed “the year of the DAO” by both participants and observers; DAOs are beginning to receive detailed mainstream coverage in The New York Times, Yahoo News, and Fortune, and, as we’ve discussed, exciting new DAOs are being created every single day.
As new DAOs continue to permeate the web3 landscape, it’s important to note that DAOs are still a relatively unexplored frontier in the Wild Wild West that is web3. The easiest way to join a DAO is to explore the list of DAOs that Layer3 has partnered with on our platform. After finding a DAO you’re interested in, it’s also helpful to follow their Twitter for official communications, or join their Discord to meet other members of the DAO.
Since many DAOs aim to be non-hierarchical and recruiting processes differ from traditional companies, new members often make themselves heard via contributions. We’ve made it easy for anyone to discover and contribute to a DAO through the variety of DAO tasks, projects, and bounties that we’ve aggregated on Layer3.
Some DAOs may also require you to hold certain tokens to become an official member. If you have no cryptocurrency to begin with, the best way to get started is by earning tokens on Layer3!
