Crypto trends and blockchain technology are bringing a constant stream of new innovations that offer many promising opportunities. Businesses and individuals around the world have become aware of the potential of blockchain technology as new advancements such as DeFi emerge. Crypto trends continue to evolve as do the tools available to support them.
Some of the best DAO tokens are a good example of how technological advances can drive DeFi governance. DAO members enjoy governance system privileges granted only by internet-native social organizations. Due to the growing interest in decentralized finance, the role of DAOs has become a focal point, too.
The phrase refers to a decentralized autonomous organization — an association created around a crypto project or a financial goal that can't be achieved by one individual alone. An example of the goal might be to pool funds to buy an expensive piece of art. However, DAOs can also function as private clubs, where you have to purchase a particular NFT to gain access. The DAO crypto token can be used for many purposes, including investment, buying or crafting NFTs, fundraising, charity, and more.
What Is a DAO?
The technical definition of a DAO refers to a decentralized autonomous organization; that is to say, a group of people who agree to follow certain rules for a common goal. Smart contracts refer to algorithms that run when certain criteria are met and are written into the code of the organization.
All participants are on board with the organization, which has pretty much any purpose. As a result of the "decentralized" aspect, there is no central governing authority. Unlike conventional CEOs, DAOs operate on a flattened hierarchy; meaning each staff member has an equal stake and no single person owns or controls the entire organization.
A DAO is entirely online and uses blockchain technology as a ledger to record decisions.
How Does a DAO Work?
Do you want to conduct your own research? Wondering how DAOs work? An initial DAO is created with smart contracts incorporated in its code that will execute certain actions when they happen. When someone joins the group, they are required to follow its rules, and if those rules are violated, their funds are locked and they are unable to use the DAO. DAOs, in theory, ensure that everyone follows the rules.
Each DAO has an internal repository where its cache of digital currency is stored, which members can access only with approval by the group, and decisions affecting the group are made collectively during a fixed period. In order to create and launch a DAO, you need to follow three steps:
Smart contract: Smart contracts that dictate the rules of the group and determine the group's purpose can be coded by DAO developers. During this stage, the code is extensively tested, since any changes can only be made once the DAO is launched.
Fundraising: A DAO's currency must be raised from its members from its shared cache. In exchange for a stake in the group, anyone who supports its mission buys a certain amount of top DAO tokens. Regulations can be established during this phase as well.
Release: Upon deployment, the DAO's code is placed on the blockchain. From this point on, only the stakeholders can vote to change it. Original developers no longer control it.
Benefits of DAOs
A digitally-run decentralized autonomous organization like a DAO typically has many benefits over traditional platforms. Here are a few of them:
Two parties must lack trust: In contrast to traditional organizations, DAOs take advantage of the fact that you only need codes to operate them. They can be heavily tested before they launch and are publicly available. Upon its launch, every action a DAO undertakes needs to be approved by the internet communities, ensuring total transparency and accountability.
Organizations without hierarchy: While these organizations lack hierarchical structures, they still can accomplish tasks and grow when controlled by stakeholders via native tokens. A lack of hierarchy is helpful in this context because it allows stakeholders to present innovative ideas that an entire team can consider and improve.
System of voting rights: The system of voting rights makes it easy to solve internal issues. Using a smart contract, you can find the solution more quickly.
Top DAO Tokens 2022
The list below indicates what DAO tokens to buy during this dip, as well as how their members can reach a consensus and make decisions. Diverse decentralized autonomous organizations have different purposes, such as grant-making, social good, and media. Most top DAOs are based on DeFi (decentralized finance) protocols.
Decentraland DAO’s virtual land parcels are governed by a decentralized body instead of a central authority. It combines the functions of a homeowners' association and a decentralized city planning committee. As opposed to elected representatives, everyone has the ability to vote based on how much virtual property they own. The vote counts for some proposals seem low for this reason.
In the real world, that virtual land would occupy approximately 9 square miles. Last year, a plot of land in Decentraverse sold for $2.43 million to the Metaverse Group, a Tokens.com company hoping to become an industry developer.
The use of Maker DAO’s algorithmic stablecoin has also made the platform vital for working with all things decentralized. This DAO project is set on exploring the new and exciting ground for the crypto trends: onboarding non-crypto assets. During the platform's governance token vote last year, MKR holders voted to use tokenized versions for freight and shipping invoices, agricultural real estate, and short-term trade receivables.
