There is a lot of talk about DAOs. Year after year, the concept of the decentralized autonomous organization appears time and again in major media headlines, angel investor conversations, and thought pieces from Web 3.0 visionaries. While we are not yet in a world where decentralization is ubiquitous, maybe it's time to change that.

👋 Hey, my name is Roman Melnyk! I'm in marketing, and I am the one of core contributors to the DeXe protocol. One of DeXe's products is a DAO constructor and manager, so today I will guide you through smoothly and painlessly reshaping your company into a DAO structure for the many benefits that it offers. We'll look at key nuances, build a step-by-step strategy, and find the best ways to implement it. Let's go!

Does my company really need to become a DAO?

Decentralized Autonomous Organizations (DAOs) are becoming increasingly popular in the business world. DAOs are autonomous organizations that leverage blockchain technology to manage and coordinate activities without the need for a centralized authority. This may instantly make sense or sound like “ok, but what’s in it for me/my organization?”

Short answer:* Becoming a DAO can streamline operations, increase transparency, and reduce costs. As such, it can be great for your bottom line, help you scale more easily, and create long-lasting goodwill with all stakeholders.*

All crypto and Web 3.0 projects should be DAOs. But so should all other businesses for the abovementioned benefits. Ages ago, companies were created for people to better work together. Then, public companies were formed to give more inclusion to investors and encourage trust. DAOs are a natural next step in that progression  — even more transparency and inclusivity with a direct positive impact to governance.

How does a DAO work?

The main killer feature of a DAO is better decision-making. By leveraging blockchain technology, corporations can store, track, and analyze data quickly. This allows them to make more informed decisions and to be agile with their strategies. Moreover, DAOs can increase the transparency of the corporation’s operations. All decisions and processes will be publicly available on the blockchain, which can help build stakeholder trust.

And what is the most successful marketing tactic in our day and age? That's right - honesty and openness. And a DAO will definitely give you that. With all that in mind, it's time to talk about your own DAO implementation strategy.

Here we go

Giving a DAO structure to your company is a great way to open it up to more stakeholders, increase engagement and trust, and improve effectiveness via better decision-making. Here is your step-by-step guide to help you get started:

Step 1: Research main DAO terms and concepts

Before you start giving your company a DAO structure, it is important to understand a bit deeper what a DAO is and what key components/terms are. Research the key concepts and protocols of DAOs, such as governance, voting, and decision-making processes.

I  highly recommend going deep into the theoretical part of DAOs so that you can answer any emerging questions in a more informed way. We also highly recommend doing an internal Q&A session to clarify your goals for a DAO. Here are some questions to help you do that more effectively:

• Is your company ready to accept a community-focused decentralized ownership structure?

• What do you expect your DAO will achieve? What are your goals?

• Which decisions are you comfortable with your DAO community making?

• Is there a current difficulty in your industry that decentralizing governance could solve?

• How could your community, customers, investors, suppliers, and other stakeholders benefit from a DAO?

• What are the technical and developer resources needed for the DAO launch? (do some research)

• How do you envision your community assisting you in realizing your DAO vision?

• Are you prepared to face the changing dynamics of the crypto markets?

Step 2: Choose the Structure and Type

The structure of DAO to choose depends on the purpose of your company. Consider the number of members, the size of the company, and the type of activities that your DAO will undertake.

It is worth noting that this article will focus on the DAO as a business organization. But don't think that such a structure can exist only in the crypto or Web 3.0 field. The application of DAO is very diverse and in fact, such a structure can be applied to almost any sector of your life, including non-profits, schools, teams, and any other situation where people come together to make decisions.

Even your family could be a DAO. Figuratively speaking, you can distribute one match to each member of your family and designate it as your "control token," which gives the holder (i.e. family member) the right to vote, raise questions and make proposals.

The structure of your DAO will remain more or less the same regardless of your organizational type. But the tools and complexity will naturally be different.

The DAO is rapidly evolving and it is difficult to identify any specific industries where this structure would be more or less successful. However, we can identify several frequently occurring types of DAOs. Among them: social DAOs, investment DAOs, protocol DAOs, and media DAOs.

And each of these types has its own organizational features. For example, in investment DAOs, community members can vote for projects they want to invest in. Whereas media DAOs can be used to create a space with open, democratic editing where everyone can suggest changes to any material, and the general "editorial staff" accepts those edits.

Step 3: Develop the Technical Aspects

Transitioning a company to a DAO structure requires several technical operations, especially:

• Blockchain integration: The first step in transitioning to a DAO structure is to integrate the company's existing systems with a blockchain platform. This can be done by deploying smart contracts that automate decision-making, resource allocation, and other governance processes. The blockchain platform provides a secure and transparent environment for the DAO to operate.

