Our DeFi experts demystify and explain decentralized finance, how it works, and how to capitalize on its growth potential.
Daos8 Types of DAOs You Can Create Using MoralisDAOs, or decentralized autonomous organizations, are one of the most important cornerstones of decentralized projects. With them, the control of a project is taken away from centralized institutions and individuals, and is then given in the hands of the users. This is because every member of a DAO has at least some power in the decision-making process of a project, allowing them to participate in the project by voting and proposing new features. However, not all DAOs are created equal, as there are many different types of DAOs that can be created using Moralis—a platform for creating and managing decentralized organizations. Moralis is one of the most popular services that allow teams to create a decentralized autonomous organization with any blockchain features, like smart contracts or dApps. So, let's take a look at the types of DAOs you can create with Moralis. » Learn all about creating DAO smart contracts A Quick Look at the Types of DAOs You Can Create Using Moralis Protocol DAOsVenture DAOsGrant DAOsSocial DAOsPhilanthropy DAOsCollector DAOsMedia DAOsSubDAOs 1. Protocol DAOs Protocol DAOs are decentralized autonomous organizations designed to facilitate the implementation of a protocol (a network with a specific set of rules on how data is transmitted). These DAOs are typically used to oversee and maintain projects such as open-source blockchain networks, stablecoins, and other protocols that rely on distributed ledgers. With a protocol DAO, users can vote on upgrades and changes to the project without requiring any third-party intermediaries. There are many protocol DAOs in the blockchain space right now, but the most popular ones are financial protocols like Aave, UniSwap, and SushiSwap. 2. Venture DAOs Venture DAOs are decentralized autonomous organizations made to facilitate venture capital projects. With a venture DAO, teams can manage their funds and business decisions in a secure, transparent way by leveraging smart contracts to automate the process. This ensures that all investors’ funds are distributed and managed accordingly while also allowing users to participate in the decision-making process by voting. It's worth noting that venture DAOs aren't incredibly popular, as investors still haven't caught up on the potential use cases of blockchain technology in venture capitalism and funding. Some examples of venture DAOs include Bessemer DAO and Krause House DAO. 3. Grant DAOs Grant DAOs are decentralized autonomous organizations designed to provide grants for projects. This type of DAO allows users to create and fund projects with the support of a larger community by voting on proposals. Through this process, members can decide which projects and startups should receive funding, allowing them to keep track of how funds are being used. In the majority of cases, this type of DAO is ideal for open-source projects, but in some cases, it could also be used for philanthropic initiatives (we'll further discuss philanthropic DAOs below). A key aspect to point out is that a grand DAO can effectively be a part of a larger decentralized autonomous organization. An example of a grant DAO is the Aave Grants DAO, which is a SubDAO of Aave's Protocol DAO (more on SubDAOs later). 4. Social DAOs As you can probably already guess, social DAOs are decentralized autonomous organizations designed to create and manage social networks. This type of DAO allows users to create a platform where they can interact with one another, share content, and discuss ideas in an open and secure environment. With a social DAO, users can control their own data while also preventing malicious actors from taking advantage of the network. And unlike traditional social networks, no central authority will be able to oversee the data of the users, allowing for a much higher level of privacy and security. Recently, the number of social DAOs appearing in the space has been drastically rising. The most popular example of a social DAO is the Bored Apes Yach Club, which is made up of people who own Bored Ape NFTs. » Discover all about the advantages and disadvantages of DAOs 5. Philanthropy DAOs Philanthropy DAOs are decentralized autonomous organizations developed to facilitate charitable projects. Just like with any DAO, users can vote on proposals and direct funds to support different philanthropic causes. However, unlike other types of DAOs which serve to benefit the users, these DAOs are made purely for charitable reasons. The benefit of using a DAO for philanthropic causes rather than a centralized organization (like the Red Cross) is that a DAO also allows for much greater transparency. This means better transparency when it comes to tracking the use of funds, effectively ensuring that money isn’t being misused. Additionally, philanthropy DAOs can help foster greater collaboration between individuals and organizations in order to further their causes. Some of the most popular philanthropic DAOs include Charity DAO—an organization that manages fundraisers and campaigns; and Big Green DAO—a non-profit organization that organizes grantmaking for food in the US. 6. Collector DAOs Collector DAOs are decentralized autonomous organizations created to facilitate the buying and selling of rare digital collectibles (often in the form of an NFT). This type of DAO allows users to securely buy and sell these assets without requiring any third-party help. Additionally, members can vote on proposals related to the buying and selling of these assets, ensuring that all transactions are secure and transparent. Typical examples of collector DAOs include Arts DAO and Davinci DAO, which both are used as funding projects for collectors looking to invest in NFTs and other forms of digital art. 7. Media DAOs Media DAOs are decentralized autonomous organizations designed to support the creation of media-related projects. With a media DAO, users can vote on proposals related to film and TV projects, music, art, and other types of creative works. By creating a transparent and secure platform for these projects, users can ensure that their ideas are properly funded and brought to life, while the profits are kept to the users instead of corporate organizations. Additionally, members can benefit from the collective knowledge of the entire community when participating in such projects. For example, BanklessDAO is one of the most popular media DAOs out there, seeking to drive the adoption of decentralized finance by offering educational material and coordinating media. 