Hey there, DAO enthusiasts! In this article, we’ll be exploring the exciting world of real-world DAO use cases. Whether you’re a beginner or an expert, we’ve got something for everyone here.
First off, let’s define DAOs.
A DAO, or a Decentralized Autonomous Organization, is an organization that operates through rules encoded as computer programs known as smart contracts. These smart contracts enforce the rules and facilitate transactions without the need for intermediaries like banks, lawyers, or other third parties.
Now, you may be wondering how DAOs came to be. One of the first mentions of DAOs goes back to 1997 when Werner Dilger wrote a journal article on the “Internet of Things” (IoT) and described the “Decentralized Organizations” concept.
Then in 2013, father and son Stan and Daniel Larimer invented the concept of a “Decentralized Autonomous Company” (DAC). But, the first notable DAO was created in 2016 by a group of developers who wanted to create a decentralized venture capital fund. “The DAO” raised USD 150 million worth of ETH and was one of the earliest crowdfunding efforts. However, it faces a controversial hack that leads to its dissolution.
So, what’s the purpose of this article? We’re here to explore the various real-world use cases of DAOs and how they’re revolutionizing different industries. From DeFi DAOs to DAOs for social impact and governance, we’ve got it all covered.
Without further ado, let’s dive into the exciting world of DAOs!
Real-world DAO use cases
DAOs come in all shapes and sizes. My recent article researched different types and categories showing which DAO vertical is trending. The decentralized finances category is where decentralized organization theory applied the most, with 45% of projects spinning around DeFi protocols, investments, and grants.
Here is an excellent overview of the current DAO landscape by Cooper Turley:
To rest DAOs case, let’s look at some successful DAO implementations.
The 10 most interesting DAO use cases
You probably understand that DAOs can be a powerful tool that solves real-world problems. From crowdfunding to governance to decentralized finance, DAOs are used in various industries.
We will look at the biggest fall, “The DAO,” use case to show you two sides of a medal. But also review some of the successful DAO cases, such as Uniswap and MakerDAO.
1. The DAO
So far, one of the most significant DAO applications (and disappointment) has been through The DAO project. The project was launched in April 2016, and in the next four weeks, it surpassed everyone’s expectations, raising an astonishing ~12 million ETH inside the DAO’s smart contract by selling its community token, worth roughly 150 million USD at the time.
Less than 3 months after the launch, the project was attacked by a hacker who drained $50 million worth of ETH from The DAO’s smart contract.
Surprisingly, the big DAO project was a spin-off of a smaller project Slock.it. The project was started in 2015 by two brothers, Simon Jentzsch, Christoph Jentzsch, and Stephan Tual, the former CCO of Ethereum, with the idea to connect all kinds of smart locks to the Ethereum blockchain and use smart contracts to handle access-control permissions.
Founders realized that a token sale would be a suitable option to get an initial user base and raise funds to grow the company. Initially, the team created a simple crowdfunding smart contract specifically for Slock.it gave token holders voting power on what the project should do with the funds. After further consideration, they gave token holders even more power by giving them full control over the funds, which would be released only after a successful vote on detailed proposals backed by smart contracts. And with this, the story of the DAO started.
The community around the project grew fast, volunteers joined the effort, and it became increasingly decentralized, with different individuals taking on different responsibilities. For the DAO to grow as an independent project, it had to be detached from Slock. It volunteered to do this job with the help of many well-known experts from the Ethereum community. And the creation of what will be known as “The DAO” began.
A great example of the decentralized autonomous organization (DAO) that was created to bid on a historical document: a copy of the United States Constitution, one of only thirteen printed in 1787 for the Constitutional Convention. The copy was to be auctioned by Sotheby’s in November 2021.
The idea for ConstitutionDAO began on social media, with a group discussing the possibility of pooling their resources to buy the Constitution. The group then formed a DAO, a decentralized organization that operates on a blockchain and is run by its members, who vote on decisions through a governance system.
The ConstitutionDAO project quickly gained traction and went viral, with people worldwide contributing funds to the DAO to help it win the auction. In just over a week, the DAO raised over $40 million, becoming one of the largest DAOs in history.
However, despite having the highest bid, ConstitutionDAO ultimately lost the auction to a single bidder (Kenneth Griffin, the American billionaire CEO of Citadel), who offered $43.2 million. The outcome was controversial, as the DAO’s bid resulted from contributions from over 17,000 individuals and organizations.
Despite the loss, ConstitutionDAO became a symbol of the potential of decentralized organizations and the power of collective action.
