We look about the internet differently now that Web3 is here. It promises to make things less centralized, safer, and provide people new ways to trade value. Decentralized Autonomous Organizations (DAOs) are an important part of this change. These systems are run by smart contracts and group decision-making, not by central authorities. People want online communities to be more free, open, and fair, and DAOs are changing the way they do that.
The main point of this post is “5 Ways DAOs are Changing the Future of Online Communities in Web3.” It talks about how decentralized governance, tokenized incentives, community-driven funding, open collaboration, and cross-chain interoperability all work together to produce digital ecosystems that are more creative, welcoming, and strong.
1. A decentralized government gives people more power by letting them own things instead than having a central authority.
In most cases, traditional online communities like forums, social media groups, and membership-based platforms offer one person or group all the power. There could be a company, a group of moderators, or just one person in control. This can help you determine what to do, but it also makes it easier for things to go wrong, increases the chance of censorship, and makes it harder for leaders and the community to agree on what they want.
DAOs turn this idea on its head by putting rules for doing things right into smart contracts. The blockchain keeps track of every proposal, vote, and result. This makes it easy to understand, clear, and impossible to change. DAO members have governance tokens that let them vote based on how many tokens they have, how long they’ve been a member, or other rules set out in the DAO’s bylaws. This setup makes sure that everyone in the organization has a say in things like how to spend money and how to make the code better, not just one person.
The DAO (2016) was one of the first big tests of how well decentralized government works. It made around $150 million in ETH by selling tokens. It was a big security hole, but it showed how programming can help and hurt you when you make decisions.
With Aragon, communities can set up their own DAOs and change the rules that govern them. You may easily make your own voting rules, such how many tokens you need to vote, how many people need to vote for a proposal to pass, and how long proposals last.
Experience: A lot of successful DAO founders have run businesses, managed communities, or worked with blockchain technology.
People trust DAOs more when well-known companies like OpenZeppelin do technical audits of their smart contracts.
People will trust you if you work on initiatives that are well-known, like The Graph and DAOstack.
People can trust the blockchain since it is open and the community keeps everyone up to date.
These laws not only offer people more power, but they also make sure that decisions are based on what the community thinks is important.
2. Tokens as prizes If you value what others do, they may be more loyal and involved.
The token is a big part of Web3. You can set it up to provide you voting rights, a share of the profits, and other things. Tokens help DAOs make sure that everyone in the community is on the same page and working toward the same goals. They provide people rewards for making things, developing programs, or working for the government.
- When members finish their work, they get Work Tokens. Then they can use them to buy money or governance tokens.
- Reputation Tokens: These tokens can’t be sold, and they show how good someone is at something or what they’ve done. People use them in reputation management systems like Colony’s skill-based reputation system.
- People who hold revenue shares, like people who own dividends, get a share of the treasury yields or protocol fees.
DAOs get people to help out, stop people from taking advantage of others, and get those who want to make a difference in the community and make money by tying rewards to measurable activities.
For example, Bankless DAO gives “Guild Tokens” to people who help run the community, write blogs, and make videos. These tokens show you how to divide the money from premium memberships and sponsorships.
Making Token Mechanics More Like How Things Work in the Real World
The best DAOs don’t just talk about their tokenomics; they also tell stories about their members.
“After Alice joined our design guild, she spent her evenings making mockups of how the dashboard’s user interface would look. She got 50 work tokens for each design she agreed to execute. After three sprints, she could use these tokens to become a governor on our steering committee.”
This type of writing, which mixes personal stories with simple physics, makes it simpler for individuals to relate to and helps new people understand complex incentive structures without feeling too much pressure.
3. With community-driven funding, you can use your money in more ways than just the usual means of getting it from a lot of people.
We need central custodians to keep money safe, set regulations for campaigns, and charge a lot of money on regular crowdfunding platforms. DAOs, on the other hand, can run treasuries that get money from grants, token sales, or other ways to make money. After that, the members can tell them what to do with the money.
- DeFi tools like lending and providing liquidity can help protocol treasuries increase the community’s assets.
- People ask for money for things like marketing campaigns and developer bounties, and then everyone votes on them.
- Automated Disbursement: After a proposal is approved, smart contracts provide money directly to the people who need it. This means that people don’t have to get engaged, and things don’t take as long.
For example, MolochDAO was the first group in the Ethereum ecosystem to use grants to pay for projects. Members can “ragequit” if they don’t like how the money is being spent, which lets them stay independent.
When you provide money to DAOs, putting EEAT into action often means doing the following things to get more power and experience:
- Publish Reports on a Regular Basis: Every three months, put out financial statements that show how well the treasury is doing.
- Have people who know a lot about smart contracts and how grants function look at them.
- Invite Expert Panels: Before the whole community makes a decision, experts in the subject look over the proposals.
This method with many tiers makes sure that the money is used to assist the DAO reach its goals and that those who wish to support can trust it.
4. When people are honest about working together, they can come up with fresh ideas and share what they know.
DAOs use the brains of a lot of people to solve problems. They prefer a flat, merit-based structure where anyone with the right skills can make suggestions, manage sub-teams, or contribute ideas. Gatekeeping usually makes it harder to choose and stops people from becoming creative when there is a hierarchy. This is a big difference.