8. SubDAOs SubDAOs are decentralized autonomous organizations that effectively serve as an extension of a larger DAO. Namely, they allow teams to create and manage their own projects while remaining connected to the main DAO. In the majority of cases, this type of DAO is used by businesses looking to decentralize part of their operations without completely restructuring their entire organization. SubDAOs provide a secure and transparent platform for users to collaborate while still allowing the main organization to maintain control over the project. A typical example of a SubDAO is the one we mentioned above—Aave's Grants DAO. It counts as a SubDAO because it's a part of a larger ecosystem (Aave's decentralized protocol), effectively extending it and offering different features. Final Words In conclusion, Moralis allows users to create a variety of different decentralized autonomous organizations (DAOs) depending on their individual needs. From venture DAOs that facilitate fund management to media DAOs that support creative projects, users can create a variety of different DAOs to best suit their needs. With Moralis, users have the power to create secure and transparent DAOs that will help them reach their goals. » Read more about how to start a DAO
Daos7 Best Crypto DAO Projects to Join in 2023The DeFi space (decentralized finance) is growing at a rapid pace, despite the recent downtrend of the crypto market. Namely, decentralized finance offers many features that TradFi (traditional finance) doesn't have, including the free borrowing and lending of assets, as well as no intermediaries to oversee the process. Thanks to this rise of DeFi and the features it offers, many DAO projects (decentralized autonomous organizations) decided to take their ideas to the market and offer them to the people. Most of these DAO projects have unique features that we haven't seen in finance thus far, making them attractive to both end-users and investors. Now, without further ado, let's go over the best DAO projects you can join in 2023 and see what they're about. » Wondering if a DAO is profitable? Find out how DAOs make money 1. Aave (AAVE) Aave is a DeFi lending protocol founded in November 2017 that's running on the Ethereum blockchain. Namely, Aave is a DAO project that's managed entirely by its community, meaning that everyone can participate in governing the project. Aave can do this thanks to the distributed network of computers managing it, meaning that it's completely run by the code behind it. So, why should you invest in Aave? Well, Aave is one of the most reputable and reliable DAO projects in the DeFi space. It also offers features like lending and borrowing a wide variety of classic cryptocurrencies and stablecoins, including USDT, ETH, and DAI. Of course, the APY differs from asset to asset, though you can expect to have some of the best and most reliable returns on the market with Aave. If you're looking to invest in Aave, then you can buy AAVE tokens, which are the native cryptocurrency of the ecosystem. 2. MakerDAO (MKR) MakerDAO is one of the oldest decentralized autonomous organizations, being built in 2014 on the Ethereum blockchain. Since it's been successfully running for nearly a decade now, it's not too difficult to see why people trust the project for its features and services. Additionally, the history of MakerDAO is quite reputable and stable, so the future is likely to continue in that direction too. Namely, MakerDAO offers borrowing, staking, and lending entirely through the use of smart contracts, allowing you to earn passive income in a reliable way. However, unlike the majority of DAO projects out there, MakerDAO also has its own stablecoin called DAI. And unlike many "stablecoins," DAI has actually proven to be stable, keeping its $1 peg since its launch in December 2017. So, if you'd like to invest in MakerDAO, you can buy MKR coins, which are used to govern and manage the project. 3. Tamadoge (TAMA) Being one of the most popular projects in the P2E space (Play to Earn), Tamadoge is a metaverse game where its users can "breed" virtual dogs as NFTs while competing for crypto prizes. Even though the whole memecoin space started off as a joke, this project quickly gained a lot of traction among the P2E community, gathering the attention of investors too. Regarding the inner workings of the system, it's a protocol that's launched on the Ethereum blockchain and is governed by its native cryptocurrency TAMA. As you can already guess, the TAMA currency will be used to buy and sell NFTs on the network as well as user interaction. As of late 2022, the coin has a price of $0.024, with an all-time high of $0.20. So, if the coin returns to its ATH again, investors are looking at a potential 10x return on their investment. 4. DeFi Swap (DEFC) DeFi Swap is a DEX (decentralized exchange) that's focused on providing users with the best possible liquidity for their assets. Unlike the other DAO projects which are running on Ethereum, this one is powered by the Binance Smart Chain (BSC) and offers its services through the use of smart contracts. It's worth mentioning that DeFi Swap is one of the most popular exchanges running on BSC, making it a potentially good investment. What makes DeFi Swap attractive to investors and users is the fact that it offers one of the lowest trading fees on the market, having them at only 0.03%. Furthermore, DeFi Swap is also a DAO project, meaning that it's community-driven and decentralized. So, if you're looking to invest in this project, consider buying some DEFC (DeFi Coin). 5. Aragon (ANT) Unlike the other projects on this list that offer traditional DeFi services, Aragon is a decentralized organization that's focused on providing users with the tools they need to manage their own DAO. In simple terms, Aragon is DAO that's here to help you create and manage your own DAO. Namely, it offers a wide variety of features, including project management, voting, and even fundraising. The project was built on the Ethereum blockchain and is managed by its own native cryptocurrency ANT. As you can already guess, the ANT tokens are a quite solid investment, and they're primarily used to fuel the network. On the other hand, they can also be staked by the users in order to earn a passive income. Currently, one ANT token is worth $1.86, with an all-time high of $14.12. So, if the coin returns to its ATH again, investors are looking at a potential 650% return on their investment. 