CHAPTER 3: DAO USE CASES
Decentralized Autonomous Organizations have been employed in a wide array of applications, from funding innovative ventures to facilitating charitable initiatives. Their use cases highlight their flexibility and potential to disrupt traditional models of organization.
How DAOs Have Been Used So Far
DAOs have been implemented across diverse domains:
For-Profit Ventures: MakerDAO (rebranded as "Sky" in August 2024), one of the most prominent DAOs, oversees a decentralized financial system providing stablecoins and lending protocols. It allows participants to influence governance decisions, such as altering interest rates or updating its protocols, via a token-based voting system. This model showcases how DAOs can manage complex financial ecosystems transparently and efficiently.
Non-Profit Organizations: Charity DAOs, like Giveth, provide platforms for transparent and democratic donation management. Contributors can track exactly how their funds are used, and communities vote on where resources are allocated. For instance, Giveth has successfully funded social impact projects in underserved areas, demonstrating how DAOs can foster accountability and collaboration in charitable efforts.
Creative Collaboration: PleasrDAO, a collective of digital art enthusiasts, has pooled resources to acquire culturally significant works, such as the Wu-Tang Clan’s unique album, Once Upon a Time in Shaolin. This DAO uses its acquisitions to promote art and cultural preservation, making ownership a collective experience.
Community Building: Friends with Benefits (FWB) demonstrates how DAOs can foster vibrant communities. FWB operates as a membership DAO, granting access to events, discussions, and collaborations through $FWB tokens. Its global, decentralized structure allows members from diverse backgrounds to contribute to and benefit from the community's collective efforts.
Sought After Ingredients
The journey of DAOs toward greater use and legal recognition has underscored several key insights:
Flexibility Matters: Legal structures need to accommodate the unique operational models of DAOs without imposing rigid frameworks.
Transparency Builds Trust: Regulatory frameworks must ensure transparency without stifling innovation.
Global Compatibility: DAOs are inherently global entities. Localized frameworks must align with international standards to remain relevant. For DAOs to truly thrive, global compatibility must be prioritized. This requires:
Harmonization of Regulations: International cooperation is essential to establish uniform guidelines that reduce friction for DAOs operating across borders. Jurisdictions like the European Union have begun exploring cross-border frameworks for blockchain governance.
Interoperability Standards: DAOs depend on seamless interaction between various blockchain platforms and legal systems. Standards for interoperability will enable DAOs to function smoothly in diverse regulatory environments.
Collaboration Across Sectors: Governments, private entities, and blockchain communities must work together to address legal and technical challenges. Initiatives like the OECD’s Blockchain Policy Forum illustrate how multi-stakeholder dialogue can foster innovation. As DAO adoption grows, fostering global alignment will ensure that these decentralized entities can fulfill their potential without being hindered by fragmented legal landscapes.
Chapter 3 Key Takeaways:
DAOs serve various purposes, from funding innovative projects (e.g., MakerDAO) to charitable initiatives (e.g., Giveth) and creative collaborations (e.g., PleasrDAO).
Key insights for DAO frameworks include flexibility, transparency, and global compatibility to reduce legal and operational friction.