The arrival of Decentralised Autonomous Organisations or DAOs has emerged as a promising intervention in the gradually evolving web3 landscape. DAOs are gradually growing in terms of popularity for launching web3 projects and businesses.  

Why even start a DAO?

A simple impression of answers to “How does a DAO work?” would suggest how it empowers the organisation members with a definitive share in the decision-making process. If you wanted to create an exclusive online community with a shared goal, how would you go about it? If your answer is, “with crypto, obviously!” then you’re in luck. DAOs (those are decentralised autonomous organisations, if that helps) are growing more popular with proponents of cryptocurrency and blockchain technologies. But what’s up for some debate is what these communities are actually good for, and what kind of impact this purposeful gatekeeping can have on the real world.

Before building a DAO, you need to define its structure.

Even if DAOs introduce the benefits of decentralisation, it is not reasonable to implement them everywhere. The good performance of DAOs can encourage people to implement them in different organisations, projects, and communities. However, they are not the best option in all cases, as the 2017 ICO boom proved clearly. How can you define the structure of the DAO? You must take note of the following factors before you start creating the DAO. 

• Objectives of creating the DAO alongside short-term and long-term vision for the same. 
• The urgency for a decentralised ownership structure.
• Decision-making approaches in the DAO.
• Challenges are resolved by creating a DAO in your industry.
• Benefits of a DAO for the customers, users, and community. 
• Previous instances of DAO implementation.
• Possibilities for community-centric aspects when you create a DAO alongside preparation for unprecedented consequences in the crypto market. 

There are many types of DAOs so decide which is best for you!

Decentralised Autonomous Organisations, or DAOs, are still in the stages of infancy and can serve many use cases. Therefore, you can opt for many practical paths for creating your DAO according to your objectives. You must go through different types of DAOs and their functionalities to find the models which can fulfil your goals. Some of the most common types of DAOs include protocol DAOs, social DAOs, venture DAOs, collector DAOs, and social media DAOs.

What are the use cases of DAOS?

The use cases of DAO tokens can include serving as instruments for incentives and rewards or benefits and new opportunities for the community. DAO tokens also play an important role in creating a DAO by enabling DAO governance alongside voting on the future of the DAO. If you look closely, the DAO tokens are a promising instrument for enabling the active participation of users in the growth of the organisation. 

However, DAO tokens are not always associated with voting rights on the direction of the company, and users can choose to stake the tokens for desired benefits. You need to set some clear goals for using the tokens and the methods for using them. You can also figure out whether you want to offer DAO tokens for voting privileges or staking.

DAO Token Allocation, Supply, and Rewards

Pricing of DAO tokens is one of the key concerns for anyone interested in “How does a DAO work?” while also focusing on the supply of tokens. You need to figure out the ideal pointer for token supply and set the demand running rather than offering a random value of the initial coin supply. Following the selection of the initial coin supply, you must focus on the allocation of tokens. You must keep a steady focus on providing rewards to your community with adequate funds in the community treasury. Therefore, you would need substantial working capital to achieve the initial objectives alongside providing rewards to early supporters and users. 

As of now, many projects are stuck on finding out how DAOs work alongside figuring out new ways for token distribution and resource allocation in the treasury. One of the significant highlights in answers to “How do you start a decentralised autonomous organisation?” would also draw attention to different use cases in token utility. Remember that the various use cases of token utility can play a critical role in determining the initial token allocations. 

Once you are done with setting the goals, structure, and DAO token use cases alongside allocation, you are ready to create your DAO!

The most important concern in ‘how to start a DAO’ points to the approach you prefer for creating the DAO. Many companies opt for developing their own systems, while some choose DAO tools and templates for creating the DAO. The tools and templates can help you define the legal framework for the DAO you wish to create. In addition, the tools also offer the required infrastructure for DAO token minting tools, creating the DAO name, and supporting the teams and founding members. 

Some of the popular Ethereum-based DAO tools for starting a DAO of your own offer multiple functionalities. You can choose Aragon, the comprehensive DAO toolkit with functionalities for dispute resolution and governance. Here are some other promising DAO tools you can use for creating your DAO. 

• Syndicate is a dedicated tool tailored for creating investment DAOs. 
• OpenLaw is a powerful tool for creating Ethereum-compatible legal documents. 
• Colony is a popular tool for creating a DAO as it is a plug-and-play DAO platform that loads within 90 seconds. 
• The Orca Protocol is a people-centric protocol aimed at decentralised organisations of users. 
• DAOstack is a trustworthy, open-source tool suite with various modules for launching your DAO. 

The main advantages overall:
The value advantages of decentralisation alongside the favourable prospects for supporting web3 applications fuel the demand for DAOs. Many DAO projects have made their mark with different use cases, including protocol governance or collective ownership of NFTs. However, the answer to “How do you start a decentralised autonomous organisation?” shows a simple procedure anyone can use to create a DAO.