Blockchain technology has come a long way since its inception. In recent years, we’ve seen blockchain technology revolutionize different industries, from the financial sector to the creative industries. Along with the wider mainstream adoption of DeFi, GameFi, and NFTs, other blockchain technologies are also becoming increasingly popular in the digital space – namely Decentralized Autonomous Organizations (DAOs). But what exactly is a DAO, and what does it have to do with NFTs?
Keep on reading to learn the basics of what a DAO is, DAO NFT meaning, and some examples of already existing NFT DAOs that have been relatively successful to date.
What Is a DAO and How Do They Work?
A Decentralized Autonomous Organization or DAO is a community-led group governed using tokens or NFTs that grant members voting rights. DAOs operate using smart contracts to automatically execute a command whenever a set of conditions are met. As the name suggests, DAOs are decentralized and autonomous. The rules of a DAO are stored on an open-sourced blockchain, meaning anyone can look at their code and transaction records. A central entity does not direct the decisions in a DAO but through proposals shared with the project community, who then vote on them.
In a sense, a DAO functions similarly to a corporation, except it works without a hierarchical structure; it attempts to provide a new, democratic process through decentralized governance. Unlike a traditional organization, members of a DAO are not bound by any formal contract. Instead, they are bound togETHer by a common goal or incentives written into their rules.
There are many different types of DAOs out there, and you can even create your own if you wish.
DAO NFT Meaning
One of the ways NFTs and DAOs are closely connected is in the form of collector DAOs. A collector DAO is an organization that pools togETHer funds to acquire and issue NFTs. Hence, DAO NFT simply means non-fungible tokens owned by DAOs
Investing in an NFT project, especially a more popular one, can sometimes require significant capital that could be difficult for smaller traders to afford. Collector DAOs let multiple individuals own a fragment of an NFT. An example of a collector DAO is the APE DAO, a DAO that fractionalizes Bored Ape Yacht Club NFTs, allowing multiple users to own a fraction of the same asset.
The connection between DAOs and NFTs isn’t just limited to collector DAOs. DAOs can also help create NFT projects via community governance. Community members and creators can collaboratively come to decisions and contribute ideas for the future direction of the NFT project.
Moreover, DAOs have the potential to help smaller projects or creators build a dedicated community. However, unlike some celebrities and well-known artists who already have a sizable following, not every emerging creator will have a dedicated community from the start. Much like a crowdfunding platform, collector DAOs can help raise funds and create engaged communities for different NFT projects by allowing people to vote on the projects they most want to succeed.
Examples Of NFT DAOs
Wondering what are some of the most popular NFT DAOs? Here are a few examples:
APE DAO
APE DAO was started by Bored Apes collector Kylo.ETH. They fractionalized 49 BAYC NFTs and a female CryptoPunk into 1,000,000 APED tokens to launch the decentralized organizations in June this year. Meaning, as part of their DAO, anyone could own parts of these highly sought-after NFTs. The Decentralized Autonomous Organization was a great success with the tokens selling out in just four days! Soon after, the members donated more NFTs, including CyberKongz, Avastar, Punk’s Comic, and more. Furthermore, the community governs the DAO through $APED shards.
YGG DAO
As opposed to NFT art and collectibles, YGG DAO focuses on in-game assets from blockchain and NFT games. Currently, Yield Guild’s three co-founders manage all the assets. Furthermore, YGG issues the ‘YGG token’ for members. Accordingly, Token holders can vote on “decisions related to the guild’s business and governance” and participate in various activities.
SharkDAO
SharkDAO brings togETHer a group of strangers to pool together funds to acquire rare NFTs. However, it focuses only on Nouns, a generative art NFT project. So far, SharkDAO has acquired 5 nouns and has 400 members (or as they call it, ‘Sharks’), together raising 1000 ETH. Here, members will receive SHARK tokens in exchange for ETH. Then, with this token, members can vote and “steer the mission” and how they “deploy resources”.
Jenny Metaverse DAO
Jenny Metaverse DAO, set up on the Unicly platform, acquires NFTs and stores them in a vault. Additionally, the native uJENNY token represents the NFTs. As with WHALE, those who hold the token holders get governance rights and can vote on decisions such as releasing NFTs from the vault, acquiring NFTs, and more.
Closing Thoughts
Having learnt DAO NFT meaning, DAOs clearly have a number of use-cases within the NFT industry. In the coming months and years, these use cases are only going to grow. Moreover, their vision of an organization owned and managed by its members could one day even replace some traditional organizations.
In the future, Decentralized Autonomous Organizations could also become a must-have for NFT projects. As the NFT space continues to grow, we will likely see more projects incorporating DAOs. Meaning, we will likely see a flurry of DAO activity in the next year and further.
