Your DAO Guide – The most important DAO categories defining the space

Beginner Dec 24, 2021 · 6 min read

Key Takeaways:
— DAOs are having a big moment in blockchain, thanks to their community-driven code of ethics.
— There are several different DAO categories, each one suiting a different interest, whether it’s investing, collecting art, or cultivating community and member projects via community funding.
— Because DAOs are decentralized, they eliminate the need for a central governing authority, putting the power back into the hands of the community members.
— Here, we present the most imporant DAO categories – so you can start gettgin involved in this insanely interesting development!

The crypto community is convinced that DAOs are the next big thing in blockchain, and mainstream investors are paying attention. But you may be wondering what, exactly, is a DAO and what types of DAOs are out there? Here are your most important DAO categories, explained.

WHAT ARE DAOs?

Blockchain technology is innovative and exciting; at its core lies a decentralized system that operates without a central authority. However, blockchain apps span way beyond finance, most recently being applied to decentralized governance and organizations. 

DAOs aren’t subject to central, top-down leadership by corporate leaders or other third-party decision-makers. Let’s get real; none of us likes to be told what to do by conglomerate shareholders, especially when it comes to our hard-earned money!

In a DAO, decisions are made from the ground up, governed by a community (a group of awesome people like you and me) organized around a specific set of rules all coded on the blockchain – and thus – 100% transparent and community-driven.

Very simply, DAOs are a modern version of online communities that happen to share one bank account, and where members vote to decide how funds are raised and distributed. In contrast, critical decisions of today’s financial institutions, like our banks, for example, are taken at the top of the hierarchy, often passing through several tiers of leadership before reaching our personal financial affairs. 

What is a Decentralized Autonomous Organization (DAO)?
Image credit: Liquid Blog

DAOs stand strongly against the above principle. DAOs are formed so that the people who would normally be at the bottom of the funnel (you and me) finally have a shot at sitting at the board table.

In short, in a DAO, we are the VPs, CEOs, and shareholders. As such, we determine exactly what happens within our community, by allowing an equal-opportunity-for-all voting system.

THE DIFFERENT TYPES OF DAO

There are several types of DAOs, all of which follow the community’s best wishes. And whether your passion lies in sports, music, investing, or anything in between, the right DAO will soon be out there for you.

Let’s explore the most popular DAO categories and highlight some of the innovative projects using them.

AMM (Protocol) DAOs

AMM (automated market maker) DAOs use smart contract protocols to bring decentralised financial services to users.

MakerDao is widely known to be the first-ever protocol DAO, launching the DAI stablecoin and forever changing DeFi as we know it. Currently, the MakerDAO project is one of the most successful and innovative apps on Ethereum, with almost 1000 projects integrating DAI into their own unique apps.

Maker Protocol 101 - Maker Docs

A model for DAOs across the entire crypto sphere, Maker has been able to let anyone actively take part in the global financial system, in a fully decentralized manner. If that’s not a big deal, I don’t know what is.

You might have heard some of the other heavy hitters too: SushiSwap, UniSwap, even Compound, and Aave Protocols. These DEXs (decentralized exchanges) serve as crypto exchange aggregators, meaning they are constantly searching for market liquidity from a bunch of different DEXs. In this way, traders receive lower token swap rates than they could get using just one single DEX. 

DEX’s rely on liquidity pools (LPs) funded by users who are rewarded if they add money to the LP. So when you buy into a DEX’s native governance token, you get to participate in staking to earn rewards in the form of the native token.

And what about governance? AMM DAOs typically rely on decentralized governance, by awarding native governance tokens to anyone contributing to the LP. In turn, you get to use the tokens to participate in network voting/governance.   

Grant DAOs

One of the earliest use cases of DAOs is Grants. In a Grant DAO, the community donates funds into the grant pool and collectively votes on allocating and distributing the funds. The purpose of these DAOs is to fund innovative new DeFi projects, with organizations submitting funding applications. Grant-based DAOs are practical examples that decentralized communities are more flexible in funding distribution than the more traditional institutions.

Aave Protocol is one of the most well-known DAOs using the Grants infrastructure to nurture and build its community of DeFi projects. Aave is built around a lending pool ecosystem, which means that users can either lend their own funds or borrow from the lending pools instead. A neat benefit is that community members are constantly encouraged to view and vote on the projects they believe that most deserve funding.