FWB DAO is an organization focused on supporting open-source software development. The DAO was created in 2021 by developers, designers, and blockchain enthusiasts who wanted to create a new model for funding and supporting open-source projects.
The FWB DAO operates on the Ethereum blockchain and is run by its members, who vote on decisions through a governance system. The members of the DAO are known as “friends,” and they can earn membership by holding a certain amount of FWB tokens, which are used for voting and governance.
The FWB DAO aims to provide a sustainable funding model for open-source projects and incentivize collaboration among developers, designers, and other contributors. The DAO provides grants and funding for projects deemed to be in line with its mission and values, and it also provides support and resources to help these projects succeed.
Since its creation, the FWB DAO has multiplied:
- Raised $10 million, Seed Round in Oct 2021, Led by A16Z
- The valuation of the FWB DAO project is ~ $100 million
- Over 4,000 members within the community
- 7.4k FWB token holders as of April 2023
The DAO has funded various open-source projects, including software tools, decentralized finance (DeFi) protocols, and web3 applications.
MakerDAO was founded in 2014 by Rune Christensen, who had previously worked in the mobile gaming industry. Christensen became interested in crypto and saw the need for a stablecoin that could be used as a store of value and medium of exchange in the cryptocurrency ecosystem.
In 2015, MakerDAO launched a prototype of its Dai stablecoin, and in 2017, it launched the first version of the Maker Protocol.
The Maker Protocol is a decentralized system that allows users to lock up their cryptocurrency as collateral in exchange for Dai stablecoins. The collateral is held in smart contracts known as Collateralized Debt Positions (CDPs).
The Maker Protocol uses an algorithmic system to maintain the stability of Dai by adjusting the supply of Dai in circulation based on market demand. If the price of Dai rises above $1, the Maker Protocol increases the supply of Dai to bring the price back down to $1. If the price of Dai falls below $1, the Maker Protocol reduces the supply of Dai to increase the price back up to $1.
The Maker Protocol has undergone several upgrades over the years, the most significant being the transition from a single collateral system (where only Ethereum could be used as collateral) to a multi-collateral system (where other cryptocurrencies can also be used as collateral). This transition occurred in 2019, significantly increasing the Maker Protocol’s flexibility and scalability.
- In 2017, the project sold $12 million of MKR tokens from the MakerDAO Development Fund to partners led by Andreessen Horowitz and Polychain Capital.
- Overall, MakerDAO has raised a total of $79.5 million in funding over 7 funding rounds
- In 2022 MakerDAO reported 19 million DAI earnings and 65 million total revenues
Overall, MakerDAO and the Maker Protocol have played a significant role in developing the DeFi ecosystem by providing a stablecoin that is decentralized and algorithmically stable.
5. Uniswap DAO
Uniswap is a decentralized autonomous organization (DAO) that governs the Uniswap protocol, a popular decentralized exchange (DEX) built on the Ethereum blockchain.
The project was created by an Ethereum developer named Hayden Adams, who announced the project’s birth in November 2018. Initially, it was a basic website and a smart contract that allowed anyone to make simple swaps.
Later this year, Hayden introduced the Uniswap idea to Vitalik Buterin at one of the crypto meetups and, at the end of July 2018, received a grant from Etherium Foundation. You can read the full story of how Uniswap progressed here.
In September 2020, the Uniswap development team launched its governance token UNI. The total supply of tokens the team issues is 1 billion UNI tokens. These tokens are shared among groups of core contributors to the platform.
- 600,000,000 UNI tokens to Uniswap community members
- 212,660,000 UNI tokens to team members and employees with a 4-year vesting schedule
- 180,440,000 UNI tokens to investors with a 4-year vesting schedule
- 6,900,000 UNI tokens to advisors with a 4-year vesting schedule
Today, Uniswap operates as a community-driven DAO where token holders can vote on proposals for developing and maintaining the Uniswap protocol. One notable feature of Uniswap DAO is its use of a quadratic voting system, which aims to give smaller token holders a greater say in the decision-making process.
Since its launch, it has become one of the most active and successful DAOs in the DeFi space. As of April 2023, DAO has over 310,000 members and over $2.4 billion in treasury assets. The UNI token has also seen significant value growth, reaching an all-time high of over $44 in November 2021.
Overall, Uniswap DAO has emerged as a leading example of decentralized governance in the DeFi space, and its success has helped demonstrate the potential of DAOs to enable community-driven decision-making in decentralized systems.
