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What is DAO?
A DAO, short for Decentralised Autonomous Organisation, refers to an entity that is absent of a central governing body, where individuals share a common objective to act in favour of the entity. Smart contracts are used in DAOs which are pre-coded agreements made among the founding members that dictate decision making. For example, when trying to decide who to hire from a list of applicants, a smart contract will execute this task automatically.
One of a DAOs most attractive aspects is its decentralised nature – the community is able to collectively make decisions. A voting decision will usually be assigned on the blockchain, where users vote between mutually exclusive outcomes. In most cases, those who hold the largest share of tokens, which are used to govern the DAO, are given a greater weight in voting power. This would ensure those more invested in the community will act in good faith. However, this article will show that more tokens held does not correlate with greater voting power in some DAOs.
As of January 2023, the total number of DAOs in existence reached 10992, which was three times the number recorded in 2022 (Source: pixelplex).
With the increased adoption of DAOs in recent years, there is more to explore about its projects! We’ve compiled top DAO projects worldwide so you won’t want to miss this article.
Top DAO Projects You Should Know
Uniswap — Leading Defi protocol
Status: Launched
Uniswap is one of the most popular decentralised trading protocols that is best known for enabling the automation process of trading decentralised fiance (Defi) tokens. Soon after its creation it became a DAO. Individuals that hold the native UNI token can vote on decisions regarding the treasury, governance, and road map. Any proposal put forward by a member of the community must gain at least 25,000 yes-votes to be considered. Next, the individual must put forward their proposals and reach 50,000 in yes-votes for their proposal to be approved – this is the consensus check. Finally, the governance phase has to attract 40 million yes-votes to be adopted.
Objective:
- To eliminate the need for a central operator to execute buy and sell orders found in traditional exchanges
- To enable their exchange to function as a public good , allowing the community to trade tokens without platform fees
Find more on this project on CFTE’s analysis of blockchain projects.
Compound — Crypto lending DAO
Status: Launched
Compound is a DeFi protocol that allows the community to deposit their crypto assets into different pools supported by the platform to earn interest. Holding the compound governance token, COMP, allows holders to delegate voting rights to individuals of their choice. In theory, an individual does not need to hold this ERC-20 token to obtain voting rights in the DAO.
Objective:
- To create a decentralised money market where users can lend or borrow funds without the need for intermediaries
Find more on this project on CFTE’s analysis of blockchain projects.
Decentraland — Virtual destination for digital assets
Status: Launched
Decentraland is an immersive 3D virtual world browser-based game, where players can acquire digital assets such as land using the in-game currency, MANA. These virtual assets are bought as Non-Fungible Tokens (NFTs) using the Ethereum blockchain. The DAO governs key components of this virtual word including MANA, NAMES, LAND, and Estate smart contracts. The community holds the power to issue grants, make changes to the list of banned names, Proof of Importance (POI’s), and catalyst nodes.
Objective:
- Allowing users to be part of a shared digital experience
Find more on this project on CFTE’s analysis of blockchain projects.
Ape Coin — Supporting Web3 development
Status: Launched
ApeCoin is an ERC-20 used for governance and utility purposes in the APE Ecosystem. It grants access to ApeCoin DAO, which makes decisions on fund allocations, governance rules, partnerships, and other ecosystem-related matters. All ERC-20 token holders can participate in the DAO, with voting power increasing based on the amount of ApeCoin held.
Objective:
- The organisation’s vision is to facilitate the development of Web3 by enabling users to support ‘what’s next’, controlled and built on by the community.
Find more on this project on CFTE’s analysis of blockchain projects.
Maker — Decentralised protocol for trading DAI
Status: Launched
The Maker Protocol is a decentralised project on the Ethereum blockchain and gives users the ability to generate DAI, a stable coin issued by MakerDAO, by leveraging collateral assets approved by the DAO. Such assets include Ethereum (ETH), 0x (ZRX), and Chainlink (LINK). Users are required to hold the native token, MKR, to govern the MakerDAO which grants voting rights on issues such as managing and stabilising the financial risks of DAI. The voting power is linearly proportional, dependent on the number of stakes in the voting contract, DSChief.
