Building on DAOs

Launching a DAO requires careful planning and execution to ensure it doesn’t just die out! Here are some key points to consider: 

1. Defining the DAO’s Purpose

Before creating a DAO, it’s essential to establish its purpose. DAOs created just for the sake of it rarely last. Possible reasons include protocol governance, funding projects, community-driven activities, or investment pooling. Clearly defining the DAO’s mission and vision aligns members and sets a clear path forward. 

2. Choosing the Right Blockchain and DAO Framework

Selecting the right blockchain for your DAO is possibly one of the most important decisions. The choice affects transaction costs, security, scalability, centralization, and so much more. It helps to understand the strengths of each blockchain. For instance, Ethereum is the most widely used due to its mature ecosystem and decentralization, while alternatives like Solana, Polygon, and Cosmos offer faster and cheaper transactions. It depends on your DAO’s needs. 

Furthermore, choosing your DAO’s creation framework is arguably just as important. These provide pre-built templates and interfaces, reducing technical complexity. For example, Aragon offers granular control over governance and fundraising, DAOstack focuses on reputation-based voting features, and Colony is particularly catered to non-technical users. 

3. Setting Up Smart Contracts and Governance Rules

Once a blockchain and framework are selected, the next step is deploying smart contracts to define the rules of the DAO. From voting mechanisms to fund management and proposal submissions, smart contracts automate operations. They serve as the  DAO’s backbone, ensuring the governance model is followed and functions as intended. 

4. Treasury Setup and Initial Funding Strategies

DAOs also require a secure and transparent treasury system to manage funds. It is crucial to prioritize security measures such as multi-signature wallets (e.g., Gnosis Safe) and fair token allocation to prevent centralization. Funding strategies may include token sales, staking incentives, and grants. However, this must be balanced with the decentralized ethos of DAOs, preventing any party from gaining excessive power.  

5. Community Building and Onboarding Members

Lastly, a DAO cannot thrive without its members. As a DAO creator, one needs to think largely about community building and onboarding. Platforms like Discord, Twitter, and Discourse are commonly used for engagement and governance communication. Leaders can also organize educational initiatives, AMAs, and incentive programs to attract and retain contributors.

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DAOs rely on various tools to manage their everyday operations. Familiarity with these tools helps run a DAO more effectively. 

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1. Governance Tools

Governance tools are fundamental to DAO decision-making, enabling members to vote on proposals and shape the organization's future. These tools help reduce gas fees, ensure transparency, and encourage broader participation.

• Snapshot – A popular off-chain voting tool that enables DAOs hold governance polls without gas fees. Voting off-chain lowers barriers to participation while maintaining transparency. DAOs like Uniswap, Aave, and Balancer use Snapshot to facilitate governance decisions.
• Tally – A governance platform designed for fully on-chain voting, ensuring decisions are executed through smart contracts. Unlike Snapshot, Tally directly integrates with Ethereum’s governance frameworks, making it ideal for DAOs  requiring verifiable and enforceable decisions.
• Boardroom – A governance aggregation platform that consolidates voting proposals from multiple DAOs into a single interface. Boardroom allows users to track DAO activities, vote on governance issues, and manage memberships across several DAOs efficiently.
• Governor Contracts (Compound, OpenZeppelin) – For fully decentralized governance, some DAOs use smart contract frameworks like Compound’s Governor contracts. These enable token-based voting with proposals executed directly on-chain via blockchain transactions.

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2. Treasury Management Tools 

Effective treasury management is vital to a DAO’s sustainability, ensuring funds are securely stored and efficiently utilized.

• Gnosis Safe – A multi-signature wallet that enhances security by requiring multiple DAO members to approve transactions before execution. This prevents unauthorized withdrawals and ensures collective oversight of treasury activities. Gnosis Safe is widely used by organizations like ENS DAO and Gitcoin.
• Juicebox – A treasury and crowdfunding platform that enables DAOs to raise funds in a decentralized and transparent way. Juicebox allows communities to set funding parameters, allocate treasury resources, and track contributions over time. DAOs such as ConstitutionDAO and SharkDAO have successfully leveraged Juicebox for fundraising efforts.
• Parcel – A DAO-native treasury management platform that streamlines payroll, expenses, and treasury operations. It automates recurring payments, distributes grants, and tracks expenditures seamlessly.
• Superfluid – A real-time finance protocol that allows continuous streaming of funds. DAOs can use Superfluid to automate salaries, contributor rewards, and funding flows, eliminating the need for manual payment processing.

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3. Communication & Collaboration Tools

Since DAOs operate globally with decentralized teams, communication tools play a crucial role in community engagement, governance discussions, and knowledge sharing.

• Discord – Often the central hub for real-time community interaction. Discord serves as a space for DAO members to coordinate activities, host governance meetings, and engage in direct discussions. Many create dedicated channels for governance updates, proposal discussions, and working group collaboration.
• Discourse – A forum-based platform where DAO members can discuss governance proposals, submit feedback, and engage in structured debates before votes take place. It promotes thoughtful dialogue and  archives discussions for future reference. DAOs like ENS and Gitcoin use Discourse as a key governance discussion platform.
• Mirror – A decentralized publishing tool for governance proposals, updates, and long-form content. Unlike traditional blogs, Mirror leverages blockchain-based publishing to create immutable records of DAO-related documents. Mirror is ideal for proposal documentation and transparency reports.
• Notion & Coordinape – Notion is commonly used for DAO documentation and knowledge management, while Coordinape helps DAOs track contributions and distribute rewards through decentralized compensation models.