Traders Flock to LEND Ahead of Its 100:1 Split to AAVE: Price Up 20%
Image Credit: Medium.com

Social DAOs

Though most DAOs have their own distinct community, some are explicitly built to focus on a particular objective, such as preserving arts and culture or pursuing projects aligned with their community values. 

Friends with Benefits (FWB)  is an innovative DAO project that takes pride in leveraging the power of cultural membership. The FWB mission is to unify artists and cultural thinkers with shared values and incentives, allowing them to network and collaborate via members only events. And of course; the community is governed via its FWB social tokens. What’s interesting – as with all DAOs – is that the value of the tokens rises the better the community does as a whole. So incentives are aligned for members to work and create together.

Friends With Benefits
Image Credit: FWB.com

Collector DAOs

PleasrDAO has been making big moves with acquiring cultural collectibles for its community, distributing ownership of various high-ticket digital assets equally among all community members. Its very first purchase was the notorious (there is only one copy in existence) Wu Tang Clan album, Once Upon a Time in Shaolin – a move that put this DAO in the headlines and firmly on the map. Not bad.

Wu-Tang Clan's $2 Million LP 'Once Upon a Time in Shaolin' is Currently for  Sale on eBay
Once Upon a Time in Shaolin
Image Credit: The Guardian.com

More recently, Pleasr also purchased the original Doge meme NFT for a cool $4 million, which wouldn’t have been possible had its members not pooled their money together. 

The uniqueness of what Pleasr offers lies in its dedication to the arts. Art collectors typically pool their funds together so that the community as a whole can invest in extravagent art collectibles, each member owning their fair share. As a typical DAO, it doesn’t have a central governing authority and network protocols are decided through open voting systems.

Looking at the big picture, the UVP (unique value proposition) of PleasrDAO is that it lowers the barrier to NFT investments. It lets us dream bigger, allowing an entire blue ocean of people to experience digital art and be empowered by digital ownership.

Ultimately, both FWB and Pleasr are passionate community-focused projects that remain vigilant about nurturing members’ careers. This provides a medium for brand growth. Networking remains at the core of Social DAOs; they bring fans and creators closer by organizing member-only events, which members can buy into by owning each platform’s native tokens.This brings new projects into fruition that might otherwise not have been realized without the support (and shared vision) of the community.

Keep in mind, Pleasr also falls into the category of an investment DAO, so let’s talk about that next.

Venture DAOs (investment DAOs)

This type of DAO is where you dream big to attain the impossible. A tool designed to democratize investing, these DAOs often raise hundreds of millions of dollars thanks to the rising demand for owning a portfolio we couldn’t typically invest in. 

Millennials and Gen Zers alike are most drawn to investment DAOs to make some extra cash. So if you’re wondering how your 18-year-old neighbor bought that house next to yours, it could very well be thanks to an investment DAO.

And while traditional investment firms are elitist and non-inclusive, investment DAOs are transparent and inclusive – often open to anyone, anywhere, anytime. 

Venture DAOs let us participate in the unthinkable, like investing in an entire NBA team if we want to. And that’s exactly what The Krause House is doing. This fan-governed organisation identifies itself as “a community of hoop fanatics just craey enough to buy an NBA team”. Its DAO is dedicated to basketball fans who share a single dream: bring the first fan-governed basketball team to the NBA.

The Krause House (🏀,🏀) (@KrauseHouseDAO) / Twitter
Image Credit: Twitter.com

There’s also CityDAO that bought land in Wyoming or ConstitutionDAO that was bidding in Sotheby’s auction on the constitution of the United States.

There truly is a DAO for more or less everything – the point is that they remove barriers to entry for regular people to extraordinary projects. When thousands of people pool their money into this type of DAO, it becomes possible to invest in things that are typically reserved for the upper echelon of traditional investors.

Media DAOs

It’s no secret that media platforms follow a top-down structure, producing content aligning with a central agenda – they are also paid for by advertisers, which makes you, the reader, the product.

Media DAO restructures this by allowing content to be driven by the community, rewarding content creators in the native token; and removing advertisers from the equation.

Two notable projects include Bankless Dao and Forefront. Bankless has come up with a user-friendly support platform, to help create windows of opportunity for people curious about DeFi, using media, learning channels, and culture. Similarly, ForeFront is developing a crypto education hub for its community members. Through education, Forefront wants its users to learn about social tokens in an inclusive, friendly environment, celebrating community as well as growth initiatives for incubated projects. 

