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With the genesis of Web3 comes a new way for organizations to govern themselves while granting more power to community members. Enter, the DAO. beginning in 2016, DAOs have been used to manage funds, and establish community-driven organizations for Web3 projects.
Solana devs have taken the idea of DAOs and iterated upon it, building the beautiful and thriving DAO ecosystem we see today. As shown by Realms, Solana DAOs are in full effect, managing proposals for grants, treasury changes, and other organizational matters. On the other hand, Solana devs are taking full advantage of the blockchain’s composability and spinning up integrations to provide better tooling for DAOs.
In this breakdown, we’ll explore DAOs, their role in Web3, and Solana’s breakthrough achievements in the DAO space.
What are DAOs?
Decentralized Autonomous Organizations (DAOs) are internet-native community-led entities with no central authority. As DAOs are governed autonomously, all decisions are made by the community’s members. Unlike traditional organizations, DAOs do not feature hierarchical management structures. The first set of rules of the DAO is established by a core team of community members and voted on by existing members. After setting initial rules the smart contract enforces them until changed by another proposal.
These smart contracts also ensure the DAO abides by its member voting thresholds and allocates assets to the correct parties after a successful proposal. Every transaction by an on-chain DAO is fully accessible via the Solana Block Explorer allowing for public audits at any time. Solana’s DAO governance portals, Realms and Tribeca also give community members a view of the DAOs proposal history.
As organizations DAOs require funding, as well as a way for DAO members to hold governance power. Both of these problems are solved with a DAOs token IDO/ICO. Tokens are sold to raise funds— giving holders voting rights in the process. Token holders receive voting rights proportional to their held tokens. Then the DAO takes the funds raised by their IDO/ICO and uses them to supply their treasury/reserves.
Generally, community members put forward proposals regarding the future operations of the protocol and then come together to vote on those proposals. Proposals can range from partnership requests with other DAOs/protocols to grant proposals that control treasury allocations. Proposals that reach the threshold for member approvals are accepted and the desired action is triggered by the smart contract.
Solana dApps like Realms and Tribeca can be seen as the DAO governance portals of Solana. All of the essential smart contracts needed for DAOs are baked into these apps’ infrastructure. Additionally, these dApps allow users to connect their wallets and interact with the governance for particular DAOs.
Realms is a DAO governance portal that allows users to create and manage their DAOs. DAO creators can distribute tokens to their community and determine the voting power of each token allowing DAO community members to create and vote on proposals. We’ve integrated with Realms to power token distribution for every DAO that creates a proposal that triggers the distribution of funds.
Apps like Realms have given us insight into how DAOs handle grant proposals, and their growing need to distribute payments. With our integration into Realms, we’ve seen many DAO proposals make use of our payment streaming within their proposal.
Tribeca is a DAO governance portal inspired by Curve and Compound’s VE governance model. Tribeca mainly caters to protocol DAOs, as it connects with the protocol and allows users to lock up governance tokens in exchange for Voter Escrowed (VE) tokens that possess voting power. Similar to Realms, Tribeca allows DAO members to create and vote on proposals, but they can only use VE tokens. Tribeca’s VE model falls in line with its goal to lend more decentralization and community ownership to Solana protocols. Using Tribeca, Protocols can ensure demand for their token and protocol by requiring users to lock their governance to make protocol changes.
DAO tooling in the Solana ecosystem has been scaling rapidly allowing DAOs to accommodate and interact with their community in different ways.
Different types of DAOs
As Decentralized Autonomous Organizations, DAOs can take many different shapes and be committed to different purposes. For instance, there are DAOs like Ukraine DAO that represent charitable organizations where members approve donations, and there are also DAOs like AngelDAO made up of angel investors that choose new projects to fund. Here are all of the types of DAOs we’ve encountered in Web3:
A protocol DAO is a DAO that governs a decentralized protocol like a yield optimizer, lending market, or decentralized exchange.
Philanthropy DAOs help address social issues by gathering members that revolve around a shared purpose. Members vote on making contributions/ donations to causes.
Social DAOs bring together like-minded individuals in an effort to create a sort of Web3 “think tank.” Social DAOs can consist of developers, writers, artists, and other creatives. Social DAOs are usually gated by NFT ownership or personal invitation.
Collector DAOs are comprised of members that have a shared interest in specific NFTs/digital art. With collector DAOs, members pool funds together so that the community can invest in “blue chip” NFTs. Each member is entitled to a share equivalent to their governance tokens.
Investment and VC DAOs
Investment and VC DAOs pool funds to invest in web3 startups, and protocols.
Grant DAOs are designed to fund projects and integrations in web3. Grants are either an extension of an existing project or an entirely separate organization.
Media DAOs create content driven by the community. Members create and vote on proposals for which the subject matter of the media is created.
Service DAOs offer talent hunting services where they direct talent to find jobs in web3.
Why do we need DAOs?
As a decentralized organization, DAOs benefit from the lack of trust required between parties. With DAOs, trust is only maintained by smart contracts. This falls in line with the Web3 ethos of having a trust-minimized, decentralized way of conducting business. Through blockchain technology, a public ledger of all account transactions is publicly available for anyone’s viewing. This has helped to drastically change the dynamics of the people in charge, and the community.
The smart contract code is the only component to be trusted which allows community members to better understand their risks, and audit DAO transactions.
Despite lacking a clear hierarchy, the DAO structure allows groups to grow while being controlled by stakeholders aligned with the project as shown by their token holdings. Though All DAO members can make proposals, members with the most governance tokens hold the most power — Which helps to solve internal disputes.
For example, a Web3 founder may have views that conflict with the wants of stakeholders. In this event, everyone can come to a consensus and vote together to deny proposals.
The governance token voting model also helps to gauge adoption, and stakeholders’ long-term alignment with the project. By forcing community members to hold the governance token before they participate with the DAO, project founders can measure the demand for their project through how many tokens their community holds.
Solana DAO ecosystem
Solana’s DAO ecosystem is thriving with innovation and talent! There are many DAOs in the community that have done a lot to empower their communities, as well as the Solana ecosystem. Some of the most unique DAOs on Solana include:
SuperteamDAO is a social DAO made of some of Solana’s brightest builders, and creatives dedicated to increasing adoption and expansion in places like India, South East Asia, Eastern Europe, and Africa by helping projects launch and grow. launch and grow. SuperDAO provides resources like a Web3 job board, bounties, and developer courses.
Grape DAO is a social DAO intended for Solana supporters “focused on accelerating the adoption and growth of the Solana ecosystem whit their talents and enthusiasm.” Grape DAO aims to onboard more people to the Solana ecosystem, support existing Solana projects, and provide educational materials for users looking to interact with Solana in any way. Grape features a dashboard on its website that allows users to view their current balances, NFTs, and create online storage bins via Genesys GO. We’ve also recently integrated with Grape so users can view their payment streams from the Grape dashboard. Grape’s membership is currently tiered by how many $GRAPE tokens a user holds.
DAOs are providing a way for organizations to effectively manage themselves through community governance, which paves the way for new models to be created, as seen by the types of DAOs that have been popping up recently. Additionally, Solana has put its own spin on the ‘DAO’ concept allowing for unparalleled tooling created through collaboration. No one knows what the future holds but one thing is for certain: Streamflow will continue to work towards facilitating top-level integrations with other tools to better serve Streamflow users and expand DAO tooling as a whole.
To learn more, visit the Streamflow blog