• Governance Token creation: Tokens are an essential component of a DAO, as they represent ownership, participation, and contribution. Your company needs to create its own tokens that are specific to the DAO. These tokens can be distributed to stakeholders and used to vote on proposals, allocate resources, and receive rewards.

• Governance design: Your company needs to design a governance model that is appropriate for your DAO. The governance model should ensure that decision-making is transparent, democratic, and decentralized. It should also provide a mechanism for resolving disputes and making changes to the governance process.

• Front-end interfaces: Your company needs to develop user interfaces that enable stakeholders to participate in the DAO. These interfaces can be web-based or mobile-based and should allow users to submit proposals, vote on proposals, and view the status of the DAO.

• Decentralized storage: Your company needs to implement a decentralized storage solution to store data related to the DAO, such as proposals, votes, and transactions. Decentralized storage solutions, such as IPFS (InterPlanetary File System), ensure that the data is stored in a distributed manner, making it difficult for a single point of failure to compromise the DAO.

• Security auditing: Most DAOs are created using the previous DAO code, which is already audited. However, any changes you make to the code could be open to hacker exploits. So it’s a good idea to conduct internal and external audits to provide an extra layer of security to your DAO.

This structure works for DAOs that are created on-chain. At the same time, there is a simpler (and so far more popular) option — off-chain.

Off-chain DAOs do not operate on a blockchain. Instead, they use traditional software tools and platforms to manage the organization. While they may still use smart contracts and distributed decision-making, the results of those decisions are not recorded on a blockchain. Off-chain DAOs are typically more flexible and can integrate with a wider range of tools and services.

One of the most popular tools for an off-chain DAO is Snapshot. There are a lot of projects using it, including Uniswap, PancakeSwap, and others. Just keep in mind that blockchains create a permanent history of DAO decisions and transactions, which is crucial for the high level of trust and accountability that DAOs foster. Off-chain storage minimizes that trust and accountability and can be lost much more easily either accidentally or through hacking.

Step 4: DAO treasury is your economic engine

A DAO treasury refers to the pool of funds that an organization holds and manages. The treasury usually contains the native cryptocurrency or token of the DAO as well as any other assets that the DAO has received through its operations or fundraising activities.

The DAO treasury is a key element of a DAO's financial management, as it provides the organization with the resources to fund its ongoing operations and pursue its objectives. The treasury is typically controlled by the DAO's governance mechanisms, which may include voting systems or other decision-making processes that involve token holders. By giving members the ability and tools to control a healthy treasury, you create active engagement and trust in your governance.

DAO treasuries can be used for a variety of purposes, such as funding research and development, community initiatives, or other projects that align with the DAO's mission. In addition, the treasury can also be used to pay for the ongoing expenses of running the DAO, such as legal and accounting fees, salaries of employees, and other overhead costs.

Effective management of the DAO treasury is critical to the success of the organization, and many DAOs have developed sophisticated financial strategies and risk management protocols to ensure the security and stability of their treasuries.

Step 5: DAO Members

Recruit stakeholders who are interested in participating in the DAO. This could include investors, advisers, clients, and any other people who have a vested interest in the success of your project.

It is important to understand that a good start for a DAO is only possible with like-minded people who, just like you, are burning with the same idea and have the same goals.

In general, this is universal advice for any startup (not surprisingly), but for a DAO it is critical. After all, every member of your team could have the same power of voice and the same amount of responsibility.

And, of course, start working with your community. The bigger it is, the closer you are to a real DAO. It's important for you to understand that from the moment you create a DAO, your community is not just people watching, supporting, and believing in your company. Your community is now your company. They will determine how the company will operate. They will make decisions, choose employees, or strategies for future growth.

Your job is to give them all the information they need on all the issues.

Step 6: Enjoy the power of decentralization

The best part about having a DAO is that it requires the barest minimum of active management from its creator. Empower the members to guide it towards success and they will gladly do so. In fact, they can use proposals to suggest changes in the structure of the DAO, getting a real feel for how the entire DAO community feels about specific changes and the direction of the DAO in general.

A few final thoughts

Giving your company a DAO structure can be a complex process. But with the right steps and tools, you can create a successful decentralized autonomous organization rather quickly and easily.

You can search the DeFi space for DAO structures to copy, DAO management solutions, and other tools. Though, to be fair, it’s easy to get lost and confused in all the data. If you want to get a more ready solution to your DAO building needs, I recommend checking what the DeXe project does the DeXe Network does (since they are the creators of an intuitive no-code DAO builder with solutions for the most common DAO creation and management problems). DeXe user-friendly DAO constructor and manager, and modern Asset Management platform are at your service.

Enjoy your DAO journey!

Cheers!👋