In many ways, Mirror is like Medium, Kickstarter, and Substack. The Mirror launched in February of 2021, and you could only get access if you finished in the top 10 in its weekly WRITE race, in which existing members vote for aspiring members. The winners received one WRITE token that could be redeemed for a blog hosted by the Mirror. Later, Mirror changed course and opened up the DAO platform to anyone, though names still need to be bought through the WRITE race.
"FriendsWithBenefits," or simply FWB, looks like a membership-only club, but it raises fundamental questions about social network value accrual. More specifically, how does Web3 technology make Spotify and Facebook better? You first need to buy some FWB DAO crypto tokens. The more of these you possess, the more stuff you can do. FWB tokens, which cost around $15 each at today's prices, can be used to subscribe to the community's newsletter.
With five DAO tokens, you will get exclusive access to different community-driven events and gain access to the FWB's Cities initiative, a transparent computer program that creates FWB hubs in NY, London, and LA.
A 58-member community within EulerBeats, BeetsDAO is obsessed with all music-based NFTs. At its core, BeetsDAO is primarily used to pool funds for group investments, similar to many of the other DAOs on this list. The organization has also sponsored new works of art and music on a few occasions.
In March of last year, DAO purchased EulerBeats Enigma NFTs that were rare and generated audio files using algorithmic methods. Within a month, the group unveiled the "Nyan Dogg" NFT, a collaboration between the original Nyan Cat artist and Snoop Dogg.
Aragon is another DAO focused on allowing others to establish their own DAO. With Dragon's DAO infrastructure, clients can connect with anyone from anywhere at any time.
Holders of the ANT DAO token can express their agreement or disagreement regarding the decisions that influence corporate operations autonomously. As one of the leading DAO tokens, Aragon allows token holders to join or create DAOs based on Dao platforms.
In addition, Aragon Fundraising empowers DAO members to collect fundraising for their social organizations.
The Dash DAO project is another example of how the best DAO projects can drive future DeFi development. The DAO project aims to provide faster transactions than Bitcoin through decentralized digital payments. DASH, the utility token of the DAO, has grown substantially in recent years.
Over 10 million DASH tokens have already been issued. Moreover, Dash has also enjoyed exceptional growth prospects in recent months, particularly with its focus on anonymity.
In Compound, users who hold COMP tokens are elevated to decision-makers within the government ecosystem. The token COMP functions as the protocol's governance token. Compound is a protocol that enables developers to unlock finance applications using interest rates based on an algorithm.
A compound loan lets you borrow money using collateral such as other cash. Bitcoins, for example, can be kept as collateral and converted to dollars. Due to the fact that the compound application is built on Ethereum, it cannot be censored, thus allowing it to be accessed by anyone in the world. All calculations are done by thoroughly audited code.
Curve introduced its DAO token (CRV) in mid-2020 as a way to arrange on-chain governance. The maximum supply of this token is 3,303,030,299 CRV and the circulating supply of this token is more than 420,000,000 CRV.
A market maker system, Curve DAO trades assets with the same value and is one of the liquidity providers. As you can see, the Curve DAO token enables the Curve financial platform as a whole. With Curve DAO's capability to make automated crypto market orders and provide a liquidity pool, new opportunities for applications in DeFi's promising future are opened.
With Ave's DeFi protocol, users can actively manage crypto ecosystems and create decentralized applications. The AAVE tokens were introduced in order to implement this governance system, and these tokens provided the means to distribute voting rights to Aave users.
In addition to providing users and lenders the opportunity to earn passive interest income from assets, Ave acts as a fully decentralized and secure ecosystem. Its partners include Axie Infinity, Balancer, Pixelcraft Studios, etc.
Since Ave is an open-source and fully decentralized autonomous organization built on the Ethereum platform, users can borrow digital assets and earn interest on their deposits and loans.
0x is a common mention among different DAO projects. Using the Ethereum blockchain, it facilitates peer-to-peer asset exchanges. After deciding to switch to the DAO governance model in April 2021, 0x created 0x DAO. A DAO would focus mainly on maintaining the community treasury rather than upgrading the protocol as a whole. Treasury funds are managed by token holders of the DAO to drive positive effects on the ecosystem and other token holders.
It's not surprising that 0x and its native tokens ZRX would dominate the DAO space since they are autonomous crypto exchanges working through open-source smart contracts.
