⛓ Blockchain 101
What is a DAO? And why all the hype?
Everybody from crypto enthusiasts to Mark Cuban is high on the potential of DAOs right now. But what is a DAO? And why all the hype?
👋 We’re EarthFund, the decentralized platform using blockchain, DAOs and crypto to give you more of a voice in the shape of tomorrow.
This week, we’re getting you up to speed on all things DAO.
Dive right in 👇
- DAOs give everybody a voice 📣
- A brief overview of DAOs 👨🏫
- Here’s a quick ELI5 on the DAO terminology you’re likely to come across
- A more flexible, efficient and transparent way to run communities ✊
- DAOs are simple to set up (in theory) ⚙️
- Joining a DAO is the easiest way to have your say 🎤
- EarthFund makes starting or joining a DAO easier than ever before 🙌
Decentralized Autonomous Organizations (DAOs) give everybody a real voice 📣
If we break them down to their simplest, DAOs are a new form of online organization where everybody has a voice.
In a DAO, there’s no centralized leadership figure like a CEO, board of directors, or a central government to make decisions. In other words, there’s no select group of people that get to make all of the decisions on your behalf.
Instead, in a DAO, everybody has a real say in every decision, from how funding is spent to how the DAO functions.
In other words, a DAOs is an online community with a shared bank accounts that makes decisions as a collective.
What’s the use case for DAOs?
DAOs can be used to organize anything from funding a specific project to creating a democratic community that wants to make the world a better place. (Just like the communities launching on EarthFund 😏.)
Anybody can join a DAO simply by buying and holding crypto-tokens called governance tokens. And by holding these tokens — AKA, keeping them in your wallet — you get voting rights on how the DAO will spend donations and funds.
DAOs are built on trust and community
Because they’re run on the blockchain, DAOs are more transparent than traditional organizations. Everything that the DAO does is recorded so you can see how it’s run and how decisions were made whenever you want to.
In short, DAOs are a more democratic, more community-focused, and more forward-thinking way to make real change actually happen.
“DAOs are the ultimate combination of capitalism and progressivism. As companies are built on this approach we will see some incredibly disruptive businesses built.”
Mark Cuban
A brief overview of DAOs 👨🏫
The first DAO was only launched in 2016, so they’re a relatively new concept.
“The DAO” — which, confusingly, was the name of the first DAO — was a platform built using the blockchain designed to let anyone with a project or cause pitch to a community of like-minded folk and receive funding from the DAO.
And while the first DAO was one of the most successful crowdfunding projects in history, ultimately it failed. Like most new technologies, there were issues and vulnerabilities and an attack exploited a weakness.
However, as a proof of concept, it was a huge success and since then, DAOs have drastically improved with enhanced security and stricter rules encoded in the code and smart contracts.
Learning the DAO lingo
There are a ton of articles about DAOs out there that bombard you with jargon. Smart contracts, DeFi, governance tokens, staking, gas fees…
In our experience, they often leave you with more questions than answers.
DAOs are supposed to democratize decision-making and give a voice to everyday people. They’re not supposed to just be for investors or people that run a venture capital fund.
But it’s pretty difficult to get involved if you don’t have a clue what anything means. So, we’re here to help you out.
Here’s a quick ELI5 on the DAO terminology you’re likely to come across 👇
A smart contract is a contract written in code and stored on a blockchain. When someone wants to enter into the contract, they send a transaction to the smart contract address. The transaction triggers the code and the terms of the contract are enforced automatically.
Decentralized finance — often called DeFi — refers to the shift from traditional, centralized financial systems like banks and investment firms to peer-to-peer finance enabled by decentralized technologies built on the Ethereum blockchain.
Governance tokens are a type of crypto token that is used to give holders voting rights within a decentralized autonomous organization (DAO). Governance tokens are usually issued on a blockchain, and holders can use them to vote on proposals or make decisions about how funds are spent.