6. Compound (COMP) Compound is a DeFi protocol that allows users to earn interest on their cryptocurrency holdings. The project was launched in 2018 on the Ethereum blockchain and has been growing steadily ever since. In terms of features, Compound offers a wide range of them, including borrowing, lending, and even staking. However, what makes Compound unique is the fact that it uses complex algorithms to calculate interest rates, making sure that you always get the best one. Since Compound is a decentralized autonomous organization, anyone can contribute to the project and help it grow. Regarding the native cryptocurrency of the Compound protocol called COMP, it is primarily used to fuel the network and to power the smart contracts. COMP tokens are also a quite solid investment, as they offer a wide range of benefits to their holders, like better yearly returns and voting. 7. SushiSwap (SUSHI) SushiSwap is a DEX (decentralized exchange) that was built as an improvement of the popular Uniswap protocol. The project was launched in 2020 on the BSC blockchain and has been growing steadily ever since. In terms of features, SushiSwap offers a wide range of them, including borrowing, lending, staking, and even farming. However, what makes SushiSwap unique is the fact that it uses a different approach to liquidity provision, which results in lower fees for the users. What makes SushiSwap attractive to investors and users is the fact that it offers one of the lowest trading fees on the market, having them at only 0.03%. Furthermore, SushiSwap is also a DAO project, meaning that it's community-driven and decentralized. So, if you're looking to invest in this project, consider buying some SUSHI tokens. Final Words While there are a lot of DAO projects to choose from on the market, knowing how to choose the best one goes a long way. In summary, we would recommend choosing between the following three: AAVE - Best Overall SushiSwap - Best Eco-Friendly Due to Low FeesAragon - Best Potential In The Future » Ready to get started with DAOs? Learn all about how to start a DAO
DaosDAO Taxation: Everything Crypto Investors Need to KnowDecentralized autonomous organization (DAO) taxation is a rather unique subject to tackle. While the IRS requires taxes on cryptocurrency to be filed and paid, there are no clear rules yet concerning DAOs. Many cryptocurrency projects have adopted the DAO framework in recent years, causing quite a few investors to fumble around with their taxes. How exactly should one report taxes on their DAO tokens, anyway? In this guide, we'll go into a thorough but easy-to-understand discussion of how DAOs are taxed and what investors should look out for in terms of taxable events. » Haven't started a DAO yet? Learn more with our step-by-step guide Criteria for Taxation of DAO Payments Even though a DAO doesn't have a physical presence, it can be seen as an entity for tax purposes. In the United States, for instance, tax regulations stipulate that contractual arrangements engaged in trade, business, venture, or financial operation that affords them profits, may create a separate entity. Since a DAO is created by investors who vote on investment proposals, contribute funds for investment, and share the profits, it may be considered a separate tax entity. However, DAOs not created for profit, such as one formed to raise funds to buy a copy of the U.S. Constitution, are not considered taxable entities. Now, if a DAO has been established as its own tax entity, the next question is: What category does this DAO fall into for taxation purposes? Let’s take a look: Corporations vs. Partnerships The primary types of business classifications are corporations and partnerships. If a business entity has two or more members who share unlimited liability, the default classification is a partnership. In contrast, a corporation is a separate legal entity with shareholders not personally liable for their business' debts or obligations. Domestic vs. Foreign Another criterion to consider is if the DAO is domestic or foreign. The term "domestic" means created or established in the U.S. or under U.S. law, while "foreign" refers to any partnership or corporation outside the U.S. Note that these classifications are just potential factors that may affect how DAOs are taxed in the future. Currently, only the overarching tax rules on cryptocurrency are strictly implemented by the IRS. These include taxable gains and losses that may come from: Selling a crypto asset for fiat moneyExchanging cryptocurrency for goods, services, or propertyTrading one crypto asset for another type of crypto assetReceiving cryptocurrency as payment for goods or servicesObtaining a new crypto asset resulting from a hard forkAcquiring a new crypto asset from mining or stakingReceiving cryptocurrency from an airdrop » Learn all about the advantages and disadvantages of DAOs How DAO Payments Are Taxed The IRS has yet to release clear guidance on how DAOs will be taxed. However, they will likely be taxed much like traditional corporations moving forward — with a few adjustments. The United States already has a legal precedent for this. In 2017, during a discussion of the DAOs governance tokens by the SEC, it was ruled that these types of tokens were offered by a "virtual organization" and were, therefore, subject to securities law. Currently, however, there is no straightforward way to report cryptocurrency taxes on the profits that DAOs make from fees, investment strategies, or other sources. That said, if a DAO's blockchain sends you crypto in exchange for goods or services, those assets may be taxed as income in accordance with IRS rules. For example, if a DAO paid an artist in crypto, they would need to file taxes for that income in the state and/or country where they performed the work. Short & Long-Term Capital Gains Tax When you sell a long-term crypto asset for more money than what you originally paid, the surplus is called a capital gain. How much tax you'll pay on your capital gain depends on the duration of your ownership of the asset before you sell it. Capital gains are classified as either long-term or short-term and taxed differently. Profits you make off of selling an asset are taxable, especially if you day trade online. Short-term gains taxes are equal to income taxes and are paid if the crypto assets were owned for 365 days or less. If you sell an asset you've held for longer than a year, any profit is considered a long-term capital gain. The tax rate on these gains is 0%, 15%, or 20%, depending on your total income. Tax Treatment of Governance Tokens & NFTs If you receive governance tokens or non-fungible tokens (NFTs) from a DAO launch (or as an incentive/reward), you'll need to file them under your crypto taxes as regular income. In addition, if you sell your governance tokens or NFTs in the future, any profit you make will be subject to crypto capital gains tax. Royalties or commissions from NFT resales are also considered income – but there are no clear guidelines on taxing this at the moment. Technically, reselling an NFT