Whether an encryption project adopts the DAO model, first consider these 8 factors

Original title: "Not all encryption projects are suitable for DAO, 8 points to understand before deciding"

Original author: Nicole Buckler, beincrypto

Original compilation: Moni, Odaily Planet Daily

We are seeing growing interest in  DAO   as more companies seek to innovate in management and organizational strategies, as well as People's digital lives are having a huge impact. However, not every project is suitable for adopting the DAO model. Before making the right choice, you need to consider the following 8 points:

1. Centralized services and DAO is not recommended for large-scale projects

For Web3 startups, DAO is an attractive traditional enterprise management model Alternatives, but if your project is large and needs to provide centralized services, then DAO is not suitable. Once you adopt the DAO model, you need to manage hundreds of shared decisions, and just communicating and coordinating will consume a lot of energy and cost.

In addition, the low turnout rate is also a headache. Although technology can simplify the voting process and speed up voting, it cannot completely solve the problem of low turnout rate. It takes a long time to finally pass the proposal after voting, which is not suitable for large projects and projects that provide centralized services. Most importantly, even if you are a small project at the beginning, it will continue to expand over time, so the adoption of DAO governance also needs to consider the challenge of project scalability, which is very important for determining the mission and goals of the project and judging whether DAO is Choosing the right one is crucial.

2. Clarify the overall needs of the team and project

Each DAO needs a powerful Whether you need to start a team or gather a group of friends, ask yourself if everyone on the team is passionate about the task. The team fully discussed why DAO is needed and verified the needs of the project and its community, and discussed how to use DAO to encourage community formation instead of relying on a centralized management model.

Divergence among team members is a red flag as this may affect subsequent governance structures, so choose DAO members with similar views but complementary skillsets — — Remember that even within a development team there can be technical complexities and differences.

3. Trust is the foundation

In the DAO governance structure, you cannot see any "Leadership", because DAO encourages collective ownership and collective autonomy. All work and organizational rules are determined by voting by DAO Token holders, and decisions are also automatically executed by smart contracts when predetermined standards are met.

Before deciding whether to embed the project in the blockchain technology and smart contract trust layer, you must understand one thing - trust is the key to effectively manage DAO , since any member can verify the DAO code, you need to measure how to collaborate in a secure and transparent manner.

4. Establish a correct governance structure

You need to determine whether the community really wants to use smart contracts to automate decision-making, or still wants to use a traditional top-down governance model based on seniority and leadership?

Frankly speaking, many DAOs today still rely on "centralized decision-making" - 1% of Token holders actually own 90% of the decision-making power - — which may discourage new members from joining the project. The core DAO team should identify key members and governance principles so that voting rights are evenly distributed among the community. Generally speaking, voting weight on the chain is usually based on the Token quantity, while off-chain voting relies on tools such as Snapshot.

Whether it is one person one vote, delegated voting, or weighted voting, the ultimate goal is to make it easier for each member to vote on proposals and review.

5. Determining community ownership and value standards

The process of joining a DAO can be time consuming , if you want to form a DAO, you determine how to expand the community, and how to let new members join and ensure that they have the right to express their opinions in the DAO. Usually DAO members have the following three ways to join:

Invitation to join

Automatically open to all Token holders

Setting up entry barriers, or requiring DAO members to contribute to the organization, is crucial for decentralized autonomous organizations, So you have to make it easy for any potential contributor to join and understand the project, but also provide clear and complete rules and standards. This is a reliable way to avoid future disputes-after all, decentralization does not mean There is no friction.

6, treasury and Token Economics

In DAO, Token Uses usually include:

Rewarding organization members

Voting on proposals

Unlocking more benefits

Token Whether it can be used to vote on the direction of the organization, providing added value and revenue opportunities is up to you. design a high-quality Token The economic model is very important, such as a reasonable Token Release time can ensure long-term support from investors, unissued Token can be used to incentivize those long-term loyal DAO members. On the one hand, you need to ensure that there are enough reserves in the DAO treasury to achieve greater development goals; on the other hand, you also need to allocate them reasonably Token To motivate the community, a balance needs to be struck between the two.

7. Transparency issues

Decentralization slows down decision making It's a problem for startups that don't act, so you should tell DAO members how to quickly process decisions, and which decisions need to be voted on. Therefore, you need to form a community committee or set different voting thresholds. This skill ensures that the DAO follows the principle of decentralization and can quickly promote the growth of the organization. In this process, you need to maintain a high degree of transparency. Data is public, you need to have a clear understanding of native Token How is assigned (although tracking Token distribution is a lengthy process), as well as publishing revenue metrics and financials so that DAO members know all the truth when making decisions.

8. Consider the long-term

For establishing a DAO, only consider governance, collective Ownership, trust, and scalability are not enough, you also need to explore community communication, new user outreach, and ongoing review of governance principles, especially as DAOs scale.

If you decide to use DAO to manage the organization, you must not only have a flexible and long-term vision, but also maintain the transparency of members and contributors. Take decisive control measures.

In short, if you want DAO to succeed, all 8 points above are necessary.

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