- Developer guilds, research pods, and localization teams are all types of guilds and sub-DAOs. These are groups of people who work together to reach a goal. They are members of the DAO, but they have their own goals.
- Open Issue Boards: Public roadmaps and issue trackers (on GitHub or DAO-specific platforms) let everyone see what is and isn’t working.
- Learning Circles: New people can learn new things and discuss what works best through regular seminars, AMAs, and mentoring programs.
Gitcoin DAO, for instance, holds hackathons and bounty hunts where programmers, designers, and community managers work together on projects that help people. Forums run by the community let people talk about their thoughts.
Thinking about your coworkers
A more human story might show how powerful it can be to work together:
Bob, a UX designer in Spain, posted a request in our design guild after seeing that our wallet UI was hard to use. Fifteen people spoke out and gave code examples, tips on how to make things work in other languages, and frameworks for testing with real users. Bob’s prototype was working in just two weeks, and he was excited to talk about it at our town hall meeting every other week.
These kinds of stories show that DAO innovation is about putting others first and caring about them.
5. Cross-chain interoperability connects different parts of the community into one system.
The Web3 platform includes Ethereum, Solana, Polkadot, and other ecosystems. DAOs that let different blockchains work together can reach more end users, developer communities, and liquidity pools. This will make networks more reliable and strong.
- Bridged Assets: Native tokens that are moved from one chain to another can still vote, no matter which network they are on.
- Multi-Chain Deployments: DAOs put their main contracts on more than one chain. Using only one chain makes things less crowded and cheaper.
- DAOs on different chains can do more when they cooperate together. For instance, they can work together to put on hackathons or give out money.
For example, SushiSwap’s Onsen program started on Ethereum and then added rewards for liquidity on Polygon, Fantom, and Avalanche. This method, which works on all chains, tripled its Total Value Locked (TVL) and brought in people from all walks of life to help.
Improving EEAT on all chains
To keep people’s trust in all kinds of networks, DAOs should do the following:
- Use secure and well-known standards for tokens and contracts that are used for governance to make smart contracts the same.
- Write out how to send tokens, vote, or stake them from one network to another.
- Check the Security Posture: Watch the bridge for anything strange and any hacks that might happen on the blockchain.
These regulations protect the property and rights of all members, no matter where they choose to participate.
People in Web3 are starting to think differently about online communities because of decentralized autonomous organizations. By decentralizing governance, aligning incentives through tokens, democratizing funding, encouraging open cooperation, and connecting ecosystems that aren’t already connected, DAOs are making digital societies stronger, more open, and more adaptive.
DAOs can not only survive but also thrive in a more competitive environment by following the EEAT principles of using collective experience, showing domain competency, building authority through partnerships and audits, and building trust through transparent processes.
People who build communities need to stop using top-down models and start utilizing bottom-up ones. They know what they have to do. Allow members to make real choices and spend money on stories about people, safety, and red tape. DAOs enable people work together to improve things, learn new things, and change the internet in ways that have never been done before. We’re about to enter a moment when code rules over online communities, people utilize their creativity to improve them, and everyone has a stake in them.
A lot of people ask these questions all the time.
What is a DAO, though?
Smart contracts on a blockchain run a Decentralized Autonomous Organization (DAO). Most groups have one person in command, but DAOs don’t. People who have tokens talk about, suggest, and vote on how to make choices.
Q2: How do I join a DAO?
You usually have to get the governance token before you can join a DAO. You can receive it by buying it, getting it as an airdrop, or helping with design, coding, or community work. You can vote with your tokens based on how many you have or how well-known you are.
Q3: Is it okay to join a DAO?
DAOs are honest and open, but they also have risks, including as flaws in smart contracts, attacks on governance (such vote buying), and weak spots in bridges. Always read security audits, start with a small number of tokens, and follow best practices, including using hardware wallets.
Q4: What kinds of taxes do DAOs have to pay?
Your location will affect how much tax you owe on your DAO. In many places, the tokens you get as income are taxed at their fair market value. You only have to pay capital gains tax when you sell or trade your tokens. A good tax professional can assist you figure out what to do in your situation.
Q5: Can DAOs perform things on a huge scale?
Yes, DAOs can handle big treasuries and do a lot of work. Bankless DAO has more than 10,000 members, and GnosisDAO has more over $1 billion in its treasury. But for DAOs to work well, they need clear rules about how to run them, how to get a quorum, and how to handle disagreements.
Q6: What makes DAOs different from other kinds of non-profits?
DAOs, on the other hand, use on-chain governance, tokenized incentives, and automatic fund distribution to lower costs, make things more open, and let people from all over the world participate without needing to be in a certain place.
References
- “What Is a DAO?” Ethereum Foundation. https://ethereum.org/en/dao/
- Aragon Project. https://aragon.org
- MolochDAO. https://molochdao.com
- Bankless DAO. https://banklessdao.com
- Gitcoin. https://gitcoin.co
- SushiSwap. https://sushi.com
- OpenZeppelin Audits. https://openzeppelin.com/security-audits/