would be a taxable sale of property, much like other cryptocurrencies considered by the tax code as property. Will DAOs Be Taxed in the Future? The jury is still out on how DAOs will be taxed in the future, particularly when it comes to identifying who will be responsible for the entity’s taxes and where those taxes are to be paid. In the U.S., pass-through entity tax has been suggested as a possible model for taxing DAOs in the future. Pass-through entities are business organizations in which the owners and/or members file the 1040s and pay individual income taxes on their share of any profits. This includes partnerships (including some limited liability companies ) and S-corporations. Although DAOs are not primarily for profit, should they be taxed as pass-through entities, members are liable to report the DAO's earnings from investments, fees, etc., while filing their personal income tax returns even if the said income hadn't been distributed yet. » Discover how to find new DAO projects Final Words Despite the lack of clear tax guidelines for DAOs, you must file your cryptocurrency taxes accurately. Whether you are a member of a DAO or simply invested in one, it's crucial to know how digital currencies are taxed and what reporting requirements apply. Careful planning and record-keeping can help you stay on top of your crypto taxes and minimize your tax burden. » Ready to get started with DAOs? Check out the best crypto DAO Projects to invest in
Daos5 Ways DAO Smart Contracts Benefit NFTsThe main reason NFTs are a hot topic in the crypto world for a while now is their elegant use of smart contracts. Namely, it is precisely smart contracts that give NFTs their special and unique ability to be stored and traded on blockchains like Ethereum without the need for mediation. On the other hand, smart contracts are also the culprits behind the recent rise of DAOs (decentralized autonomous organizations). DAOs allow for the effective use of smart contracts that allows groups of people to cooperate on a blockchain project. However, unlike traditional organizations, DAOs are not controlled by a central authority but rather by the code of their smart contracts, which makes them much more efficient and transparent than traditional organizations. Thus, smart contracts are precisely the bridge that connects NFTs and DAOs. In this article, we will discuss how the intelligent use of smart contracts can allow DAOs to support the growth of NFTs. » New to smart contracts? Here's everything you need to know about creating a DAO smart contract 1. DAOs Are Communities for NFTs One of the biggest benefits that DAOs can provide to NFTs is that they can effectively create and maintain a community for the NFT holders. As decentralized organizations are run by their members, the NFT holders within a DAO can join forces with other like-minded individuals to help grow and develop the ecosystem collectively. For example, an NFT holder could join a DAO that is focused on developing new applications for NFTs. This would allow them to be a part of the community, listen to new & innovative ideas, and expand their areas of interest, which ultimately helps shape the future of NFTs and the blockchain. Moreover, the DAO will receive valuable feedback from an actual holder, which will prove to be invaluably beneficial in the long term. 2. DAOs Can Help Manage and Fund NFT Projects Another great thing about DAOs is that they can help manage and fund all kinds of projects, including NFT projects. Namely, DAO members do this by voting on proposals and allocating funds to the projects that they believe in, which is a much more efficient way of funding projects than the traditional method of going through VCs or other investors. In addition to this, DAOs can also help manage NFT projects by providing a clear & precise structure for them. This is something that can be especially beneficial for larger projects that have many moving parts. Having a DAO in place can help keep everything organized and running smoothly. 3. DAOs Help Protect the Ownership of NFTs and Ensure That NFTs Are Used for Their Intended Purpose A benefit of using DAOs with NFTs that's worth mentioning is that they can help protect the ownership of the NFTs and ensure that everything is running smoothly. This is because DAOs can hold the NFTs in a trustless manner, which means that the owners do not have to worry about losing their NFTs to hacks or scams. Since DAOs use smart contracts to store and manage NFTs, even if the DAO itself is hacked, the NFTs will still be safe. Simultaneously, smart contracts also give DAOs the ability to enforce the rules that are written into their smart contracts. So, if an NFT is meant to be used for a specific purpose, the DAO can make sure that it is only traded or sold for that purpose. Let's take a look at a simple example. If an NFT is meant to represent a piece of digital art, the DAO can make sure that it is only used for that purpose and not sold for other uses such as gambling or speculation. This is all thanks to smart contracts and the notion that “code is law”. 4. DAOs Can Help Increase the Liquidity of NFTs and Reduce the Cost of Transactions DAOs can trade or sell NFTs on behalf of their members (if it's needed). This is a benefit that doesn’t apply only to the members of that DAO, but to the entire blockchain ecosystem because it increases the liquidity of the NFTs. For example, if an NFT owner wants to sell their NFT but cannot find a buyer, the DAO can help by selling the NFT on their behalf. This allows NFT owners to liquidity their assets without having to go through exchanges and all the hassles that come with them. Of course, this will be entirely processed by a smart contract, so you can rest assured that all parties will be fairly treated. In this regard, DAOs can pool together resources and negotiate better deals with providers such as wallets and exchanges, which will ultimately reduce transaction costs. For example, if a group of potential investors wants to buy an NFT but doesn’t have enough ETH to cover the transaction fees, the DAO can help by pooling together the resources and paying the transaction fees on behalf of the group. 5. DAOs Are Helpful With the Marketing and Promotion of NFTs Finally, DAOs can also help with the marketing and promotion of NFTs. By using their resources, DAOs can reach larger audiences and spread the word about new and upcoming NFT projects. For example, a DAO could use its resources to create a website or social media campaign to promote an NFT project. This would help raise awareness about the project and get more people interested in it. Final Words As you can see, DAOs and NFTs go hand-in-hand. The truth is that almost every area of the NFT ecosystem can be improved with the help of DAOs, including: The management, funding, and promotion of NFT projects. The protection of the ownership of NFTs. The NFT liquidity and reduction of transaction costs. » Ready to get started with DAOs? Check out 7 best crypto DAO projects to join in 2023
