{"id":516395,"date":"2022-11-26T17:01:00","date_gmt":"2022-11-26T14:01:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/sustainability-what-do-daos-need-to-succeed-in-the-long-run\/"},"modified":"2022-11-26T17:01:00","modified_gmt":"2022-11-26T14:01:00","slug":"sustainability-what-do-daos-need-to-succeed-in-the-long-run","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/sustainability-what-do-daos-need-to-succeed-in-the-long-run\/","title":{"rendered":"# Sustainability: What do DAOs need to succeed in the long run?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a26e0f0bedfb\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a26e0f0bedfb\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/sustainability-what-do-daos-need-to-succeed-in-the-long-run\/#%E2%80%9D_Sustainability_What_do_DAOs_need_to_succeed_in_the_long_run_%E2%80%9C\" >&#8221; Sustainability: What do DAOs need to succeed in the long run?  &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/sustainability-what-do-daos-need-to-succeed-in-the-long-run\/#A_basic_ingredient\" >A basic ingredient<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/sustainability-what-do-daos-need-to-succeed-in-the-long-run\/#How_to_fund_a_DAO\" >How to fund a DAO<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/sustainability-what-do-daos-need-to-succeed-in-the-long-run\/#DAO_drama\" >DAO drama<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/sustainability-what-do-daos-need-to-succeed-in-the-long-run\/#DAOs_from_the_ground_up\" >DAOs from the ground up<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_Sustainability_What_do_DAOs_need_to_succeed_in_the_long_run_%E2%80%9C\"><\/span>&#8221; Sustainability: What do DAOs need to succeed in the long run?  &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMTEvYzVjNTY4ZjEtMzkyYS00YTRjLWI3NTUtNGVjMTdlYWM2NmRhLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5129e2ea>The rising popularity of decentralized autonomous organizations (DAO) reflects the growing tendency toward the creation of community-focused projects within the Web3 ecosystem.\u00a0<\/p>\n<p>At its core, a DAO is an organizational structure that allows decentralized decision-making within a community. <\/p>\n<p>Currently, there are over 4,000 of these projects in existence, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/deepdao.io\/organizations\">according<\/a> to the registration data of DeepDAO. With new tools available to make DAOs easier than ever, quantity can easily overtake quality within these communities and it begs the question of what will eventually make these projects relevant in the long run.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_basic_ingredient\"><\/span>A basic ingredient<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The basic structure for decentralized organizations seems to be similar to any other tech startup: It requires a service or product with added value, a community of users, treasury, a business development plan and marketing.<\/p>\n<p>Speaking to Cointelegraph, Santiago Siri, founder of Proof-Of-Humanity DAO (PoH DAO) \u2014 the issuer of the Universal Basic Income (UBI) token \u2014 shared his special ingredient to make DAOs sustainable: a committed community:<\/p>\n<blockquote><p>\u201cAfter building a participative community, we can find funding mechanisms, alliances with other DAOs, governance and participation mechanisms and so on. But without a community, the DAO is not real.\u201d<\/p><\/blockquote>\n<p>The community focus is repeated all across the Web3 space, but just having a group of people signed up for your project will not be enough for it to thrive.\u00a0<\/p>\n<p>As Siri explains, the real priority for a DAO is to give that community a purpose from an early stage. \u201cWhat usually h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ens with a project without a soul or purpose, is that a bunch of mercenaries are going to get away with the money without generating value,\u201d he said.<\/p>\n<p>Community as the base of a decentralized structure also supports another rather important factor: funding.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_to_fund_a_DAO\"><\/span>How to fund a DAO<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>One step that DAOs commonly add to their economic plans for sustainability is tokenization.\u00a0<\/p>\n<p>Speaking to Cointelegraph, Mitch Oz, DAO Steward for Giveth \u2014 a nonprofit organization and open source platform for decentralized projects \u2014 warned that tokenization is a rather dangerous step if done at the wrong time.