Staking is a process by which a person can earn rewards for holding onto their cryptocurrencies. When you stake, you’re essentially locking up your digital tokens in order to validate transactions on the blockchain and earn rewards. It’s also how you swap cryptocurrencies for governance tokens. You stake your currency and get a governance token in exchange.
Gas fees are essentially crypto transaction fees — a little bit like paying postage on a package. When you send crypto from one location to another it requires a certain amount of computing energy and the gas fees cover the cost of that. Crypto users can set a gas limit for the maximum amount of gas they’re willing to spend on a transaction.
By bringing all of these elements together, developers have created a new system of open finance that prioritizes transparency, security, and interoperability.
In other words, DeFi is rebuilding financial services from the ground up to work for everyone, not just the privileged few. And DAOs play a huge role in making that vision a reality.
A more flexible, efficient, and transparent way to run communities ✊
One of the biggest differences between a decentralized autonomous organization and a traditional organization is the power structure.
A traditional organization is structured like a pyramid. The top of the pyramid (made up of a select few) has the most decision-making power and at the bottom, there are the most people with the least amount of power.
DAOs flip this.
They give everybody a proportionate voice based on the number of tokens they hold.
In a way, DAOs are the first truly flat organizations.
They’re entirely decentralized, meaning there’s no central authority or corporate governance controlling the DAO like a CEO or board would control a typical company.
This gives DAOs a lot more flexibility and erases any conflict of interest between the person making the decision and the stakeholders.
It also means that no decisions can be made by a sole party.
DAOs are also autonomous, meaning that once a decision has been made by the token holders, the resulting action is carried out by smart contracts automatically.
This makes a DAO much more efficient than a traditional organization, which often has a lot of bureaucracy and the possibility of human error.
On top of that, DAOs are completely transparent.
All transactions are public and recorded on the blockchain, so anyone can see how the DAO is run. This makes DAOs much more accountable than traditional organizations, which often operate in the dark.
Joining a DAO is the easiest way to make your voice matter🎤
Imagine a community of like-minded people working together and voting on ways to move towards a common goal. That’s what a DAO is.
The beauty of DAOs is how simple they are to join. In fact, you can join most DAOs by simply buying their cryptocurrency or governance tokens.
This is known as a token-based membership.
Once you own governance tokens, you will have voting rights and power. Token holders are able to vote on the causes they believe in and freely submit proposals for new projects and causes.
In most cases, token-based membership is permissionless meaning anybody can join by buying the token.
Deeper dive: There are also share-based and reputation-based membership DAOs that are more pemissioned communities. These DAOs require proposals from prospective members that assess what you can bring to the community before giving you access.
Once you’ve found a community you want to join, the benefits of joining a DAO are endless.
- Get rewarded in crypto for your contribution
- Have a real voice in an active community
- Find like-minded people
- Contribute to causes that you believe in
- Bring about real change
However, for new crypto users, a lot of this still requires a huge learning curve. It’s no surprise that crypto UX is one of the biggest barriers to entry.
The next stage of DAOs will bring together all the usability features you know from your favorite websites with all the power and decentralization that blockchain offers.
DAOs are simple to set up (in theory) ⚙️
The other advantage of DAOs is how quick they are to set up. No registering an LLC or hiring lawyers or any of the other stuff that goes into starting a company… just a few clicks and a few forms and you’re good to go.
In theory, all you need to set up a DAO is:
- A group of like-minded folk
- A smart contract
- Governance tokens
- Proposal tracking system
- A voting system
Once you’ve got that in place, you’re good to go.
Sort of.
Unfortunately, setting up a funding DAO usually requires a team of experienced Solidity developers (a class of programmers in extremely short supply).
Not to mention, it costs around 0.2ETH to set up a DAO. In US dollars that’s about usually $300–400 (or it was, pre-crash).
On top of that, you also need an effective smart contract that defines the rules and processes for everything your DAO does. And before launching your DAO, you’ll need to extensively test its security and ensure no weaknesses are overlooked too.
