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How DAOs are created

This article describes how DAOs are created
Close up of server
© RMIT 2023

DAOs are often created using DAO frameworks, which are suites of smart contracts and interfaces.

Users can use the templates offered in DAO creation tools to launch and operate a DAO in just a few simple steps. DAO tools can be used in combination with each other and allow people and teams alike to create a community/organisation around a central theme, idea, project or movement of their choosing.

To create a DAO you will need to implement 3 aspects:

  1. A blockchain, and smart contracts to execute decision making
  2. A communication tool to facilitate off-chain voting and DAO management
  3. A treasury tool to manage and distribute DAO funds

DAOs will use a blockchain and its smart contracts as the execution layer for decision making. Tools like Aragon help to simplify the creation of a DAO, by providing you with smart contracts to execute on-chain decision making within your DAO. This allows you to create a DAO without the need for special coding skills. You can easily just connect your wallet and begin using one of their helpful templates to invite members, mint a native token, create and vote on proposals, and generally operate a DAO.

However, this is just for the execution layer and often a lot of coordination happens ‘off-chain’, in chat servers or using off-chain voting mechanisms. Executing decisions on-chain can be expensive due to transaction costs. Off-chain tools don’t have any transaction costs, and so are used to discuss whether a decision is worth taking to a vote on-chain. This is where tools like Snapshot, Discord and Telegram come into play as a way to discuss governance, submit proposals, and converse with each other. There are a range of helpful bots that can be used in Discord to customize your server. These range from creating voting proposals, token gating access, and notifying users of activity amongst other things.

DAOs will also have a pool of funds, known as a treasury, that will generally be used to pay for any activities voted on by the DAO. For example, upgrades, research, marketing, and operations work will often need to be paid for by the DAO. In order to manage this you need a treasury tool, the most common form of this is a multi-signature wallet such as Gnosis Safe.

Getting hands on experience

This is a brief overview of how to create your first DAO, using some of the great DAO tools in the ecosystem to get started on your journey. The best way to understand is by getting hands-on experience, so test some of these tools out and try building one yourself!

© RMIT 2023
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Introduction to DAOs: Decentralised Autonomous Organisations

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