<\/p>\n<p><strong><em>Recent:\u00a0FTX\u2019s collapse could change crypto industry governance standards for good<\/em><\/strong><\/p>\n<p>\u201cUsually when people get the idea of launching a token it\u2019s on the lines of launching an airdrop, building hype. Having a token, a transferable token, is not a great idea to start with and I think that is where a lot of DAOs fail,\u201d he stated.<\/p>\n<p>In his experience, Oz recommends to start small when it comes to creating a community token. \u201cI think it\u2019s very important to have some sort of token-weighted governance and start with a token that can\u2019t be bought,\u201d he said.<\/p>\n<p>On the other hand, there\u2019s also external financing DAOs can receive via grant programs and venture capital (VC) for tokenized projects. <\/p>\n<p>Rather than the fine tightrope traditional first-time entrepreneurs used to walk to get their first approved financing, grant programs focused on supporting Web3 projects and their communities have now provided a new avenue to receive funding.<\/p>\n<p>Talking to Cointelegraph, Ashley D\u00e1vila, venture capitalist at blockchain-focused venture capital firm Gumi Cryptos, explained that Web3 grants allow DAOs to remain financially independent when receiving external funding.<\/p>\n<p>\u201cGrants are <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly no strings attached, so they are very attractive and can be seen as revenue. The overall takeaway is that grants are non dilutive and VC funding is dilutive\u201d, she said.<\/p>\n<p>Christian Narv\u00e1ez, venture partner at OP Crypto and founder of Web3 Familia DAO, told Cointelegraph that Web3 projects should begin their funding externally through grants before knocking on venture capital\u2019s doors. <\/p>\n<p>\u201cI always recommend that Web3 projects that are building up, apply to grants within the blockchain ecosystem. It\u2019s an effective way of getting capital without having to give equity tokens of your project,\u201d he said.<\/p>\n<p>Narv\u00e1ez added that there\u2019s even a technique that allows Web3 projects to stay afloat before they are ready to take their project to a VC:<\/p>\n<blockquote><p>\u201cIt\u2019s called grant farming, which basically is applying to many grants of different blockchains and raising capital in an equity-free way, allowing projects to maintain ownership as long as possible before they try to raise VC money.\u201d\u00a0<\/p><\/blockquote>\n<p>While on the outside, a DAO may seem to run smoothly once it has built a community and received funding, achieving the decentralized dream is not as easy as idealists make it sound.\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"DAO_drama\"><\/span>DAO drama<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Even as all voting and funding processes are dutifully registered on the blockchain, DAOs still struggle with fund transparency and the centralization of power.<\/p>\n<p>Scandals around these issues were a prevalent topic at Devcon IV \u2014 an international event dedicated to the Ethereum community. <\/p>\n<p>In one instance, members of the Harmony protocol aimed criticism at the Blu3DAO directive, claiming they had observed suspicious fund management and a possible conflict of interest within the founding team and their main sponsor, the Harmony protocol itself.<\/p>\n<p>Inconsistencies of information from the DAO also raised alarms. Harmony\u2019s forum also showed ties between the organization and the company MoneyBoss \u2014 which is owned by Blu3DAO founders.<\/p>\n<p>The blockchain community response was <a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/v\">mixed<\/a>, with support from members of Blu3DAO and questions from users on <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Twitter<\/a>. <\/p>\n<p>Blu3DAO founders <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/novellsk8\/status\/1581060145559535617?s=46&amp;t=Q5kWHmp53IqvAWtVABfoig\">addressed<\/a> these accusations shortly after they were published, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/RayRaspberry1\/status\/1581090067073728512?s=20&amp;t=fsKmTpsErol8sUnCz2zjqg\">facing<\/a> more backlash from the blockchain community. The team also <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/blu3dao\/status\/1591153286954221569?s=20&amp;t=9WXHKWjG-FPF7i8kc-RdLA\">provided<\/a> proof of their transactions on the blockchain a month after the event to discredit fund mismanagement reports and have carried on their operations.<\/p>\n<p>Siri further dedicated a part of his time on stage at the event to clarify the so-called \u201cDAO drama\u201d that <a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/v\">involved<\/a> the alleged centralization of voting power in PoH DAO by their governance partner, the Kleros team. <\/p>\n<p>Another example occurred in April when the FEI\/TRIBE DAO \u2014 a merge between the FEI protocol and Rari Capital DAO \u2014 reached the headlines with an $80 million hack. Uncertainty fell over the organization\u2019s community once the governance started a tumultuous voting process that went back and forth on the decision to cover the funds.