HOW TO SET UP A DECENTRALISED AUTONOMOUS ORGANISATION — 3 STEPS YOU CAN USE

Every now and then, there is a development of new trends in the blockchain and crypto space. This development opens up many exciting possibilities, with DeFi becoming more prominent. In the same regard, we may see the adoption of new tools to support the rapid growth of Defi solutions.

DAO is a good reference of how technology improvements can help with DeFi governance. They are unique internet-based organizations that give community members governance rights. The function of DAOs has been in talks as interest in decentralized finance soars high.

This article will explain how to set up a DAO. But first.

What is DAO?

Before you take this dive. It is crucial to know there is a difference between DAO — An internet-native organization. And The DAO — a 2016 project that eventually failed, dividing the Ethereum network significantly.

As previously stated. a DAO is a structure in which members make choices from the bottom up. You can join a DAO, with the most popular method being holding a token. Smart contracts, an essential bit of code that executes automatically when a set of standards are met, are used by DAOs. Smart contracts are now used on different networks — Ethereum was the first.

How to set up a DAO?

Create a smart contract: You are not serious about establishing a DAO until you get a smart contract. A Developer or group of developers can create a smart contract depending on the DAO agreement. This contract can only be amended by the rules specified through the governance system. As a result, developers must thoroughly test the contracts to ensure core aspects are not missed.

Funding: After the developer or group of developers create the smart contracts. The DAO must take steps to figure out how to get financing and implement governance. In achieving this goal. Tokens are usually sold to raise money. Also, these tokens secured holders voting rights in the DAO.

Deployment: After doing all the essential processes. The DAO must be launched on the blockchain. After the launch, a power shift occurs from the developers to the Stake Holders. Stakeholders get in control. Decisions about the organization’s future will be taken care of by the stakes holders. The primary individuals who developed the smart contracts will now have zero influence over the project than other stakeholders.

Benefit of DAO

DAOs are structured so that members do not have a reason to “trust” one another. Members can be complete strangers. Participants either meet or do not fulfill the smart contract’s requirements. The contract conditions and all participant actions are published in code on the blockchain, making the information public and permanent.

Drawback of DAO

Notwithstanding, today’s DAOs are neither completely decentralized nor public. It still relies on members trusting the set of individuals that designed the DAO and its goals and fundamental principles. That set of individuals must also be charged to choose an appropriate governance style.