CityDAO made headlines by partnering with approximately 6,000 crypto investors to purchase 40 acres of land in Wyoming with plans to build a blockchain-powered city. And it all started with a simple Tweet by Scott Fitsimones on July 2nd, 2021.
To participate in this experiment, interested individuals could buy one of the 10,000 NFTs offered by CityDAO for a cost of 0.25 ETH, approximately $1,000. This NFT purchase comes with fundamental citizenship rights, including access to a Discord channel, voting privileges, and the opportunity to settle land following the “First & Founding Citizens” of the city.
The First Citizen of the blockchain city is the individual who purchased a single NFT for 6.52 ETH, providing them with the privilege to name the first piece of land and the first access to “land drops.”
The Founding Citizens are the 50 individuals who purchased an NFT with a price floor of 10 ETH, providing them access to land drops following the First Citizen while maintaining access to the Discord and voting rights.
Vitalki Buterin also joined the CityDAO project, as some people noticed and posted some of his thoughts about crypto cities.
Overall, CityDAO is a fascinating experiment that allows individuals to contribute to creating a blockchain city and participate in developing a new form of governance and citizenship. Apparently,
7. Krause House
An entrepreneur from Vancouver has launched Krause House, a DAO that seeks to purchase an NBA team, with the New Orleans basketball team as its first target.
The group, described as a “community of hoop fanatics,” aims to become either full or part-owners of a team by raising funds through the sale of NFTs. The DAO Genesis NFT collection, with an overall supply of 2050 NFTs, was minted & sold out as of November 21st, 2021, raising 1,000 ETH.
While sales of NBA franchises are infrequent, valuations suggest that teams can range from around $1.63 billion for the New Orleans Pelicans to as much as $7.56 billion for the Golden State Warriors. James Shamenski calls himself a “Future owner, Pelicans NBA” on Twitter and is considered the point guard for the New Orleans project. It would require a lot more funds for the project to become an owner of an NBA team. Krause House may have a shot at becoming a minority owner, but it has a long road ahead.
Overall, the Krause House DAO project represents a novel approach to vacation rentals, and it will be interesting to see how it evolves in the coming years.
VitaDAO is a decentralized autonomous organization (DAO) that aims to accelerate medical research by funding innovative research projects. The project was founded in 2021 by scientists, technologists, and entrepreneurs to use blockchain technology to create a more transparent and efficient system for funding medical research.
The VitaDAO platform allows members to purchase tokens representing a share of ownership in the DAO. Upon its creation, VitaDAO generated 64,298,880 Vita tokens. The quantity was selected based on the number of minutes recorded as the most extended lifespan in human history. This amount will only increase when someone manages to live longer.
During the initial token distribution, 10% was allocated to working groups, another 10% to the community, 10% to service providers, and the remaining 70% was retained in the treasury. Holders of Vita tokens possess the authority to vote on decisions, such as the governance rules, the financing of intellectual property and projects, and the management of the treasury. Apart from being a means of voting, the Vita token is also an investable asset.
In August 2022, Pfizer announced it requested to join VitaDAO with a half-a-million bid. Pfizer’s bid to join VitaDAO is likely to pass (so far, 100% of the votes favor Pfizer entering the DAO).
Overall, VitaDAO represents a novel approach to funding medical research, and it will be interesting to see how it evolves in the coming years.
9. Aragon DAO
Aragon is a decentralized autonomous organization (DAO) platform built on the Ethereum blockchain. It was founded in 2016 by Luis Cuende and Jorge Izquierdo to enable anyone to easily create and manage a DAO without requiring technical knowledge.
The Aragon project has its roots in the open-source software community, where the founders were involved in building tools and platforms for developers. They realized that the technology they were building could be applied to create decentralized organizations, and thus Aragon was born.
As of April 2023, Aragon DAO shows some impressive stats:
- 5,000+ DAOs created using the Agagon platform
- 300,000+ community members ecosystem
- More than $6 billion value in Aragon DAOs
- $200+ million in Aragon’s treasury assets
Aragon provides a user-friendly interface for creating and managing DAOs, organizations run entirely by code and controlled by their members. These organizations can be used for various purposes, such as managing a decentralized fund, running a community-driven project, or governing a decentralized network.
10. Nouns DAO
Nouns DAO is an NFT-based DAO launched in November 2020. The project was created by crypto enthusiasts and developers who wanted to create a community-driven platform for owning and managing a curated set of nouns. The founding team behind Nouns DAO has chosen to remain anonymous.
Nouns DAO project overview:
- Nouns artwork is in the public domain.
- One Noun is auctioned every 24 hours, forever.
