How to Create a DAO: In our previous article DAO Part 1 – What Is a DAO, the TokenMason team explained what a DAO is and how they work. In Part 2, we explain the three key steps to establishing and propagating a DAO.
How to start a DAO
Step 1: Create the smart contract
Developers of the DAO create and code the smart contract that decide the groups purchase and dictate the rules. This phase requires extensive testing and scrutinizing of the code, because after creation this can only be changed by group vote/referendum post launch.
Step 2: Raising funds
DAOs run on their collective reserve of currency, needs to be raised from its members. It’s here where people purchase their stake into the group if the agree with its mission and nominate to buy a finite number of tokens in exchange for a holding stake. Quite often governance rules are established during this period.
Step 3: Launch DAO
The DAO’s code is then deployed onto the blockchain. From here onwards, it can only be altered via a collective vote by the stakeholders. Additionally, the original founders/developers will relinquish their control of the project
As everyone equally shares the risk, everyone has the same vested interest in ensuring that that it runs as effectively and efficiently as possible. Members similarly will share in the reward proportionally to their stake- If the group succeeds, its members are rewarded more currency and which in turn increases the value of the entire DAO ecosystem.
Those who purchase a stake also share in strategic group decisions. Any new proposals are required to be voted upon and must be approved by the majority of participants prior to being enacted
To gain access to the DAO, usually you must purchase the cryptocurrency token that the DAO is written to execute on. Typically, it will be currency unique to the DAO. FWB token runs the entire ecosystem on the FWB token. The smart contract encoded rules of a DAO include utilising the currency to trade things within the system, such as digital magazine subscriptions, NFTs, virtual land and music.
To promote integrity, DAO’s are created on open source blockchains so the code can be subject to scrutiny by anyone. If anyone was to submit an action be it a proposal or an audit of the groups reserve treasury and any action within the DAO’s that action is recorded permanently on the blockchain thus keeping a transparent digital record. It’s this perpetual transparency, authenticity that facilitates trust between members and ultimately achieves the DAO’s purpose dynamic or otherwise.
Authenticity, integrity and robust smart contracts are pivotal tenets to ensure the DAO will succeed in its goals and the team of highly experience developers at TokenMason will cover your needs from the launching the ICO, building smart contracts and decentralised apps for your DAO from the ground up.
How TokenMason Can Assist
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