DaosThe Importance of DAO Treasuries for Crypto TradingThere are quite a few ways to make money in the world of cryptocurrency, like staking, lending, and trading. Still, for the majority of people, trading is one of the most popular, exciting, and profitable ways to earn a profit on your crypto holdings. However, on the other hand, trading can also be quite risky, so traders do their best to use different types of techniques (like hedging) in order to minimize the risk. Another, not so commonly known technique used for minimizing trading risk is a DAO treasury (Decentralized Autonomous Organization). Namely, a DAO treasury is a pool of funds that are used to support operations and investments within a DAO. Today’s article will cover the importance and the benefits of using a DAO treasury for crypto trading, so stick around if you want to learn more. » Thinking of starting a DAO? Consider the advantages and disadvantages of DAOs The Role of Treasury Management in Crypto Trading In finance, the term “treasury management” refers to the process of managing an organization's financial resources to achieve its financial objectives. This includes activities like handling cash flow, managing risk, and making investments. Just like traditional organizations, the same types of treasuries apply to DAOs. So, it goes without saying that treasury management is essential, both in traditional finance and when dealing with cryptocurrencies. Crypto traders, in particular, depend on treasury management to ensure that their portfolio is properly diversified and that their funds are being used in the most efficient way possible. While there is no surefire way to guarantee a 100% success rate in the world of crypto trading, proper treasury management can certainly help tilt the odds in your favor, minimize the risk and maximize the chance of profit. Keep in mind that crypto trading can be a volatile and risky business. Without the proper guidance, it's all too easy to make bad decisions that can cost you dearly. That's why having a DAO treasury is so important. Namely, a DAO treasury is a fund that is used to support the development of a project or to pay for expenses related to the project. The fund is managed by a group of people who are elected by the community, which ensures that the fund is used wisely and in the best interests of the project. Having a DAO treasury gives crypto traders a much-needed sense of security and stability. It allows them to trade with confidence knowing that there is a team of experienced professionals looking out for the project. Without a DAO treasury, traders would be taking on unnecessary risks. DAO Treasury Management There are three main components to treasury management that all DAOs should consider when it comes to managing their funds: Diversification: The process of being invested in a variety of different assets in order to minimize risk. This is one of the most important aspects of treasury management. By investing in a variety of assets, DAOs can protect themselves from loss if the value of one asset falls. Multisignature wallets: MultiSig wallets give DAOs the ability to require multiple signatures before funds can be spent. In addition to providing an extra layer of security, they ensure everyone agrees with how the funds are being spent and protect against autocratic transactions. Reporting: Treasury management also involves keeping track of your finances and reporting on your progress. This is important for both transparency and accountability. By regularly reporting on the state of the treasury, DAO members can keep track of how the fund is being used and make sure that it is being used wisely. What Modern DAO Treasuries Look Like In the early days, most DAOs simply held all of their funds in a single Ethereum wallet and relied on the community to keep track of spending. However, as DAOs have grown more complex, they have begun to implement more sophisticated treasury management systems. Today, the vast majority of DAOs use a MultiSig wallet to safeguard funds and require multiple individuals to sign off on expenditures. Some DAOs also use dedicated software platforms to track spending and monitor budgeting. In addition, DAOs have started to experiment with new ways of managing their funds. For example, some DAOs have begun using decentralized exchanges to trade assets in an automated manner and manage risk. Others have started to use synthetic assets to hedge against volatility. All in all, modern DAOs have diversified portfolios and use a variety of different tools to manage their funds. However, they all have one thing in common—they rely on good treasury management to ensure that their projects are well-funded and that their funds are being used in the most efficient way possible. » Looking for a DAO project to invest in? Learn how to find new DAO projects Final Words Treasury management is a critical part of any successful DAO. By diversifying their portfolios and using sophisticated tools to track spending, DAOs can minimize the risk of financial losses and ensure that their projects are well-funded. Moreover, they can make sure that: Projects are run in a transparent and accountable manner. All stakeholders have a say in how the DAO's funds are spent. The DAO is able to adapt to changing market conditions. In the end, treasury management is all about giving DAOs the resources they need to thrive. By carefully managing their finances, DAOs can ensure that they have the funds they need to grow and prosper. » Wondering what you need to get started? Find out all about how to start a DAO
