The Language of DAO
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The world of DAOs has a language all of it’s own. This can be intimidating and confusing to those just getting started. Here is a glossary of key DAO terms that you will encounter as you explore the technology.
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Introduction to DAOs: Decentralised Autonomous Organisations
The first blockchain-based cryptocurrency.
A distributed, immutable permanent record or ledger of all transactions since the beginning of a cryptocurrency coin or token.
A unit of digital currency. Coins are secured by encryption algorithms. Coins can be divisible and ownership can represent a share of the ownership and/or governance of a coin, token, protocol, company, or project.
Collateral refers to the offer of one cryptocurrency or token as ‘collateral’ to secure a borrowing a different cryptocurrency or token.
Designed for NFTs and artists, and for art in the corporeal world. Supports fractional or complete ownership of art and content. Key projects include Flamingo.
A measure of the usability and ability of a crypto product to be used as a building block in the construction of other products or domains. A protocol that is simple, powerful, and that functions well with other protocols would be considered to have high composability.
A cryptodemocracy is cryptographically-secured collective choice infrastructure on which individuals coordinate their voting and property rights. A DAO is typically an organisation based on cryptodemocracy principles.
These are blockchain assets that aren’t tradable because they represent one-of-a-kind digital items such as crypto art or crypto kitties (yes, the first NFTs).
Distributed Autonomous Organization. Can be defined as an ‘organisation’ on a blockchain, represented by a set of rules encoded as a computer program (on a blockchain) that is transparent, controlled by the organization members and not influenced by a central government. A DAO is a blockchain-based system that enables people to come together for a common purpose, and coordinate and govern themselves mediated by a set of self-executing rules deployed on a public blockchain. A DAO can be thought of as similar to a company, but all decisions are made collectively by a vote of shareholders – there is no central management or governing board.
DAO Operating Systems
Standalone platforms that allow organisations to create their own DAOs. Examples include Orca and Colony.
A decentralized Web3 software application that normally runs on a blockchain.
An instant messaging platform and the go-to place for discussing Crypto developments, trends and communities
Where a protocol or DAO distributes tokens to a community at zero cost to the recipient. Airdrops are typically closely tied to the launch of a token.
Bitcoin is the original cryptocurrency but its blockchain is limited to one use – recording transactions to do with Bitcoin. Ethereum launched in July 2015, allows for much more complexity using smart contracts, its own design protocols and its own programming language.
A cryptocurrency protocol based on the Ethereum blockchain. An ERC-20 token, by definition, uses this protocol.
A token standard that allows for the creation of unique, non-fungible tokens. It differs from ERC-20, for example, which is used to mint fungible tokens.
Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. Fiat currency is legal tender in (at least) its home jurisdiction, whereas many or most cryptocurrencies are not.
Gas Fees are the fees that Ethereum miners receive to process and validate transactions on the Ethereum blockchain. They are levied in the native token ETH and usually broken down into tiny increments called Gwei.
Governance and Governance Tokens
Governance refers to determining, maintaining, adapting and enforcing the rules of a blockchain ecosystem, product, project or DAO. It specifically refers to control and use of a governance token that carries the right to take part in governance processes.
Operate like decentralised Venture Capitalists with communities, where governance tokens are used to vote on capital allocation. Key projects include Audius Grants, MolochDAO, and more.
HODL was initially a spelling error of ‘hold’ that became a term that was embraced as an inside joke by the early adopters of Bitcoin and Ethereum. The choice or decision to ride out volatility and hold onto one’s crypto investments through bull and bear markets is called HODLing. A HODLer is a person that HODLs.
InterPlanetary File System (IPFS)
A means of storing NFT data that is considered superior to storing on an HTTP gateway URL, since the latter is tied to a specific provider. IPFS addresses allow users to find a piece of content so long as someone on the network is hosting it.
Supports capital pooling for various DeFi operations and investments. Key projects include The LAO, BitDAO, and more.
A fundamental tenet of the DeFi space is building for interoperability. This allows the ecosystem to benefit from individual progress, pushing decentralized finance continually forward. As participants build useful things, they are able to be shared and combined in new ways, reminiscent of everyone’s favourite toy, Lego. When new people dive into the Lego ‘bin’, they find individual legos or preassembled combinations of Legos that they too start building with, creating bigger and better things.
