Introduction to DAOs and the advantages of building a DAO on Celo.
Hello Developers 🌱
This article gives a brief overview of DAOs and the advantages of building a DAO on Celo. Throughout this article, we’ll look at some of the popular types of DAOs and then look at what benefits Celo brings to the DAO ecosystem.
- What is a DAO?
- Types of DAOs
- Why build a DAO on Celo?
Let’s go! 🚀
✅ What is a DAO?
From building Pyramids to running a multinational Corporation, “Coordination” has done marvels for humans. DAO is the latest attempt to create an efficient solution for this problem using technology.
Think of “co-operatives” where a bunch of individuals aim towards a common purpose and create value. Now managing the ownership in this organization and getting every stakeholder’s views on every crucial decision can be difficult, especially without a central intermediary.
If your community is based on the internet, forget about protecting the treasury of this community.
What Companies were in 1940 is similar to DAO in 2020
DAO is a new framework to manage large-scale human coordination, which can be loosely explained as a “group chat with a shared bank account”. They are virtual entities with a specific set of members/ shareholders who have the right to spend the entity’s funds(Treasury) only with consensus.
Smart Contracts and Public Blockchain like Ethereum, Celo are being used to provide an ecosystem for these DAOs to survive. DAOs are meant to be fundamentally transparent, with a straightforward governance process and paths to establish consensus.
DAOs can solve current economic issues
This method of forming an organization can also help reduce the wealth inequality gap. The hard truth is that we have just modernized slavery in the form of high-paying jobs with employee protection schemes. Still, these labour and wages are not an optimal solution to sustainable wealth.
Asset Ownership and Capital Access are the keys to success here.
Simply put, Capital > labour.
With web3 being a core pillar for ownership, DAOs obey the same by distributing their ownership token or governance token to the contributors.
Together, these contributors work for the common goal with utmost transparency to create wealth in the DAO and, in turn, for themselves. The next evolutionary step is to build software that is operated, funded and owned by the users.
✅ Types of DAOs
There are many categories of DAOs solving problems with different techniques. One thing common across this landscape is the tendency for constituents to act like owners and the expectation of radical transparency.
Decentralized Exchanges (Dex), and Decentralized Finance (Defi)are the most noticeable protocols in the web3 space. It’s a popular practice to govern these protocols with DAO methodologies to bring the power back into the hands of users.
MakerDAO, Sushi, Uniswap, and Compound are some leading examples.
The aim here is to build a robust community. It’s not so different from online hangouts, but with an extra sense of self-governance and ownership. Members often organize In-Real meetups for the community.
Example DAOs in this category include Friends with Benefits(FWB), Seed Club, CabinDAO, and Bright Moments.
These organizations aggregate the capital and Investors for deployment. The aim revolves around increased returns in a democratic fashion. Every investor has their share of rights with the help of DAO tokens, which are used to create new Investment proposals and vote on those proposals.
The LAO is a pioneer in the space and have grown into multiple entities, including Flamingo, Neptune, and MetaCartel.
Unlike Investor DAO, where profit is the motivation, Collector DAOs orient themselves to unite contributors around certain assets or collectibles, preferably NFTs. These DAOs generally do not aim to profit from these investments but rather provide institutional longevity and support, often bearing the role of curators in the long run.
Example: SquiggleDAO, MeebitsDAO, PleasrDAO, NounsDAO
These DAO produce public content, often collaboratively, and distribute the rewards across the group. Stakeholders decide on governance, topics to cover, managing resources, etc.
Examples include Forefront, Bankless, and DarkStar.
DAOs exist on a broad spectrum of Decentralization and Autonomy depending on their needs. Sometimes, it makes more sense to give the organization some centralized leadership at the infancy stage, while decentralization should be adopted for large organizations to prevent the accumulation of power in the wrong hands.
Your DAO might be a brand new concept, and that is okay; just make sure that you find a community that is enthusiastic about the common vision.
✅ Why build a DAO on Celo?
Celo is a user-focused blockchain with the goal to provide prosperity for everyone. It offers a set of user-centric functionalities focused on bringing blockchain technology into the hands of mobile device users.
DAOs and other Dapps can use the following advantages of Celo when building their Web3 projects.
Celo is a Mobile-First Blockchain with an ultra-light client for low-end mobile devices. This technological advancement can help bring the concept of decentralization in DAOs to a much larger scale than it currently is. Setting up a DAO, managing the tasks, and getting push notifications can be much easier with Celo with its mobile-first strategy.
Celo’s Proof-of-Stake mechanism will help develop DAO tooling without worrying about carbon footprint. Celo also aims to have a reserve of Natural-backed assets, which can help in establishing environmentally-concerned DAOs.
One major roadblock in adopting cryptocurrency as money is its high price volatility, making it harder to adopt as a treasury. Celo provides stablecoins like cUSD, cEUR, and cREAL, which can provide a stable way of maintaining the DAO Treasuries.
Public blockchains are permissionless by nature, making it difficult for some dapps that need to know about their users. Celo’s Identity Protocol allows users to associate their phone number with one or more addresses on celo Network helping them find each other easily.
Socially-oriented DAOs, where the rule is 1 member = 1 vote can also leverage this functionality to know their user's individuality to some extent.
Celo is EVM (Ethereum Virtual Machine) compatible, making it easier for solidity developers to switch chains to Celo. It is also easier to deploy Ethereum DAO Tools on Celo by simply adding the chain in your exiting dapps or forking the project and deploying it on Celo.
✅ Congratulations 🎉
That’s a wrap on our today’s topic “Getting Started with DAOs on Celo”.
We have learned about what are DAOs and why are they important, which is heavily inspired by DAOs: absorbing the internet.
Then we explored some types of DAOs with popular examples. Although every DAO can be unique on its own we have repetitive templates for which tooling can be developed.
We also covered the advantages of building your DAO on Celo. Head on to Celo Discord and connect with the DAO community using the DAOs channel.
If you want to start your own DAO you can either start from the Celo Developer Guide or wait for the next post of this series exploring DAO tools.