- 100% of Noun auction proceeds are trustlessly sent to the treasury.
- All Nouns are members of Nouns DAO, where one Noun equals one vote.
- The treasury is controlled exclusively by Nouns via governance.
- Nounders receive rewards from Nouns (10% of supply for the first 5 years).
Using a version of Compound Governance, Nouns DAO serves as the primary decision-making authority in the Nouns ecosystem. The DAO treasury collects all ETH proceeds from daily Noun auctions. As of April 2023, the treasury holds 28,276 ETH.
Nouns DAO is made up of each Noun NFT, which is a permanent member with voting rights on all governance matters. Noun votes are non-transferable, meaning they are linked to the Noun and cannot be separated. However, Noun votes are delegatable, allowing the owner to delegate their voting rights to someone else as long as they hold the Noun.
15 more DAOs worth mentioning:
- Dash DAO – Decentralized cryptocurrency governance
- Curve DAO – Community-owned stablecoin exchange
- Aave – Decentralized lending platform
- Compound DAO – Lending and borrowing protocol
- VectorDAO – DAO for Web3 projects
- SuperTeamDAO – DAO focused on sports and gaming
- MetaCartel Ventures – Venture capital DAO for Web3 startups
- The LAO – Limited liability autonomous organization for investment
- Moloch DAO – Community-driven grants mechanism
- HeadDAO – DAO for digital art and NFTs
- Flamingo DAO – DAO for NFTs
- Pleasr DAO – DAO for art collecting
- BAYC DAO – DAO for Bored Ape Yacht Club project
- Balancer DAO – An AMM protocol and liquidity provider.
- Decentraland DAO – Virtual reality platform Decentraland project
DAOs of tomorrow
Computers, telecommunications, and the Internet are regarded as revolutionary technologies transforming our work in the corporate world. Although it may seem lofty, Decentralized Autonomous Organizations (DAOs) have the potential to be the next big thing in the “Future of Work” as the overall ecosystem matures.
Let’s take a look at how DAOs can reshape the future of work:
- Growing ownership economy: As DAOs become more widely adopted, individuals may contribute several hours a week to various DAOs instead of having a single employer and working a 40-hour workweek. This could resemble the creator economy we see today, where content creators offer a range of competencies and earn income through content monetization on platforms such as YouTube, SubStack, and Patreon.
- Employee/community engagement and fulfillment: DAOs offer employees the freedom to choose projects that resonate with their values, strengths, and aspirations, offering greater flexibility in the workplace. For example, PleasrDAO is a collective of digital artists, DeFi leaders, NFT collectors, and crypto influencers that collects digital art representing important causes as NFT.
- Voice in governance: DAOs allow token-holding members to have a say in critical decisions through robust governance and voting mechanisms. MakerDAO is an example of this, where members own the governance token MKR and can propose, vote on, and enact new ideas.
- X-to-Earn models: Functioning like open economies than closed organizations, DAOs will fuel the “X-to-earn” trend, making work more flexible, fluid, and playful. DAOs will expand the opportunities available to participants, such as token holders, bounty hunters, and core contributors.
Future of DAOs in the real world
DAOs will reward each contribution based on its value, regardless of who and where it comes from. This will evolve into combining traditional work, investing, and passive income.
Contributors can explore different permutations of traditional work-to-earn models to generate native tokens or fiat currency. Token holders can use platforms such as Yearn to “stake” their tokens to earn APY (annual percentage yield), effectively earning interest.
More examples of “x-to-earn” models include Play-to-Earn (P2E) with Axie Infinity, Learn-to-Earn (L2E) with RabbitHole, and Create-to-Earn (C2E), such as writing articles or designing artwork in exchange for tokens with VectorDAO.
While the future of work with DAOs may seem far off, it can reshape how we work, from traditional work models to new and innovative X-to-earn models. DAOs have the potential to democratize decision-making and reward individuals based on their contributions, offering greater flexibility and fulfillment in the workplace. Despite DAOs’ challenges, their viability and utilization in various business cases demonstrate their transformative power.
DAOs are revolutionizing the way organizations operate in the real world. From DeFi DAOs to DAOs for content creation, social impact and governance, venture capital, and gaming, we’ve explored the various use cases of DAOs and how they’re transforming different industries.
DAOs provide several benefits, such as increased transparency, decentralization, and community-driven decision-making. They also have the potential to reduce costs and increase efficiency by eliminating intermediaries.
Looking toward the future, we expect to see DAOs playing a significant role in various industries, and we may witness the emergence of new use cases as the technology evolves.