And that’s before you’ve cracked how you’re going to get your funding.
For most DAOs, this is done by minting a token. The token is sold to users who are then given voting power. Users can also transfer crypto to DAO-specific wallets to power their treasury.
Finally, you need to promote your DAO to potential members and get them involved in the decision-making process.
So, while the advent of this technology has led to a boom in decentralized autonomous communities, getting involved still requires users to understand:
- Setting up an ERC-20 wallet
- Buying cryptocurrency
- Smart contracts
- Paying gas fees to vote
Again for new crypto users, there’s still a huge learning curve. And that keeps a lot of people from even getting started.
If DAOs are going to go mainstream and achieve that promised land called Mass Adoption, they need to be easier to set up and easier for people to join
EarthFund makes starting or joining a DAO easier than ever before 🙌
We’ve built the EarthFund platform to make DAOs accessible to everyone.
We’ve spent almost a year streamlining every aspect of DAOs so that it’s all super easy to use, even if you’re dipping your toe into crypto for the first time.
(It’s not just about making it accessible for new users, either. Our intuitive UI will make it much easier for experienced users to do what they need to do quicker, pay less in gas and earn more in rewards.)
In other words, EarthFund makes bringing about real change so easy that even your Facebook-loving Grandma can get involved.
Making it easier to start a DAO
For starters, we’ve made it super simple to set up a DAO. DAO founders have a plug-and-play toolkit for starting world-saving DAOs, complete with an intuitive onboarding experience that makes everything super simple.
There’s no need to create your own token and smart contract or worry about coding either. EarthFund just handles everything.
(Our DAO-in-a-box platform automatically sets founders up with its own ERC-20 token, ERC-20 smart contract, Gnosis multi-sig wallet, Snapshot governance system for gasless voting, manifesto, ENS subdomain, subdomain on the EarthFund platform and crypto donation page for receiving donations in any ERC-20 token.)
Making it easier to join a DAO (and earn rewards)
By stripping away the complexity of DAOs, we’ve created a platform that makes it easy for anybody to join a DAO for a cause they’re passionate about and earn rewards too.
Voting is completely gasless. Rewards are awarded in USDT so you always know what you’re going to get. And the UX is clean, clear and intuitive as hell. (If we do say so ourselves.)
As CoinTelegraph said about our platform:
A giant step towards mass adoption.
The EarthFund platform manages the complexities of the blockchain and makes it simple for anybody to start their own autonomous community dedicated to making the world a better place.
Making it easier to grow world-changing treasuries
Donating through EarthFund is simpler too. Most DAOs require a wallet-to-wallet transfer to add funds to the treasury. That means that anyone who wants to donate needs to know how to set up a transfer. Not so with EarthFund — we’ve built a router so you can donate crypto and fiat directly to a cause treasury.
And those donations are automatically converted to USDT — at the best available rate — so that causes can see at a glance how much they’ve got. (And there’s a little protection against the fluctuations of the market.)
But what about gas fees? Well, you can also forget about paying gas fees to vote on EarthFund. You’ll only ever need to pay gas fees when you want to swap tokens, donate or claim rewards and grants. Everything else you do is completely gasless. 🙌
New to EarthFund? Here’s everything you need to know 👇
Start a world-changing DAO with its own token.
Join a community of like-minded people.
Donate crypto to change the world.
All from one place.
EarthFund takes the power off centralized organizations like governments and global charities and gives it to communities dedicated to causes.
It allows everyday people like you to affect change. And using crypto and the blockchain, it lets you have a voice in decisions and fund the causes you believe in.
Powering it all is the 1Earth token, an ERC-20 token that can be staked in exchange for governance tokens that give you a voice on the platform.
By buying the token and joining the EarthFund DAO, anybody in the world will have a vote on how the EarthFund treasury is used to fund planet-saving projects around the world.
CoinTelegraph
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