DAO is known as a decentralized autonomous organization that allows communities to organize, coordinate and pursue a common goal. NFT projects are leveraging the power of DAOs to create community-led organizations that bring immense value to the project and NFT holders. So what’s special about NFT DAO? Let’s find out with Weakhand in this article.
Before jumping into the article, everyone can refer to some of the following projects to better understand.
- What is a knife? The future of the decentralized world
- What are NFTs? All about NFTs
What is NFT DAO?
What is DAO?
DAO stands for Decentralized Autonomous Organization is a decentralized autonomous organization, established by a group of people with a common goal of acting in the best interest of the organization. However, what makes DAO different from traditional organizations is that DAO is fully automated using Smart Contracts to set the basic rules for the organization. Decisions made by the community are made through many forms such as: Voting,…
Today, DAO is widely applied in many different fields, such as in Defi protocols using a decentralized governance model, a decentralized investment fund,… However, everything has its own benefits. The common feature is that members of the organization can easily participate in DAO decisions and verify proposals and activities within the organization.
Introducing NFT DAO
NFT DAO simply combines the governance model of DAO and the power of NFT as a membership and governance token. This allows NFT projects to establish a governance structure that empowers NFT holders to participate in overall project development decisions.
What is NFT DAO
NFT DAO is a new concept in the market and has been applied by several NFT projects however it has demonstrated the core values of Web3 through collaboration, decentralization and mutual economic benefits. .
NFT DAO Working Model
There are 3 core components in NFT DAO including: Community Treasury, governance and membership. In this, NFT acts as a governance token as a participating member of the DAO while also driving revenue for the DAO through the sale of NFTs by users on the secondary market. Next, let’s learn in detail about the core components in NFT DAO:
Community Treasury
Each DAO NFT will have a Community Treasury created through proceeds from the project’s initial NFT minting and secondary market royalty revenue. Treasury is usually a multi-signature wallet such as Gnosis Safe with signers who are core members in the DAO. This provides initial capital and ongoing revenue to support the DAO’s growth.
The money in the Community Treasury is used to invest in member initiatives that can create value for the project or projects that can bring profit in the Crypto market. These projects may include: Yield Farming project, Blue Chip NFTs,…
Governance (administration)
NFT DAOs typically use a governance model similar to traditional DAOs including 3 phases: Proposal, feedback, and official voting. Any member of the DAO can create a proposal and receive feedback from other members before putting it to a vote. Voting can take place off-chain via Snapshot or on-chain as NounsDAO is doing.
Additionally, the Forums are an ideal place for DAO communities in general and NFT DAOs in particular, helping to manage the proposal and feedback stages of the governance process. This helps the DAO capture all the relevant information before the vote officially takes place. The proposal is then uploaded to Snapshot where members in the NFT DAO can vote.
Membership
NFTs serve as proof of ownership granting the owner access to the DAO. This provides benefits to NFT holders such as the ability to vote on proposals or profit from project revenue. It also ensures that only those interested and moderated by the DAO can influence policy and influence decisions.
At the present time, DAOs are constantly improving new voting mechanisms, but the majority of NFT DAOs still maintain the voting mechanism of 1 NFT = 1 vote. This benefits holders of multiple NFTs in the project with additional voting rights in the DAO.
The Benefits That NFT DAO Brings
NFT DAO distributes ownership of the NFT project to the original creators and all owners. Founders act as stewards of the DAO by building together with holders in the hope of creating value for the project and the community. Here are some of the benefits that NFT DAO brings:
Project hierarchy
While many projects participate and consider the ideas of their owners, most remain centralized organizations. The founders retain decision-making power and control of the project.
Meanwhile, the NFT DAO decentralizes the project by allocating ownership to NFT holders through governance protocols and the Community Treasury. NFT holders can actively participate in governance by creating, discussing, and voting on proposals. This creates a more trustless and decentralized environment for the community.
Create a common economy
Typically for NFT collections, all the money collected from copyright fees or business activities goes into the project. In other words, NFT owners only receive certain small benefits, so there will be no incentive for NFT holders.
In NFT DAO, NFT holders have more rights and are part of the project. All profits earned will be distributed to NFT owners. Therefore, they will be more motivated and aware in building and developing the project.
Community oriented
Community forms the heart and soul of NFT projects. NFT DAO empowers its community to participate in guiding the development of the project. Decentralization of decision-making power and sharing of economic benefits creates a more community-oriented approach.
Some Popular NFT DAO Projects on the Market
Although NFT DAO is still quite new, there are already a number of projects on the market. Here are some outstanding NFT DAO projects:
Nouns DAO – NFT DAO is the most successful in the NFT market
Nouns NFT
Nouns DAO is a DAO that manages the Nouns ecosystem itself and is one of the most successful NFT DAOs on the market at the moment. Initially, all NFT Nouns are launched in the form of auctions and all proceeds will be transferred to the Treasury.
NFT Nouns owners have the right to control the Treasury through voting activities to use the money in the Treasury to participate in various activities in the Crypto market to earn profits for NFT owners.
The Llamas – Combination of NFT and Defi
The Llamas NFT
The Llamas are a collection of 1,111 NFT Llamas where all revenue from minting NFTs and a 5% royalty fee for each NFT sale on the secondary market goes to the Treasury. The Llamas will use the money in the Treasury to buy CRV and CVX and then provide liquidity to earn profits.
Profits will be divided 50% to NFT Llamas holders and the remaining 50% will be transferred to the Treasury. In addition, The Llamas also creates a miniature society and each person participating in activities in the community will be given a Badge.
Initially, users can earn 3 different Badges corresponding to higher levels including: Raid, Class and Veteran. The more good Badges a user owns, the more “prestigious” they are and can offer other missions and Badge packages to community members. These tasks revolve around the Curve ecosystem including: Providing liquidity on Curve Finance, coordinating liquidity,… When completing the task, users will receive rewards of Token CRV, CVX,…
summary
Overall, NFT DAO is a potential new segment in creating a new development model for NFT projects. Above is all the information that I want to introduce in this article, hope everyone has received useful knowledge.
