All About DAOs: Decentralised Autonomous Organisations


A Decentralised Autonomous Organisation (DAO) is like ‘an Web-based group with a shared checking account’. You’ll be able to consider it as a mutual fund the place as an alternative of a central supervisor, the contributors resolve on the funding and different selections. DAOs exist solely on a blockchain and their guidelines are coded in ‘good contracts’. Since DAOs run on public blockchains, anybody can verify and confirm all of the monetary transactions made by the DAO. 

Members of a DAO do not must belief one another – they must belief the code.

My favourite DAOs are:

  • Aave
  • Compound
  • Decred
  • Maker
  • Uniswap

Table of Contents

The DAO Hack

DAOs didn’t begin off too properly. The primary-ever DAO was ‘hacked’ and in the end led to the unique Ethereum community splitting into two.

Shocked? Let’s return to 2016.

The primary DAO raised about $150 million value of Ether (ETH) by means of a token sale. However a hacker exploited a bug within the “good contract” and siphoned out all the cash!

Now, logically nothing ought to have been accomplished about this. Blockchains are ‘immutable’ and ‘censorship-resistant’ proper? However a ‘exhausting fork’ was applied. This rolled again Ethereum’s historical past to earlier than the hack.

This reallocated the hacked ETH to a special ‘good contract’ and allowed traders to withdraw their funds. The ‘purists’ hated this and that is what led to Ethereum splitting into 2 blockchains: Ethereum and Ethereum Basic. 

Aave1 aave1. AAVE

Governance Token: AAVE
Max provide: 16 million

The Aave protocol permits the lending and borrowing of crypto. Lenders deposit digital belongings into liquidity swimming pools. Debtors put up crypto collateral and take ‘flash loans’ utilizing the liquidity swimming pools.

As a token, it offers holders discounted charges and in addition serves as a governance token by giving holders a vote within the protocol’s growth.

Customers can take part within the mission’s governance course of by holding AAVE tokens and /or stkAAVE (staked AAVE).

COMP1 comp

2. Compound

Governance Token: COMP
Max provide: 10 million

Compound is a Decentralised Finance (DeFi) lending protocol that allows depositors to earn curiosity on their cryptos. It additionally permits debtors to take secured loans by depositing collateral.

The protocol distributes 2,312 COMP each day as rewards to energetic lenders and debtors. In essence, customers are likely to accrue COMP tokens as they take part within the lending and borrowing financial system of the Compound ecosystem.

Anybody can autonomously create proposals by locking 100 COMP in an tackle. The proposal can relate to modifications in:

  • The belongings’ collateral issue
  • Rate of interest fashions
  • Addition or elimination of markets
  • Different parameters utilized by the Compound protocol

A proposal is taken into account for voting if the proposer’s tackle is delegated 65,000 COMP. After a three-day voting course of, proposals with not less than 400,000 optimistic votes are queued for 2 days earlier than being applied.

DCR1 DCR

3. Decred

Governance Token: DCR
Max provide: 21 million

Decred is a blockchain that makes use of a hybrid consensus mechanism. To vote, customers ‘timelock’ their DCR to buy tickets which can be utilized each for on-chain and off-chain voting.

For on-chain voting, the protocol randomly selects 5 tickets to evaluate the newest block created by the miners. A block is finalised if not less than 3 of the 5 tickets vote that the block is legitimate. After the voting, the DCR is unlocked and returned together with the reward.

Off-chain voting is finished on the Politeia platform. This will relate to spending the platform’s treasury funds and modifications to the constitutions and insurance policies. The data, proposals, and actions are periodically anchored to the Decred blockchain.

MKR1 MKR

4. MakerDAO

Governance Token: MKR
Max provide: Limitless

MakerDAO is a decentralised organisation whereas Maker Protocol is a software program platform, that enables customers to subject and handle the DAI stablecoin. Maker (MKR) is the governance token of the MakerDAO and Maker Protocol.

MKR is minted & burnt relying on the debt standing of MakerDAO. If the monetary sources of the protocol can’t cowl its debt, new tokens are minted. If there’s a surplus, tokens are burned.

To vote on proposals customers have to personal MKR, or have it delegated to themselves. Then it’s essential create a voting contract and lock MKR tokens in it.

UNI1 UNI5. Uniswap

Governance Token: UNI
Max provide: 1 billion

Uniswap is a very fashionable decentralised buying and selling protocol for Ethereum tokens. It’s an automatic market maker and UNI is its governance token.

UNI holders collectively management:

  • Uniswap governance
  • UNI group treasury
  • The protocol price swap
  • Uniswap.eth ENS title
  • Uniswap Default Record (tokens.uniswap.eth)
  • SOCKS liquidity tokens

Future DAO Index

A crypto index is a mathematical technique for monitoring the efficiency of a bunch of crypto belongings. Refined traders use Indexes to make higher selections.

The Future DAO Index is a market capitalisation index primarily based on:
1. Aave (AAVE)
2. Compound (COMP)
3. Curve DAO Token (CRV)
4. Sprint (DASH)
5. Decred (DCR)
6. Maker (MKR)
7. SushiSwap (SUSHI)
8. Uniswap (UNI)

The bottom date of the Future DAO Index was Thursday, twenty fourth February 2022. 


 Rohas Nagpal is the writer of the Future Cash Playbook and Chief Blockchain Architect on the Wrapped Asset Undertaking. He’s additionally an novice boxer and a retired hacker. You’ll be able to observe him on LinkedIn.


Cryptocurrency is an unregulated digital foreign money, not a authorized tender and topic to market dangers. The knowledge offered within the article will not be meant to be and doesn’t represent monetary recommendation, buying and selling recommendation or another recommendation or advice of any type supplied or endorsed by NDTV. NDTV shall not be liable for any loss arising from any funding primarily based on any perceived advice, forecast or another data contained within the article. 

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