DaosDAO NFTs: What They Are and How They Work?A DAO NFT platform leverages the concept of NFTs and DAOs to create decentralized community-run organizations capable of making changes to existing rules and policies on the platform. These DAOs are usually originally NFT collections before integrating the DAO model into the operation. To become a member of these types of DAOs, one will need to own their native NFT, which will serve as a membership card and allow the user to vote on community proposals. Unlike regular NFT collections where the creators are fully in charge of the project, DAO-enabled NFT platforms give this power of ownership and control to the community of holders of their NFTs. These DAOs aim for democratization by redistributing the voting power of control amongst members or holders of their NFTs. The practicality of this approach ensures that every member can issue changes, give reviews, and generally play an active role in the community's future. How Do They Work? DAO NFT platforms function like regular DAOs. The only difference is that there is usually no native token; instead, we have native NFTs. As a decentralized autonomous organization (DAO), NFT-powered DAOs operate autonomously through a regulated set of rules embedded in algorithmic programs or smart contracts. Smart contracts govern the DAO, and, in combination with blockchain technology, they allow DAOs are transparent and autonomous because they use open-source blockchains that anyone can visit and inspect their code and record all financial transactions. NFT-powered DAOs mint NFTs and provide them to those willing to join the organization. Members that own more of the DAO's NFTs will also have greater voting power; this provides members of the DAO with an incentive to purchase and hold its NFTs. Are DAOs Profitable? DAOs generate funds through recurring investments from users. In the case of NFT-powered, they generate funds when members purchase NFTs. Different DAOs have different mechanisms for obtaining profits. Some DAOs operate as venture capital firms and use their community funds to invest in upcoming crypto, NFT, or other DeFi projects. If these projects become successful, they share the profits with the community members. A DAO can only be as profitable as designed. The projects they invest in, the proposals put forward by the community, and the financial savviness of those initially in charge of the DAO all play a role in determining how profitable a DAO is. In the end, the profitability of a DAO rests on the investment capabilities and visionary ideas put forward by its community. Although DAOs are not a recent concept in the blockchain ecosystem, their primary use case is practical—they unite a group of investors to push toward a common objective. This utility provides real-world merit since it simplifies the process of starting companies and removes a lot of bureaucracy. Anyone can create a DAO, build a unique selling point around the organization, attract investors by offering them membership and a chance to vote on its future, and introduce a profit-sharing mechanism. Despite this, there are still advantages and disadvantages of a DAO. DAOs have only recently been striving to make a comeback following the unfortunate hack of Genesis DAO. The space is still mostly unregulated and evolving, so eventually, most of the demerits should become a thing of the past. How to Create an NFT DAO Creating an NFT DAO should begin with designing and minting an NFT collection. This is the primary idea behind an NFT DAO—a decentralized organization that leverages NFTs to give users membership and other perks. The technical aspect will involve coding and implementing the DAOs design. You will also need to figure out how NFTs factor into membership access and voting capabilities. For instance, will 1 NFT = 1 vote? DAO creators need to understand and develop a workable structure for the proper functioning of the DAO. You can take a look at the guide to start a DAO for more details. Aside from NFT integration, other technical details involve creating and deploying the DAO's smart contracts. The smart contract must be beta tested to ensure it runs smoothly and is absent of bugs or exploitable loopholes. Then, you can deploy the project on a blockchain network. After creating smart contracts for the NFT DAO, the DAO must choose an indirect means of funding for the smooth running of the protocol governance. In this case, the DAO's NFTs will be minted and sold to raise money. How to Invest in DAO If you're looking to invest in DAO project, you can get started by following the steps below: Make a fiat deposit via an e-wallet transfer or bank transfer on a decentralized exchange of your choiceChange the fiat currencies to BUSD, USDT, or ETH (for NFTs)For regular DAOs, you can access their platform, connect your wallet and deposit the right cryptocurrency for membershipFor NFT DAOs, you will need to buy their native NFTs on a marketplace like OpenSeaYou can invest in a DAO by purchasing and holding their native tokens or becoming part of their community and earning from their revenue sharing startegy
DaosHow Can I Find New DAO Projects?DAO stands for decentralized autonomous organization. It refers to member-owned communities that function without centralized leadership. DAOs marked a major milestone in the DeFi evolution, offering a trustless solution to global collaboration, where the rules of a DAO are ingrained into its code. Everything is out in the open, which allows for full transparency. Benefits of a DAO DAOs offer many benefits that are not applicable to traditional organizations. Here are some of the advantages DAOs have over traditional organizations: Traditional organizations are hierarchical. Conversely, DAOs are democratic, as each member has an equal say in decision-making.In traditional organizations, people in higher positions can demand and implement changes at their sole discretion. In DAOs, you need to present a proposal for changes, and it is only passed if the majority of members vote in favor.A traditional organization requires intermediaries to reach a consensus and implement the decision. In DAOs, smart contracts do the job. Since they are just a set of codes, they cannot be manipulated. Therefore, they are completely unbiased.A DAO treasury is managed by the smart contract. As a result, transactions are executed automatically on approval by the community.All information regarding a DAO is public. Having said this, one should always have a balanced perspective before investing in a project, and knowledge of the advantages and disadvantages of DAOs is essential. How to Find New DAO Projects The success of DAOs like Uniswap, MakerDAO, and AssangeDAO proves that the decentralized vision of DAOs has resonated with the masses. Consequently, DAO tokens are highly speculated. They usually record a massive surge in price just months into going public. This makes it hard to join DAOs without a large initial capital. You need to get hold of DAO tokens in the early stages to profit from their growth. In this section, we will discuss some of the best ways to find new DAO projects. Search #DAO on Twitter You will find updates about hot new DAOs here. Don’t fall for fake giveaways and contests, though. Although the project is in the initial phase, it will be a good idea to analyze the community strength on Twitter, Discord, and Telegram among other social media platforms. A strong community is the backbone of a DAO. Visit the official website of the DAO Double-check if the URL is correct. Scammers create fake websites and social