<\/p>\n<p>As crypto personality Cobie <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/cobie\/status\/1537220039522545664?s=20&amp;t=QsqBatVypGS2VZQ33PNH3Q\">explained<\/a> in a Twitter thread, the voting was highly influenced by the FEI protocol itself, which voted against the repayment of funds on a second vote. FEI founder Joey Santoro <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/joey__santoro\/status\/1571898751744344065?s=20&amp;t=9mMvdsRW9qWGeH-O6hP20Q\">concluded<\/a> that their case was an example of the current exploratory status of DAO voting and confirmed the protocol\u2019s separation from Tribe DAO.<\/p>\n<p>So, how to start with the right foot on this uncharted territory of DAO?<\/p>\n<h2><span class=\"ez-toc-section\" id=\"DAOs_from_the_ground_up\"><\/span>DAOs from the ground up<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Many new DAOs are born from pre-existing communities, often without funds or a business plan. Because of this, founders and governors take different routes to get their projects off the ground.<\/p>\n<p>Such is the case of Cryptonikas DAO, a new women-focused organization led by eight women from Latin America. According to their founder and director, Giselle Chac\u00f3n, their key to staying on course has little to do with relying only on Web3 tools but rather with creating a strong foundation to become sustainable both as a community and as a business.<\/p>\n<p>Speaking to Cointelegraph, Chac\u00f3n referenced her own experiences as part of a different DAO before starting Cryptonikas, which led her to take a rather traditional approach with her own community.<\/p>\n<p>\u201cNow that we are a strong community and we have people who want to fund us, we have proceeded to create a company in the United States,\u201d she said.<\/p>\n<p>According to Cryptonikas\u2019 product manager Rosa J\u00e9rez, registering the project as a C-Corp business is an effective way to ensure the legality of funding well before opting for grant money.<\/p>\n<p>\u201cA C Corp allows us to act as a private company, capable of generating income out of our commercial activities,\u201d she explained.<\/p>\n<p><strong><em>Recent:\u00a0Bitcoin miners look to software to help balance the Texas grid<\/em><\/strong><\/p>\n<p>Jer\u00e9z also added that this would be the preferred structure for the DAO \u201cuntil there\u2019s massive adoption of the entire Web3 ecosystem.\u201d<\/p>\n<p>Currently, the ideal setup for the majority of the Web3 community is one of total decentralization and betting exclusively on the technological and financial resources within the ecosystem. As Chac\u00f3n stated, the struggle is to have realistic expectations and get into the DAO space with eyes wide open:<\/p>\n<blockquote><p>\u201cWe don\u2019t want to have an utopia. We want our DAO to be sustainable in time as a startup, so we don\u2019t romanticize the process.\u201d<\/p><\/blockquote>\n<p><template data-name=\"subscription_form\" data-type=\"crypto_biz\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/sustainability-what-do-daos-need-to-succeed-in-the-long-run\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; Sustainability: What do DAOs need to succeed in the long run? &#8220; The rising popularity of decentralized autonomous organizations (DAO) reflects the growing tendency toward the creation of community-focused projects within the Web3 ecosystem.\u00a0 At its core, a DAO is an organizational structure that allows decentralized decision-making within a community. Currently, there are over&#8230;<\/p>\n","protected":false},"author":1,"featured_media":516396,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMTEvYzVjNTY4ZjEtMzkyYS00YTRjLWI3NTUtNGVjMTdlYWM2NmRhLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74894,75186,74983,74877,74868,4965],"class_list":["post-516395","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-blockchain","tag-dao","tag-decentralization","tag-decentralized-exchange","tag-defi","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/516395","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=516395"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/516395\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/516396"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=516395"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=516395"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=516395"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}