A DAO is essentially a community online that controls collectively a crypto fund. This is in order to reach a particular goal, such as buying a copy of the US constitution or even running a protocol based on DeFi. What is needed is a good idea as well as a recipe, that can invite success. Tools are also needed, as well as collaborators. So what are the tools that are needed?
What Do You Need to Make a DAO?
In order to make a DAO, you need five components. These include:
- There must be a common objective or a goal.
- A community of like minded people will need to be built. This can be done using Telegram or Discord.
- A shared fund will need to be created, that can finance what the goal is.
- A framework for governance will also need to be created.
- The group will need to be informed of how the project is doing. Rewards will also need to be disbursed to the right contributors.
In addition to this, there are several kinds of DAOs as well. These include:
- Protocol DAOs: Helps facilitate running protocols.
- Philanthropy DAOs: Initiatives that are socially beneficial are supported, and there is a goal that is shared.
- Collector DAOs: Funds are accumulated so NFTs and other digital collectibles can be bought. These are also known as NFT DAOs.
- Investment DAOs: Here, people get together to share knowledge of investment and split the risk.
- Grants DAOs: These help to fund as well as nurture new ventures and projects, particularly when it comes to DeFi.
DAOs are faster, more flexible as well as more transparent, and decentralized than traditional organizations.