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4. Reputation & Identity Solutions

Since DAOs often operate in pseudonymous environments, reputation and identity solutions help establish trust and credibility within the community.

• Ethereum Name Service (ENS) – ENS replaces long blockchain addresses with human-readable names (e.g., alice.eth). This simplifies identity verification and enhances usability for DAO members. Many DAOs offer ENS subdomains as membership badges or governance credentials.
• Gitcoin Passport – A decentralized identity and reputation system that assigns users a score based on their contributions to open-source projects, governance participation, and on-chain activity. Gitcoin Passport helps DAOs identify active, reputable members and distinguish them from potential Sybil attackers.
• POAP (Proof of Attendance Protocol) – DAOs use POAPs as verifiable badges to reward members for attending meetings, voting on governance proposals, or contributing to projects. These NFTs serve as on-chain proof of engagement and reputation-building.
• BrightID – A decentralized identity verification tool designed to prevent Sybil attacks by ensuring that each participant represents a unique human. DAOs that rely on quadratic voting or reputation-based governance often integrate BrightID to maintain fairness.

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DAOs have achieved a lot so far, but they’re still evolving and far from perfect. As they grow, DAOs must address governance inefficiencies, scalability limits, and funding challenges.

To improve efficiency, many DAOs create SubDAOs or specialized working groups focused on specific areas like marketing, treasury, development. This decentralized structure prevents decision-making bottlenecks and empowers DAO members to contribute where they excel. Additionally, many DAOs adopt delegative voting models, as mentioned in the previous modules, to distribute responsibility more effectively. Not every token holder has the time or expertise to weigh in certain issues, so allowing them to delegate their vote to someone more qualified is democracy at its finest. 

Sustaining a DAO also requires continuous funding, which may come from grants, partnerships, protocol fees, treasury investments, or even venture capital. Without steady funding, a DAO cannot operate effectively because it isn’t exactly a typical 9-to-5 company. Still, not all DAOs succeed, and when faced with governance failure or internal conflicts, they might merge with other organizations, dissolve entirely, or fork into a new DAO with an improved governance structure.

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If you think this is the end for DAOs, you ain’t seen nothing yet! DAOs have already evolved beyond crypto-native projects, and decentralized governance is now being explored in a wide range of fields: business management, government, infrastructure development, and more. You name it! DAOs have the potential to reshape how we live everyday. 

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• DAO Adoption in Businesses: Rather than relying on traditional hierarchical corporations, businesses can be structured as DAOs, where employees hold governance tokens. These tokens grant voting rights over key decisions, profit distribution, and strategic direction. For example, a Freelancer DAO could allow gig workers to collectively own and manage a platform (e.g., a decentralized alternative to Upwork or Fiverr). Members vote on platform policies, fees, and dispute resolution instead of being subject to centralized control.

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• DAO Adoption in Governments: Governments are beginning to adopt cryptocurrencies as seen with El Salvador and the U.S.’s recent crypto strategic reserve initiatives. Legislative frameworks are also evolving, introducing clearer regulations around cryptocurrencies and DAOs. Moreover, governments are exploring decentralized governance mechanisms to enhance public funding allocation and citizen participation in policymaking. Some proposals even suggest conducting national elections on the blockchain, managed by DAOs, to boost transparency and trust. 

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• AI & Automation in DAOs: The rise of artificial intelligence (AI) offers powerful tools to streamline decision-making within DAOs. AI-driven proposal filtering can prioritize high-quality initiatives while mitigating spam or low-value proposals. AI-powered treasury management using smart contracts  can optimize fund allocation and minimize human bias.

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• Cross-Chain DAOs & Interoperability: As blockchain ecosystems become more interconnected, DAOs require cross-chain functionality to manage assets and governance across multiple networks. Currently, many DAOs are limited to single blockchains, restricting their flexibility. However, interoperability solutions such as LayerZero, Cosmos’ IBC (Inter-Blockchain Communication Protocol), and Polkadot’s XCM (Cross-Consensus Messaging) are enabling seamless interaction across different ecosystems. Cross-chain DAOs can hold assets on various blockchains, participate in multi-ecosystem governance, and leverage liquidity from various DeFi platforms, enhancing their resilience and versatility.

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• DAOs & Decentralized Physical Infrastructure (DePIN): Decentralized Physical Infrastructure Networks (DePIN) are empowering DAOs to manage real-world infrastructure projects in a decentralized manner. Instead of relying on traditional corporations, communities can collectively finance, build, and maintain critical projects such as wireless networks (e.g., Helium Network), renewable energy grids, and decentralized cloud storage platforms (e.g., Filecoin, Akash Network). DAOs governing DePIN initiatives distribute ownership and governance rights among contributors, ensuring fairer and more efficient resource management.

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• Empowering Citizens & Consumers: Traditional organizations often centralize  decision-making in the hands of a few executives or policymakers, limiting grassroots influence. DAOs provide a more inclusive and transparent governance, allowing people to directly engage in decisions affecting them. This paves way for  worker-owned DAOs, where employees shape business operations, or consumer-driven DAOs, where customers influence product development and policies. By encouraging direct participation, DAOs can inspire greater civic engagement and people may start to care more and actually fight for better systems!

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The future of DAOs reaches far beyond digital governance. They’re about fairness, giving back to the people that help build them. Rather than relying solely on central authorities, who may not always act in the public’s best interest, DAOs empower communities to work together and create their own solutions. 

There’s still undoubtedly still a long way for DAOs to go. Although, just spreading the idea of it can help give the little guy a fighting chance. 

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