When you search online for DAO projects that match your needs, Decred is another top platform that you should consider. In contrast to all protocols presented so far, Decred is a type of blockchain on its own. Decred makes use of a hybrid consensus mechanism, which combines PoW and PoS protocols. It even allows members to purchase tickets and participate in governance. With the DCR native crypto token, the platform was able to resolve the scalability issue for those who buy Bitcoin. Decred uses the DAO concept to empower community members to vote on future DAO projects through its native token. In addition to this, Decred is totally decentralized and self-governing, making it difficult for it to undergo a hard fork.
BitDAO is a unique DAO ecosystem and has attracted the support of a number of big-name investors, including Peter Thiel, Alan Howard, and Founders Fund. Similarly, Bybit, a Singapore-based crypto derivatives exchange, has committed 0.025 percent of its trading volume to the DAO. Co-founder of ByBit and CEO of BitDAO, Ben Zhao is also the brain behind ByBit.
As a result, the entity will begin investing in DeFi projects, granting grants, and negotiating token swaps, all to diversify its treasury. All of these goals seem fairly typical for a traditional venture capital firm. However, since the BIT is a decentralized organization, only token holders can propose proposals and vote on whether they are executed.
A dynamic DAO system that Synthetix uses allows members to elect representatives periodically. It's a robust system for governance, which makes Synthetix stand out. The Synthetix ecosystem has six governing bodies, each of which plays a specific role:
- Spartan Council
- Ambassador DAO
- Core Contributors
- Protocol DAO
- Grant DAO
- Synthetix DAO
UMA DAO allows users to launch synthetic assets via the Ethereum blockchain. The UMA token enables the token holder to govern certain corporate operations, including voting on price metrics and managing the infrastructure for a protocol. Two DAOs now support the protocol: UMA token holders and the evangelist SuperUMAn DAOs.
After introducing its governance UNI token in September 2020, the most popular decentralized exchange in the industry has become a very influential DAO. When Uniswap decided to reduce the trading fees for some stablecoin swaps, volume rose dramatically. Uniswap's volume likely reflects users migrating from other DeFi projects.
A battleground for the crypto community members also made headlines with the Uniswap DAO. The DeFi sector was supposed to be offered a "political defense" using $40 million from the project's treasury in May. As proof that the group in support of unlocking those funds was made up of influential delegates from mega-investment. As a result of the pushback, the proposal was eventually passed (under a smaller budget), but a16z had to open-source how it delegated its mountain of governance DAO crypto tokens.
The governance tokens owners are collectively responsible for the following resources:
- Uniswap Governance
- SOCKS liquidity token
- Protocol free switch
- Uniswap Default List
- UNI community treasury
LexDAO explicitly states that LexDAO is not a law firm and cannot give legal advice. A group of "legal engineering professionals," some of whom are attorneys, have banded together to develop tools to replace some of the more basic and inaccessible legal services. As an example, the DAO's LexLocker system holds deposits in escrow while goods or services are delivered without the need to rely on a shared bank account, bank transfer or any other third party.
In addition, its group has devised a method of providing arbitration services through a multi-sign panel of LexDAO legal engineers. When they're not constructing new tools, the DAO's members share legal thoughts about disputes that arise in blockchain projects.
Although it did not succeed in winning a copy of the US Constitution at auction, ConstitutionDAO has been a significant force in bringing DAOs into mainstream culture. Several similar DAO projects have since followed, showing how crypto groups can have real sway in the world and demonstrating the power of community-centric organization. As for the native token of ConstitutionDAO, it hit an all-time high in the wake of the project's failure.
During its first year, PleasrDAO has gathered money from individual artists and collectors in order to acquire culturally relevant digital art. After first purchasing an animated Uniswap ad by the artist Pplpeasr for $525,000 in March of 2021, the DAO quickly expanded beyond just Pplpleasr art. In addition to the NFT purchased by the collective, which at the time was the fourth biggest seller ever, “Once Upon a Time in Shaolin,” the Wu Tang Clan album once owned by “pharma bro” Martin Shkreli, was also purchased by the collective for $4 million. As well as the Shiba Inu image that led to thousands of memes and meme DAO coins, PleasrDAO paid $6.3 million for the Ross Ulbricht Genesis Collection.
Even if you aren't a Dungeons and Dragons fan, its website may appeal to you. In case you are a D&D fan: Savor the moment! All members are fully focused. They offer consulting, design, development, and marketing services. In final words, one of the projects in their portfolio is WrapETH, which wraps Ether or xDAI with an ERC-20 token for trading, and another project is Smart Invoice (currently in beta) which allows the payer and beneficiary to lock money in a contract and allow it to be released once the terms have been met.