Starting a DAO can be a daunting task for those who are new to the concept. Once you understand the basics of a DAO you can begin to form a plan for how you want to set up your own. There is no one size fits all approach, but each DAO that is established shares commonalities.
Here are 5 steps to help you get started:
Before you start building your DAO, you need to establish a purpose for the DAO. What problem does it solve? What are the goals you want to achieve? What services or products do you want it to provide?
The simplest way to start is to communicate an idea or vision that you want potential contributors to identify with.
This does not have to take the form of a slide deck or 100 page manifesto. A simple one page memo or even just once sentence will suffice.
One of the best examples was the Constitution DAO. It had a one sentence purpose “We are buying the United States Constitution” and it was easy for contributors to identify with.
Other DAOs do very well as services based and some common examples include Developer DAO or Raid Guild. These DAOs exist simply to match member contributors with projects who need web3 native services.
Once you have established the purpose of your DAO, it's time to start thinking about how to bring together a community. This is the most important part of any DAO, as the early contributors will be the difference between gaining momentum for your DAO or struggling through the tragedy of commons that plague so many communities trying to standup a DAO.
Reputation systems help to identify those contributors who are pushing the DAO forward in a positive way. It also provides rules and guidelines to make sure malicious actors cannot hijack the DAO.
One of the best ways to avoid the tragedy of commons is to keep your core contributor group small and align incentives through a common set of rules or parameters that are hardcoded into the DAO. This helps to ensure that you establish a reputation system that rewards positive contribution and removes malicious actors.
To start you can introduce your new DAO to a shared chatroom in telegram or discord or you can begin by hopping into other DAOs and trying to find early contributors.
In practice the best place to form a new DAO is to meet potential contributors at IRL events (NFT NYC, ETH Denver, Consensus).
DAOs operate on a governance model where token holders get to vote on proposals. It is essential to have a well-defined governance model to ensure transparency, fairness, and security. In practice decision making takes place along a spectrum and there is no perfect answer to governance, as each model comes with its own set of trade-offs.
Some of the details to consider when designing a governance model:
Membership: who can be a member and how do they become one?
Voting type: Quadratic, Token based quorum, representative multi sig, each has its own benefits and drawbacks.
Quorum Level: how much participation is needed to reach consensus?
Voting Period: How long should voting last to ensure maximum participation?
Voting Process: What are the steps needed to pass a proposal from ideation to “heat-check” to on-chain approval
Tools: Where do the conversations and voting take place? Do you need to build your own smart contracts or use existing platforms and modules?
It is important to setup proper documentation around decisions and the processes that are required to join and participate. This can take the form of recordings of governance discussions, a gitbook documentation website and or a simple google drive and notion space.
All DAOs need resources in order to operate , whether it be to pay for development work, marketing, or even to fund ideas and proposals from members. There are a few ways to fund the treasury of your DAO:
Member Contribution:
The simplest and most straight forward way to fund your DAO is to ask for member contributions. This can be a pledge of a certain amount of ETH or USDC, or could be a pledge of other valued tokens or NFTs.
Bootstrap:
Another way to fund your DAO is through a bootstrapping method. One way to accomplish this is to use a fundraising protocol like Juicebox. Juicebox provides programmable treasuries which allow projects to configure token mints, receive funds, and create rules around how funds are distributed.
Token Sale:
DAO tokens can be created and sold to raise funds for the treasury. These types of launches typically take 2 forms:
Initial Coin Offering (ICO): Similar to a token sale, but with more complex legal and regulatory requirements.
NFT Sale: funding your treasury could come through an NFT sale where the unique token serves not only as a investment but also as a membership token
Venture Capital:
VCs can invest in your DAO just like they would invest in a traditional startup. Typically this form of funding comes with a token offering and you will need to meet accredited investor laws. One example of this type of DAO is FlamingoDAO
It is important to explore all of these options to ensure your DAO is properly funded and has the necessary resources to achieve its goals.
Once you have a community and governance process in place its time to begin submitting proposals. Proposals are the lifeblood of a DAO, as they represent the ideas and actions that drive the organization forward. To ensure a healthy and active DAO, it's important to encourage members to submit proposals and participate in the decision-making process.
Promote a culture of active engagement within your community by encouraging members to submit ideas and proposals, and reminding them of the importance of voting on proposals. You can do this through regular communication, online events, or even offering incentives for participation.
To keep your DAO organized and focused, it's essential to establish guidelines for submitting proposals. This can include:
A clear and concise title
A detailed description of the proposal
A TL;DR summary
Any relevant background information or links to resources
An explanation of the execution plan including timeline and who is responsible
A Budget for accomplishing the proposal
There are a number of existing protocols and platforms out there to help you launch your DAO in a cost effective manner. Avoid the common mistake of hiring a team of smart contract engineers to reinvent a simple governance method. This should only be considered if you are looking to develop a new DAO protocol which you expect other projects to leverage and one in which needs custom development regarding governance methods.
There are a number of tools that exist that make creating a DAO easy and efficient:
Aragon (https://aragon.org/): A platform for creating and managing DAOs, offering a wide range of features such as voting, treasury management, and permissions.
DAOhaus (https://daohaus.club/): Built on MolochDAO framework, DAOhaus offers an easy-to-use interface for creating and managing DAOs with a focus on funding and resource allocation.
Gnosis Safe (https://gnosis-safe.io/): A secure wallet for managing multi-signature transactions and smart contract interactions, often used for DAO treasury management and voting.
Snapshot (https://snapshot.org/): A gasless voting platform that allows DAOs to make decisions quickly and efficiently. Allows for a highly customizable off chain voting process.
Dao Lens (https://www.daolens.com/): A DAO management platform that provides analytics and insights into various DAOs, helping members and observers to complete tasks, track progress, voting data, and overall participation.
Tally (https://www.withtally.com/): A governance platform that simplifies the voting process for DAO members, making it easier to participate in decision-making and stay informed on key proposals.
Acknowledge that the initial governance structure and processes may not be perfect and be prepared to iterate and adapt as needed. As your DAO grows and evolves, the needs of the community and the scope of decision-making might change, requiring a shift in governance methods.
All DAOs are an experiment in radical community governance. It is a brand new way of organizing a group toward a common goal. Just as it has taken centuries for the first forms of governance to evolve, it will take time for DAOs to develop and perfect their methods. As a DAO creator or member, it is crucial to adopt a mindset of continuous learning and experimentation.