media pages to trap users. The website will give you an introduction to the DAO and its vision. You will also find links to the social media pages, white paper, and pitch deck of the DAO here. Analysis Analyze the vision, mission, tokenomics, revenue streams, and roadmap in-depth to understand the DAO’s market relevance and competence. Research Go through articles, videos, podcasts, and AMAs about the DAO to learn what industry experts have to say about the project. This is also a good way to discover DAO projects. Audit reports Make sure the smart contract has undergone a security audit from a reputed company. Go through the audit report to ensure that the flaws in the code have been addressed. Best DAO Projects to Join We have listed below the top DAO projects to join: 1. Protocol DAOs Protocol DAOs use governance tokens for decision-making. Here, you can make changes and updates to underlying protocols using these tokens. They are also used to reward liquidity pool contributors on DEXs. 2. Venture DAOs Venture DAOs pool and distribute funds for common causes in a trustless, transparent manner. Since the transactions are out for anyone to see and verify, they are widely received. 3. Arts and Entertainment DAOs These are groups of people tied together by their passion for arts and entertainment. They pool resources and host fun activities for the community. Media DAOs Media DAOs aim to create unbiased content without necessarily relying on advertisers for funding. They are rewarded in the native token of the DAO, instead. Collector DAOs Collector DAOs allow people to own collectibles as a group, which they can’t individually afford to buy. They can be NFTs or not. The DAO pools money and place bids at auctions. Related: How to start a DAO
DaosCreating a DAO Smart Contract: Fees, Time, and MoreSmart contracts are self-executable programs running on a blockchain network, which automatically activate upon the fulfillment of transactional requirements. These "predetermined conditions" are embedded into the code of each smart contract, and the decentralized nature of the blockchain network allows multiple participants to come to an agreement in a trustless manner. The primary aim of a smart contract is to eliminate the need for any intermediaries and serve as a stop-gap to any waste of execution time as a result of third-party involvement. How Does a Smart Contract Work? Smart contracts work following the use of a series of straightforward executions of code, which is domiciled on the blockchain. The idea behind smart contracts supposes that "when" or "if" a requirement is met, "then" the execution of one stage of the contract must have been said to have been validated and completed. Once the necessary conditions are met, the blockchain begins updating the commands from the smart contract, this validates the contract. It is also impossible to alter the agreement terms upon deploying a smart contract. This approach helps enforce trust amongst the agreeing parties. Smart contracts are akin to business rules, but the difference here is that they operate autonomously, involve multiple entities, and can transcend corporate boundaries. They provide a faster, cheaper, and more secure method of managing and executing agreements. Smart Contract Execution Fees Following the need to build a legally binding smart contract for intending parties, the question arises, who pays for smart contract execution fees? Well, simply put, you are responsible for paying the deployment fee upon launching a smart contract on a blockchain. However, other users of your smart contract will pay a fee to use your contract if they decide to use it, while the miners take the fees from the transactions, which include the "gas" cost of executing your contract. When creating a smart contract, it is important to also have a grasp of how much it costs to create a smart contract. The cost of creating a smart contract largely depends on the amount of byte code needed to run the program. It is important to have an idea of the amount of bytecode that will be used in the compiled contract. This is because, the more bytecode you make use of, the more storage you will require. Also, each byte costs 200 ETH gas. Over time, this will add up and could become a financial burden. Other factors to consider before creating a smart contract include: Gas fees You need to have an idea of what the gas fees are like and how much would be needed for the type of project you intend to run.The transaction data The transaction data All the bytecode you send as transaction data will determine the costs for non-zero bytes and for zero bytes.The code For the architect of the code to accept that the contract is running pretty well, you will require a lot of computation to generate the bytecode. This will make the construction of the smart contract expensive. How Long Does It Take to Create a Smart Contract? There is no specific time frame for smart contract creation. It all depends on the scope of the contract, its contents, and the skill of the developer. It may take between 16 seconds to 1 minute to build a fully functional smart contract and another 5 minutes for a smart contract user to begin transacting on Ethereum. The Role of Smart Contracts in a DAO A DAO isn't exactly a smart contract pe say, but smart contracts make up the backbone of its operation. "DAO stands for "Decentralized Autonomous Organization." It is an organization run by an automated program using computer codes. DAOs are accessible to anyone provided they meet the necessary requirements. The DAOs autonomous features are powered by smart contracts which help run the majority of its processes without human interference. Understanding DAOs is quite easy if it is created and managed by a community, which collectively manages its funds and projects. How to Create a DAO Smart Contract DAOs are becoming quite popular, and like any other new innovation, there are advantages and disadvantages of DAOs. However, this hasn't stopped developers from building DAOs and seeking new ways to create decentralized organizations. Starting a DAO smart contract, one can employ the services of web3 developer platforms like Moralis. This will involve 2 key steps: Setup a Moralis server This is the first step and it will involve creating a Moralis account from the sign-up page and then logging in and creating a Moralis server via the Testnet Server” option. After this, you can then access your server details and proceed to initialize Moralis.Input smart contract code After initializing Moralis, the final step is to write the code for the DAO smart contract. A DAO smart contract should contain important information on voting, polls, and conditions for participating in the DAO.