Objective:
- To establish a decentralised financial system that supports several functions including loans and savings on the Ethereum blockchain
Find more on this project on CFTE’s analysis of blockchain projects.
Illuvium — NFT gaming project with DAO governance
Status: Launched
Illuvium is a decentralised open-world fantasy battle game that runs on the Ethereum blockchain. The Illuvium DOA consists of more than 150 contributors and thousands of token holders who are responsible for governing and maintaining the protocol. To participate in governance, users must hold ILV tokens which give them the power to vote on proposals, such as rules and game mechanics, and elect council members. The DAO has implemented a quadratic voting system, which reduces voting power of large ILV holders and helps to prevent the dominance of wealthy players.
Objective:
- To create a fully decentralised role playing game which is transparent, open and governed by the community
- To incorporate a decentralised collection of Non Fungible Tokens (NFTs)
Find more on this project on CFTE’s analysis of blockchain projects.
Lido Finance — Enabling compound lending
Status: Launched
ALido is a liquid staking protocol with emphasis on safety and security, supporting both layer-one and layer-two cryptos that use the Proof of Stake (PoS) consensus mechanism. The organisation provides a solution to the liquidity problem faced by other PoS’. The Lido DAO influences key components of the liquid staking protocols by holding votes. Like most DAOs, the voting power is linearly proportional meaning the more an individual holds in LDO — the native token — the greater the decision-making power the voter gets.
Objective:
- To address issues associated with ETH 2.0 staking such as lack of liquidity, inaccessibility, and immovability
- To create a decentralised and secure platform for staking
Find more on this project on CFTE’s analysis of blockchain projects.
Dash — Payment project with faster transactions
Status: Launched
DASH is an open-source blockchain and cryptocurrency, known for its secure algorithm and popular features: PrivateSend and InstantSend. PrivateSend makes transactions difficult to trace while InstantSend facilitates transaction speed. The DASH DAO is governed by masternodes who must hold 1,000 DASH coins. These users have the power to vote on proposals directly or give voting rights to a third party. The DASH DAO is awarded 10% of every solved block and uses it to invest according to governance decisions using a voting system. The DASH community has been able to create funded organisations such as Dash Core Group, Inc (DCG), as a result.
Objective:
- To become a digital currency that is widely adopted for daily transactions, serving as a payment method similar to cash or credit cards
- To address Bitcoin’s downside of transaction time and privacy
Find more on this project on CFTE’s analysis of blockchain projects.
Curve — Ethereum-based DeFi protocol for stable coins
Status: Pilot Launched
Curve is a decentralised exchange dedicated to stable coins and uses an Automatic Market Maker (AMM) to control liquidity. AMM uses algorithmic bots to facilitate the buying and selling of crypto assets. The Curve platform allows users to exchange tokens at low slippage rates. Holders of the CRV token govern the Curve DAO. This community of stakeholders manages the protocol by voting on decisions regarding changes to the algorithm, the addition of new stablecoins, changes to fee structure, and other matters of the protocol. One of the Curve DAO’s unique characteristics is that it features a gauge system to encourage liquidity providers to supply specific stablecoins to the protocol – this ensures enough liquidity is available for trading and reduces slippage.
Objective:
- Curve’s main goal is to connect users who want to exchange ERC-20 tokens and stablecoins with exchange protocols
- To provide a decentralised exchange that minimises slippage and trading fees
Find more on this project on CFTE’s analysis of blockchain projects.
Aave — Open source liquidity pool
Status: Launched
Aave is a fully decentralised lending platform where individuals can lend, borrow and earn interest on their crypto assets while eliminating third parties. The DAO is governed by the token AAVE. Token holders are able to discuss, propose, and vote on upgrades to the protocol. Token holders can choose between voting themselves or delegating their vote to an address of their choice.
Objective:
- To enable users to lend, borrow and profit from stable or variable interest rates in a fully decentralised space
Find more on this project on CFTE’s analysis of blockchain projects.
Future outlook of DAO development
With the numbers growing substantially in recent years along with billions of dollars in investment, the future of DAOs look promising. The reason for their large adoption stems from their potential to offer decentralised platforms. The rise of DeFi, Web3, and the metaverse, which all emphasise decentralised governance and community driven decisions, have increased the demand for DOAs.
More contents to be discovered…
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