Liquidity measures the circulating supply and how much trading activity there in an exchange, economy, or network. A currency with low supply and/or circulation is said to be illiquid.
Maker, MakerDAO and DAI
Maker is a decentralized, governed financial ecosystem based on a Stablecoin called DAI. DAI is algorithmically pegged to $1 USD, with no volatility. The MakerDAO is a smart contract which runs on the Ethereum blockchain.
Can be thought of as decentralised news aggregators, that are transparent and work in the consumers’ common interest. Key projects include Mirror.
The collection of data that defines ownership and differentiates one NFT from another. Metadata can be on-chain or off-chain.
A wallet used as a gateway to NFT apps like OpenSea, Rarible, and Axie Infinity.
A virtual 3D world where people can interact. Popular blockchain-based environments that comprise the metaverse include Decentraland and The Sandbox, virtual gaming worlds where users can buy and sell land as NFTs.
A pool of cryptocurrency miners that provides mining services to a cryptocurrency network. Mining Pool operators and contributors are incentivized by a coin or token’s programmed mining rewards to support transactions and provide liquidity on a coin’s network.
A type of cryptocurrency wallet that controls access and changes to one or more Smart Contracts or tokens. Community governed projects like a DAO often require multiple signers to approve a transaction before it will be executed.
Non-Fungible Token. A unique, one-of-a-kind digital asset that’s stored on a blockchain. No other token or cryptocurrency can replace it.
Launched in 2018, OpenSea is the first and largest NFT marketplace, boasting more than four million assets and 135+ DApps.
A trusted feed of data, such as the current market prices of an asset or assets, that provides confidence to users that the data are timely, accurate, and untampered.
Think of this as a password that’s separate from usernames or email addresses. It gives you access to information or digital property on blockchains. You can always see your public address on Etherscan, but you might need to use a private key to access wallets or assets stored on the blockchain.
Proof of Stake (PoS)
Another way crypto projects verify transactions, which means you’re rewarded with tokens if you hold on to them for a certain period. Like mining, this process also requires some computing power and electricity usage.
Proof of Work (PoW)
This is one way of verifying transactions, which means miners must solve hashing problems to do their job. This method makes it difficult for hackers to crack the network since they’d need over 51% of all computing power available worldwide.
A set of developed rules or specifications that detail definitions, features, standards, limitations, and potential stipulations of a high-technology product or project. Well-known technology protocols include TCP/IP and ERC-20.
Common DAOs are decentralised autonomous organisations that use tokens as a voting metric to implement the protocol and financial changes. Among the better-known protocol DAOs are Uniswap, Maker, Yearn, Synthetic, and Curve, to name a few.
An Ethereum-compatible protocol that aims to provide cheaper, faster, and more secure payment transactions.
Talent search and recruiting for agencies and individuals. Key projects include MetaverseDAO and DaoHaus, and more.
Decentralised platform for interactions like social networking. Key projects include Seed Club, FWB, and more.
A stablecoin is a cryptocurrency that has its value pegged to the value of a stable asset. Stable coins are most commonly pegged to the US Dollar but can be pegged to other assets like gold or a basket of crypto assets
The act of depositing a cryptocurrency coin or token into a yield farming project and/or protocol, whether the access to the project is either through CeFi or DeFi methods.
A programming language for Ethereum-based crypto token smart contracts. It stands for “Secure Interoperable Datamarketplace,” which is what this language does when people design any new NFT on the blockchain, including illustrations and 3D models with metadata underneath to describe each asset’s unique history or story.
A testing network for a new coin, project, or product, or for potential improvements to an existing product or offering. A testnet can also be used by newcomers to ‘practice’ activities like staking and trading.
The DAO was the first implementation of the Decentralised Autonomous Organisation concept – a blockchain based crowdfunding project that raised the equivalent of USD $133 million in Ethereum from investors via token sale in 2016. It intended to aggregate applications for funding from blockchain based projects, and give DAO token holders the right to vote on which projects to fund.
Similar to a type of coin but with much greater functionality. Tokens can also be used as a method of payment like coins, but unlike coins, they can excel at other use cases such as the identification of a digital collectible or the democratic governance of a protocol or system.
A software application or hardware cryptocurrency wallet that can hold a variety of coins.
A person who HODLs a large amount of cryptocurrency or cryptocurrencies.
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Introduction to DAOs: Decentralised Autonomous Organisations
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