January 4, 2023

Decentralized Autonomous Organizations: Creating a DAO in 2023

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DAOs are considered the next big revolution in spheres like finance and business. But why??

The blockchain is all about decentralizing whether it’s assets, tokens, organizations, or decisions. This is when the idea and concept of Decentralized Autonomous Organizations (DAOs) came into existence.

The first DAO known simply as “The DAO” launched in 2016 and raised nearly $150M within a span of just 21 days from 11,000 investors through token sales.    

And as per reports, the total market capitalization of all DAO tokens stood at over $21 Bn in 2022. 

Let’s talk about Decentralized Autonomous Organizations and how to build a DAO in detail!

What Is a Decentralized Autonomous Organization (DAO)?

A decentralized autonomous organization (DAO) is an entity with no central leadership. The decisions are taken from the bottom up, governed by a community organized around a specific set of rules enforced on a blockchain. Members of a DAO own tokens belonging to the DAO and have the ability to cast votes on the entity’s initiatives.

Being ruled by computer code, DAOs are mainly managed through autonomous processes enabled by programmable smart contracts, helping run processes without any need for human intervention.

The core idea behind this concept is building digital entities that leverage blockchain technology and digital assets to develop a better way of managing resources, making decisions, and coordinating activities.

Why do we need DAOs?

It takes a lot of faith in the individuals you’re dealing with to start a business that involves capital and money. However, it can be difficult to trust someone you’ve only ever communicated with online.

This is where DAOs come into play. You can completely trust the DAO’s code with DAOs because it is completely transparent and verifiable by anyone.

This creates a huge number of brand-new possibilities for international cooperation and coordination.

Here’s the difference between a DAO and Traditional Organization:

The Different Types Of DAOs

Decentralized autonomous organizations’ members cooperate in accordance with blockchain-encoded regulations. There are a variety of Dao initiatives available, ranging from finance to charity if you wish to join the space.

Let’s have a look at the different types of DAOs:

Protocol DAOs

The most common type of decentralized autonomous organization is Protocol DAO. A protocol DAO, as its name suggests, concentrates on decentralized protocols for governance. Several DAOs make use of smart contract technologies to provide Defi services. The three most well-known protocol DAOs are Yearn Finances, Uniswap, and MakerDAO.

Investment DAOs

Owners of cryptocurrencies join forces in investing DAOs to fund new initiatives, businesses, and so on. They are formed using smart contracts to enforce governmental rights.

Grant DAOs

Grants DAOs have the same goal as Investment DAOs—to assist new initiatives—but these DAOs are only for DeFi projects. The most well-known DAO grants are the Uniswap Awards.

Social DAOs

Social DAOs are websites that promote social networking within the cryptocurrency industry. A well-liked social DAO is Blockster. By enabling everyone’s opinions to be heard and enabling people to discuss their shared interests, such platforms offer digital democracy.

Collector DAOs

Non-fungible token (NFT) artists rely on collector DAOs to prove ownership of their creations. One such project is PleasrDAO, a DAO formed by NFT collectors, Defi promoters, and digital producers.

Media DAOs

With the use of media DAOs, readers who own the content products can directly contribute in exchange for the native currency as payment for their labor. For instance, Forefront offers Defi enthusiasts a number of possibilities, including a crypto education center and expansion opportunities for incubated businesses.

Philanthropy DAOs

This decentralized autonomous organization is much less common than protocol DAOs. These DAOs assist social responsibility initiatives as they navigate the Web 3.0 environment. The Big Green DAO, the first Philanthropy DAO, works to increase public awareness of the importance of food production.

How do DAOs work?

The core of a DAO is its smart contract, which holds the group’s funds and establishes the organization’s rules. Once the contract has gone live on Ethereum, only a vote will allow for changes to the terms. Anything attempted and not permitted by the logic and principles of the code will fail.

Furthermore, as the smart contract also establishes the treasury, no one is permitted to use the funds without the group’s consent. DAOs are therefore not dependent on a centralized authority. Instead, decisions are made jointly by the group, and when votes are successful, payments are immediately issued.