DaosDecentralized Hedge Funds: What Are They and How Do They Work?A decentralized hedge fund is a community-based investment pool, where the members/community select allocation funds instead of a hedge fund manager. It uses smart contracts that run on blockchain technology. This technology guarantees trust in a trustless environment and ensures all members participate in decision-making. Traditional hedge funds rely on a fund manager's view of the market. They mitigate market risks by appropriately diversifying investor funds. Therefore, when a traditional hedge fund attracts investors to invest their money based on market prospects and the fund manager's expertise, the manager's sole mission is to maximize profits while mitigating risks. Importantly, traditional hedge funds are centralized, and most apply the 2/20 principle. The rule assigns 2% of the earnings to expenses and 20% to the founders and fund managers. The lack of obligation for public disclosure is the root cause of such huge payouts. Besides, there is minimal supervision by the limited partners (investors) in traditional hedge funds' financial activities since their operations and profits are opaque. In other words, the law doesn't compel funds to disclose their investment operations to investors. In a decentralized hedge fund: Members/investors vote to determine market possibilities, review the result of the investment strategies and compensate themselves evenly based on their contributionsSmart contracts allocate investor funds – there are no human fund managers Blockchain-based secondary markets facilitate 24/7 trading – investors can withdraw their funds anytime How Do Decentralized Hedge Funds Work? The original vision of Satoshi Nakamoto, the pseudonymous creator of Bitcoin, was to establish decentralized finance. Thus, the financial models of the crypto market should be fully decentralized. Luckily, blockchain technology – the technology behind crypto – facilitates decentralization. Here is where a decentralized hedge fund comes in. A decentralized hedge fund is an investment vehicle of funds managed by smart contracts running on a blockchain network like traditional hedge funds. The smart contracts automatically allocate funds based on the consensus arrived from investor votes. Since decentralized hedge funds are built on blockchains, their activities are completely transparent, and the investors can view all transactions. Anyone from any part of the world can participate in these funds by connecting their digital wallets to their chosen decentralized hedge funds. Besides, decentralized funds don't have a minimum deposit apart from the one-time activation fee, further lowering the barriers to entry. Let's consider the DeFi hedge fund created by Alpha Protocol. The fund consists of cryptocurrency investors, who hold digital currencies, and quantitative strategists who leverage math and other cutting-edge techniques to generate profits from investor funds. The Alpha Protocol investors apply decentralized governance to vote for the strategists using the Alpha Protocol Token (ALP). The protocol allocates a certain amount of funds from the Alpha pool to every strategist based on voting outcomes. Eventually, the earnings are split between the strategists and the Alpha pool and sent to investors. Risks of Decentralized Hedge Funds Decentralized Autonomous Organizations (DAOs) provide many pro-competitive benefits to owners and investors, including lowering entry barriers, increased efficiencies, and minimal operational expenses. However, they also come with their fair share of risks. Regulatory Risk Decentralized hedge funds are still in their infancy stages, and most governments have not created proper laws to regulate and tax them. Legal uncertainty is a major problem for founders since they lack total control over the organization's treasury at some point in the governance adoption stage. Before joining a DAO, check how the local regulations may affect you. Unilateral Decision-Making via a Dominance of Governance Tokens The primary reason for starting a DAO is to tap into the diverse and rich experience of the community. Suppose a decentralized hedge fund issues ERC20 governance tokens, but a few individuals hold more than 50% of the tokens. In that case, these individuals may collude in what is known as a Sybil Attack. Poor Engagement from the Community The moderators won't get the much-needed feedback to forge ahead without active community participation from a DAO's main communication channels, like Twitter, Telegram, Discord, and Facebook. Decentralizing too Early Decentralized hedge funds that seek community ownership early (starting with token issuance) risk creating a speculator community instead of real users. Minus a working product, a DAO ownership is valueless, and the members will disengage. Are Decentralized Hedge Funds Profitable? Yes, decentralized hedge funds are profitable. Profits normally vary from 9-12% per month. Some hedge funds like DHF hold investor funds in stablecoins, meaning the funds are not affected by volatility that plagues the crypto market. Here are more benefits of decentralized hedge funds: 24/7 automated trading on secondary marketsLow barriers to entry as there is no minimum deposit apart from the one-time activation feeEarnings are compounded automatically if they are not withdrawnTrading fees of less than 1%Live trades displaying profits and losses are available If you want to invest in decentralized hedge funds, you should consider a few things: First, ensure that the fund you invest in is legit. Unfortunately, because of decentralization, there are multiple scams and Ponzi schemes impersonating DAOs. Therefore, Do Your Own Research (DYOR) before investing! Secondly, evaluate a fund's track record before joining. While DAOs are still new, some, like MakerDAO have been in existence for years and have track records to consider. Lastly, read the whitepaper of the hedge fund you want to invest in to ensure it aligns well with your investment goals. Some DAOs are dedicated to making short-term profits, while others have long-term visions. How to Withdraw Decentralized Hedge Fund Tokens As mentioned earlier, investors can cash out their decentralized hedge fund tokens anytime. There are two options for withdrawing DAO tokens: Transferring the DAO tokens to a secondary exchange and selling them. Splitting into an individual DAO and claiming the amount of crypto relative to your DAO holdings Bottom Line As the DeFi landscape grows, a bridge is being created between traditional financial models and the cryptocurrency world. Cryptocurrency investors require a platform to exploit the volatility of cryptocurrencies. Decentralized hedge funds act as an avenue for linking digital asset investors to community-driven hedge funds. As blockchain technology continues to gain traction, traditional hedge funds may mutate into smart contract-based commonwealths exhibiting DAO features.