DAOs a beginners guide!!

What is a DAO

A decentralized autonomous organization (DAO) is a type of organization that is run by a smartcontract on a permissioneless blockchain.

DAOs are typically built on top of a public blockchain, which allows them to be transparent and tamper-proof.

A DAO operates on the principle of self-governance, where its members, whether individuals or asset holders, directly manage and decide on the organization's actions. These actions are carried out and recorded on the blockchain, a process referred to as onchain. Such actions encompass fund management, voting processes, and even adjustments to the DAO's governance parameters.

Crucial components of DAOs:

The community of people gathering around and working toward the mission

Differences between DAOs and Traditional Organizations

DAOs	Traditional Organizations
Member-owned communities without centralized leadership.	Usually centralised and hierarchical in nature
Voting is required by the members of the DAO for any changes to be made and implemented.	Depending on structure, changes can be demanded from a sole party, or voting may be offered.
All activities under the DAO are transparent and fully public.	Activities under the DAO are typically private, and limited to the public.
Votes tallied, and outcome implemented automatically without trusted intermediary.	If voting allowed, votes are tallied internally, and outcome of voting must be handled manually.

Different Types of DAOs

DAOs come in different categories:

Protocol DAOs: These DAOs are responsible for governing the development and operation of a decentralized protocol. For example, MakerDAO is a protocol DAO that governs the Maker protocol, which is a decentralized stablecoin system.
Service DAOs:: These DAOs provide services to other DAOs or to individuals. These DAOs utilize blockchain technology and smart contracts to streamline service provision, eliminate middlemen, and improve transparency and operational efficiency.
Investment DAOs:: These DAOs raise funds from investors and different VCs and use those funds to invest in projects. For example, CeloAfricaDAO is an investment DAO that invests in promising decentralized projects around Africa.
Community DAOs: These DAOs are formed by a community of people with a shared interest.
Venture DAOs: Venture DAOs pool resources to fund early-stage web3 firms, methods, off-chain investment, and holdings that arent accessible through standard financial channels.
Grants DAO: DAOs designed to manage existing shared assets and work towards a common goal
Alliance DAO: DAOs uniting broad coalitions to work on common issues, such as environmentalism and legal protection

These are but a few of the numerous DAO subtypes that exist. New DAO kinds will appear as the DAO ecosystem develops further.

Features of a DAO

Smart contracts: DAOs are typically powered by smart contracts, which are self-executing contracts that are stored on the blockchain.
Tokenization: DAOs often use tokens to represent ownership or membership in the DAO. Tokens can be used to stake and vote on proposals, make payments, and access services, check out this CeloAfricaDAO proposal that was voted for.
Decentralization: DAOs are designed to be decentralized, which means that they are not controlled by any single person or group. This is achieved through the use of smart contracts and tokenization.
Transparency: Publicly visible treasuries, Share learnings, successes and failures publicly
Inclusivity : Anon participants, Barriers to participation are only technical competence and initiative

Pros and Cons of DAOs

Pros	Cons
A variety of individuals come together to form one single entity	Decisions often take longer because their is a number of voting individuals
More individuals have a voice in the planning, strategy, and operations of the entity	There is often more burden to educate users as the collective voting population are diverse with varying ranges of education and knowledge.
As votes on onchain are publicly-viewable, tokenholders are naturally incentivized to act more responsibly.	More time is needed to cast votes or gather users due to the decentralized nature of the entity.
Members of a DAO may feel empowered to collaborate with like-minded individuals with similar goals within a single community.	Severe exploits such as theft of treasury reserves are possible if the DAO's security is not properly established and maintained.

DAO Tools

There are many different DAO tools available for creating and coordinating DAOs. Some of the most popular DAO tools include:

Aragon: Aragon is a platform that allows anyone to create and manage a DAO. It provides a number of features, creating proposals, voting, treasury management, and governance. Check out the Aragon platform
DAOstack: DAOstack is a platform that provides a number of tools for building and managing DAOs. It includes features such as voting, treasury management, and governance. Check out the DAOstack platform
Swarm: Swarm is a decentralized storage network that can be used to store data for DAOs. It is a peer-to-peer network that does not require any central servers. Check out the Swarm platform
The Graph: The Graph is a decentralized indexing protocol that can be used to query data from blockchains. It can be used to index data for DAOs, making it easier to access and analyze data.
Snapshot specifically manages proposals for voting by token holders, making it easy to see relevant details of the proposal and the status of the vote.

These are just but a few DAO tools you can explore. Here are more DAO tools for your use.

DAO tools can help DAOs to operate more efficiently and effectively. They can also help to improve transparency and accountability.

DAO Governance

DAO governance is the system by which decisions are made in the DAO

Voting: In a DAO, this is the most typical method of decision-making. Proposals put forth by the community are up for vote by DAO members. The proposal that receives the most votes is subsequently put into effect.
Multisig governance: DAOs do incorporate multisig governance and members who co-sign and implement the decisions arrived to by members of the DAO through voting.
Consensus: his method of governance is based on the idea that all members of the DAO must agree on a decision before it can be implemented. This can be a slow process, but it ensures that everyone in the DAO has a say in how the organization is run.

Conclusion

In conclusion, the emergence of Decentralized Autonomous Organizations (DAOs) has ushered in a new era of decentralized governance and decision-making. DAOs empower communities to collectively participate in the management and direction of organizations, leveraging blockchain technology and smart contracts to enable transparent and autonomous operations.