Understand DAO NFT and DAO Relation with NFT
As blockchain technology turned more common, we saw more significant use of NFTs, DAO NFTs, GameFi, and many more. In addition to this, blockchain technology has also resulted in a new form of organization: Decentralized Autonomous Organization. As a result of their potential, DAOs are gaining popularity in the digital realm. But first, what exactly is a DAO?
What is DAO?
A DAO is a blockchain-based program that provides users with a built-in methodology for collectively managing its code. It is a community-led organization with no centralized power. It is automated and credible: smart contracts establish the general principles, implement the agreed-upon judgments and ideas, polling, and even the code itself can be openly inspected at any time.
In simple terms, a DAO is administered by its members, who jointly make crucial choices regarding the project’s fate, such as technological updates and budget allocations.
In general, community members curate proposals about the upcoming operations of the protocol and then vote on every proposal altogether. Proposals that gain a certain predefined degree of consensus are then approved and implemented by the regulations instantiated via the smart contract.
Under this approach, familiar hierarchical systems prevalent in huge organizations give way to community participation. Every member of the decentralized autonomous organization oversees the protocol at a certain level.
How Does DAO Work?
DAOs are designed to resemble a business model, with policies and guidelines developed utilizing open-source code and implemented via smart contracts.
For those unfamiliar with smart contracts, it is an agreement designed to implement if and when specific criteria are met. These policies are often decided by the DAO stakeholders.
Compared to other established organizations, DAOs don’t come with any hierarchy. Instead, to regulate the firm’s interest with its team, DAOs reward a dispersed network of people to meet their objectives.
One of the prominent aspects of a DAO is the inner currency that is utilized to encourage these actors and keep the organization running correctly.
After the initial set of regulations has been developed and written into smart contracts, DAOs often enter a financing phase where anybody who wishes to join can do so.
Usually, a DAO launch happens in 3 vital steps:
Smart Contract Creation: To start with, developers must first design the smart contract behind the DAO. After the launch, they get the authority to modify the rules imposed by these contracts via the governance system. That implies they must thoroughly examine the contracts to verify that critical aspects are not overlooked.
Funding: Once the smart contracts are developed, the DAO must decide how to acquire financing and how to implement governance. Tokens are frequently traded to generate cash; these tokens grant holders voting power.
Deployment: After everything is fixed, the DAO must be launched on the blockchain. From this moment on, stakeholders make decisions about the organization’s future. The organization’s builders who designed the smart contracts don’t have much influence over the endeavor as other stakeholders.
What is the Relationship Between DAOs and NFTs?
NFTs are digital one-of-a-kind assets, while DAOs administer communities. When discussing collective DAO NFT, artists create NFT projects to manage their life cycle.
Hence, right from the community proprietorship to the governance of NFTs, DAO contributes hugely to the NFT realm.
DAO assists the NFT domain in the collective proprietorship of an asset. Dealing in NFTs, particularly in blue-chip ventures, typically necessitates substantial cash. Of course, this is not something that anyone can afford. As a result, several DAOs were created to enable a group of individuals to jointly control an elevated NFT without spending loads of money.
For instance, let’s take PleasrDAO. It is a group of “DeFi pioneers, initial NFT owners, and digital artists” who raise funding for rare NFTs. As per the site, the firm collects digital assets that showcase and fund essential ideas and causes. For every NFT it purchases, the PleasrDAO team collectively splits the cost and proprietorship of the assets. The participants had formed the group to purchase a Uniswap V3 NFT.
Another essential part in which DAO might assist NFTs is community governance. DAOs are an excellent way for fans and developers of an NFT venture to collaborate and determine the project’s fate. Many NFT initiatives have indeed formed Decentralized Autonomous Organizations.
NFT Creator Collectives:
Significant community support is required for the success of an NFT initiative. Community development is a piece of cake for well-known artists and entertainers who already have a fan base. However, the same is not the scenario for growing artists. Here, NFT creator collectives managed by DAO come into the scenario. Essentially, this group of NFT developers assists with fundraising, advertising, community development, and other activities.
Generally, creators require to trade their NFT to the DAO in return for the DAO’s tokens. The NFTs serve as security for the produced tokens and provide token value. Token holders also have the right to vote in the company.
List of Popular NFT DAO
Let’s dive into some of the most populous NFT DAO:
This NFT DAO was founded by Bored Apes collector Kylo. eth. To launch this DAO, they fragmented 49 BAYC NFTs along with a female CryptoPunk into 1,000,000 APED tokens. This allows anybody to own a piece of such highly desirable NFTs. Soon after, other NFTs were contributed, including CyberKongz, Avastar, and others. Moreover, the DAO is governed by the user via $APED shards.
Jenny Metaverse DAO:
Jenny Metaverse DAO, built on the Unicly network, purchases NFTs and deposits them in a vault. Furthermore, the NFTs are represented by the native uJENNY currency. Along with WHALE, token holders have governance powers and may vote on issues like freeing NFTs from the vault, purchasing NFTs, etc.
Flamingo DAO grows DAO money primarily by researching potential blockchain investment possibilities. As per the saying that blockchain collectors are the latest curators and investors, Flamingo DAO feels that making a move towards research on digital property proprietorship will play a vital role. This will help establish a distinct and unexplored online content market and consumption technique.
Flamingo DAO aims to gain a foothold in the digital economy, particularly the lucrative blockchain art sector that has lately emerged. Members of Flamingo DAO can combine personalized NFT resources into the DAO economy, allowing them to receive credit lines guaranteed by digital content.
Furthermore, as a part of the DAO, traders may take advantage of several benefits. For instance, people can showcase their NFT in the DAO Digital Gallery, keep the non-fungible token in the DAO vault for optimal protection, divide it, or utilize it as protection in other DeFi platforms.
Future of the Decentralized Autonomous Organization
What more is going to happen in the future for the DAO? The DAO had not come back to its former position as of mid-2020. Nevertheless, there is an outstanding deal of interest in new decentralized organizations as a whole.
In the year 2021, The Maker Foundation, the initial promoter of DAO and a cryptocurrency business icon, stated that it was handing over activities to MakerDAO and would disband by the year-end.
While there are several unanswered questions and possible challenges with law, safety, and structure, some experts estimate that this sort of organization could eventually gain traction, maybe even substituting traditionally established organizations.
DAO was an early concept and endeavor that fostered the growth and success of the blockchain sector using the smart contract architecture. As the popularity of NFT is no sooner going to slow down, traders are giving their full attention to NFT arts with collectible value. Moreover, the DAOs created to invest in NFTs have also elevated like never before.
It is expected that the NFT-run DAO would undoubtedly bring in more advancement in the future. The DAO community will also nurture more diversified types of business and success, opening up unanticipated development potential for NFT in the long run. We’ll all have to wait and watch.
Whether you wish to learn about NFT, Blockchain, Web3.0, Metaverse, or other emerging technologies, we have the vital resources that will enlighten and help you make an informed decision.
Subscribe to UPYO Blog Newsletter to deliver emerging technology updates straight to your inbox.