A Glance at DAO Development

A decentralized Autonomous Organization, or DAO, is a community-led organization that is transparent and autonomous and lacks a centralized government. This implies that all project participants equally govern a DAO, and all important decisions are made by them all at once.

Many cryptocurrency wallets, which can be controlled by businesses or individuals, can be used to create a DAO. The management of assets and votes is made possible without the need to go through conventional banking and legal procedures because all actions are carried out through code.

Reason to Choose DAO Platform Development

It can be challenging to trust individuals most of the time if you are working on a project that needs finance and involves transactions with a lot of unknown parties. Your company has a number of opportunities when using a decentralized autonomous organization blockchain.

Use the DAO blockchain development to govern an organization without any central management, handle services automatically in a standardized manner, with 100% transparency for all transactions, and with mandatory voting for future changes.

Step-by-Step Process to Create a DAO

Let’s now go through all the necessary steps required to create a DAO from scratch!

1. Define the structure of the DAO Project

If you’re trying to create a DAO from scratch, your first priority should be figuring out its basic structure. Keep in mind that a decentralized structure is not a magic wand that can be used by every project or organization. You should first decide on the structure of your DAO before contacting an Ethereum professional to write codes or use DAO tools.

Before starting the significant DAO creation task, consider the following questions:

  • Which Decisions your DAO will make?
  • What goals do you hope your DAO will accomplish? What are your objectives?
  • Do you now face a problem in your sector that a DAO could help you with?
  • What technical and developer resources are required for the launch of the DAO?

2. Decide the Type of DAO

The type of DAO should be your next step after deciding on the DAO’s structure. A comprehensive list of applications for DAO as a concept is not possible because it is still in the conceptual development stage. DAOs can create a revolution in a few respectable fields, though. The backdrop is crucial for outlining your DAO’s general structure, even though your DAO won’t necessarily operate under a governmental framework of a nation-state and city stage.

3. Choose the DAO Token: Supply, Allocation, and Incentives

Do you know what token allocation is? If not, you’ll have to dig a little. You must distribute your token when you have determined your structure and type clearly. Getting this right from the start will help you raise money more effectively and win over the community and your initial supporters.

Using DAO tokens helps in:

  • Providing perks, incentives, and other benefits
  • Role of DAO voting and governance in DAO operation
  • Expanding your community’s potential for development and growth

The DAO development team must carefully select the token supply volume and distribute the tokens. To maximize business growth, it can be helpful to have a solid understanding of the DAO token’s use cases and its allocation. For users and the community, it helps build value. 

4. Create Your DAO

While startups have the option of building their systems from scratch, a number of DAO development platforms are there which have templates and tools that are offered on the market to assist them.

They can help in everything from determining the DAOs legal framework to minting DAO coin and choosing the DAOs name.

Here are some most popular Ethereum blockchain building blocks for a DAO:

  • Aragon: Aragon is a DAO toolkit with governance and dispute-resolution capabilities.
  • Syndicate: It is software that focuses on launching investment DAOs.
  • Colony: A colony is a plug-and-play DAO platform that can be set up in less than 90 seconds.
  • DAOstack: It is an open-source, technologically oriented toolset for creating a DAO.

How much does it cost to set up a DAO?

The cost to create a DAO on Ethereum isn’t fixed and changes in accordance with the ETH price. Approximately, $350 (or 0.2 ETH) is needed to set up DAO. Plus, the formation of DAO as an LLC will cost you $100 in fees.

Besides this, the cost can vary depending on any unique requirements for a project.

For instance, if you’re designing a Defi DAO, you’ll need a Defi platform with lending, staking, and borrowing features. A project with such features would typically have a budget of up to $200,000 to $240,000. (This would cover the creation of ERC-20 tokens, DEX, DeFi lending/staking, liquidity mining, wallet integration, and the setup of a liquidity protocol )


Now that you understand how to build a DAO, it’s time to execute your plan.

DAOs help establish fundamental connections with the world and like-minded individuals. Also, DAOs can be developed for charitable and non-profit causes. Altogether, the future of DAOs is bright, and investing in them is a smart choice.

If you’re looking for world-class DAO development services, get in touch with us today!

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