Indeed, media DAOs are the ultimate incubator for content creators, who are rewarded with native tokens for the content they produce. And chances are, these types of DAOs have an incredibly disruptive potential as the new digital creator economy becomes more widespread.

Social Media DAOs

Following the same pattern as Media DAOs, Social Media DAOs are a playground for those of us who want a hub to come together and socialize without the constraints of targeted Ads and politically-charged news feeds. After all, it is 2021 and we’ve all had a rather rocky year and a half. 

Therefore, social network DAOs are stepping up to the plate, running on independent servers rather than those owned by large corporations.

Blockster is a decentralized social network that is geared toward crypto lovers around the world. Not only does the platform bring people together who share common interests, but it does so by providing an outlet that won’t steal your data, and won’t subject you to those aforementioned targeted Ads. 

The people’s voices are slowly being heard again, we are on the cusp of a transformative digital democracy that will be heralded by all of us for years to come!

Entertainment DAOs

Have you ever read a book or watched a movie and thought to yourself: I would have changed the way that ended, or, they should have written the story around a different character? Now, you can! 

Entertainment DAOs (or decentralized entertainment) open up a whole new creative outlet for the artist within all of us. We’re each talented in our own way, and I can think of no outlet more inspiring than an entertainment DAO where great minds come together to make exciting, creative projects come to life.

For instance, BAYC (Bored Ape Yacht Club) , the beloved Ape NFT project, has been developing its roadmap to include its very own DAO launch, complete with its own native governance token – check out the roadmap below. Members will be able to vote on the creative decisions the collective executes, expanding an already enormous 500 billion-dollar project. The ultimate reward would be bringing a new DeFi use-case to BAYC with the possibility of a thriving token economy.

Bored Ape Yacht Club on Twitter: "Roadmap 2.0 ☠️🦍⛵️  https://t.co/irtzOZcPLl" / Twitter
BAYC Roadmap
Image Credit: Twitter

But the fun is only just beginning. Two notable entertainment DAOs are as charming as they are community-driven. On the one hand there’s Jenkins the Valet, a BAYC NFT avatar who is the hero of the first ever community-generated book. He owns his own writing-room, in which members can vote on how his story unfolds, and get writing credits doing so.

On the other hand, as an added dose of cuteness overload, Flufworld offers its members the opportunity to fully customize 3D NFT Flufs. Flufs are a collection of unique bunnies that hop in and out of the metaverse and breed together to create Fluflets. Buying a Fluf grants you total control over its name, looks, and even character and soundtrack. You can shape a Fluf any way you like and you’re free to license it out, hopefully, for some real good money!

Great Resources

We’re pretty sure we’ve fully captured your attention with some of the amazing DAOs in this article. Here’s a few tips to get you on you way to learning more about the world of DAOs and how they could benefit you both in the short and long-term:

Forefront Newsletter

Forefrunt is the leading news aggregator for DAOs and social tokens. The outlet has features a user-friendly “Resources” section on its website, along with a Learning Center and Newsletter sign-up page. If you sign up to the Forefront Newsletter, you’d get emails dropped to your inbox each morning, keeping you one step ahead of the crowd when it comes to NFTs and new DAOs.

The Defiant

Similarly, The Defiant boasts a DeFi-centric learning outlet that explores everything from the basics of DeFi to keeping abrest of NFT news and trends on its active Youtube channel.

Matty (DCL Blogger)

Matty is social media’s NFT go-to news person. A quick follow of his twitter account and you’re part of a community of crypto geeks who love to invest in the next big project before it hits mass media and becomes, well, unaffordable.

So, DAO what?

The unique quality of a DAO is that it provides a platform where the incentives of the community, the project and all the individual members are aligned. There is no central entity carving out a profit from your efforts.

Ultimately, DAOs bond groups of people together for the greater good, providing an ecosystem that does not need, nor call-for a central governing authority. When you contribute to a project that you’re passionate about,you also have a stake in its success with all the other contributors. This success takes on many forms from financial gains to creative opportunity, community collaboration, sometimes all at the same time.

Hopefully, after reading this article, you now understand the most important DAO categoaries and can begin to experiment yourself. All you need to do to get started is connect your wallet and buy some tokens.

So dream big, invest in something great and be part of a crypto movement actively rewriting the history of human collaboration!

Knowledge is power.

Trust yourself and keep on learning! If, like us, you find DAOs fascinating, check out our informative – and highly entertaining – School of Block episode.

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