By Alex, Peter
A DAO is a community that’s owned and managed by its members.
DAOs vs. companies
The simplest way to describe how a DAO works is to compare it to a company:
- Company: Hierarchical structure led by the CEO and other executives.
- DAO: Flat structure led by a group of core contributors.
- Company: Management approves proposals and makes decisions behind closed doors.
- DAO: Members submit proposals and vote on them using DAO tokens in public.
- Company: Candidates need to apply and pass interviews to get hired.
- DAO: Some DAOs let anyone join while others require a minimum number of tokens. Tokens can be bought or earned by contributing to the DAO (e.g., taking meeting notes).
- Company: Employees need to climb the corporate ladder to get promoted.
- DAO: Members can start contributing right away to gain the trust of core contributors.
- Company: Most employees work full time and are compensated through salary and stock.
- DAO: Most contributors work part-time and are compensated through DAO tokens or other cryptocurrencies (e.g., stablecoins).
As you can see, DAOs have both advantages and disadvantages compared to companies:
- Advantages include letting more people contribute, participate in decisions, and own the upside.
- Disadvantages include having to coordinate a part-time workforce in a decentralized manner.
DAOs in practical terms
Practically speaking, most DAOs use:
- Communication tools like Discord and Discourse to stay in touch.
- Governance tools like Snapshot for members to vote on decisions.
- Crowdfund tools like Mirror to raise capital for the DAO.
- Treasury tools like Gnosis Safe to manage the DAO’s treasury.
Now that you have a high-level understanding of DAOs, let’s cover how you can find one to join.
Up next: How to find a DAO to join?
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