Original source:p.mirror.xyz

Original source:

Original translation: dave lin。

This article is from The SeeDAO

In the encrypted world, 2020 is the era of DeFi.

So far, 2021 is the era of NFT.

Everyone knows about the hot jpeg summer, right?

2022 will be the era of community DAO.

Community DAO = DeFi infrastructure + NFT business model + creative people.

Crypto (encryption) is not just a technology, it is a native Internet economy. Income is tracked using ETH; key decisions are made through community governance; transactions are executed through on-chain smart contracts; treasuries are controlled through multi-signature mechanisms; and value is captured by tokens.

DAO is the native organizational structure of the encrypted economy.

The DAO is built on a Discord server and blockchain, not in Delaware or the Cayman Islands. DAOs provide an internet-native way to pool money, make collective decisions, and capture value.

These days, DAOs are everywhere: collecting NFTs, socializing, building software, esports, musicians, media, education, funding public goods.

first level title"DAO"But what exactly makes

The reason for DAO?

• While DAOs vary in purpose, size and complexity, most contain the same core components:

Group chat"DAOs usually start with someone saying"Wouldn't it be cool if...

• Get started, and add some friends to a Telegram group or a Discord server.

Treasury

• The most common type of community DAO is to collect blue-chip NFTs and store them in a multi-signature system. As we saw in Party Bid, people like to brainlessly enter NFTs with friends. It's an experience. Community DAOs can also obtain initial funding through token crowdfunding. This allows the DAO to fill its treasury with ETH for operations and growth.

Tokens

• As word spreads that your community DAO is interesting, people will start sending you DMs asking to join your DAO. At this time, many community DAOs will issue ERC-20 tokens as a threshold for membership. Depending on the exclusivity of the community DAO, membership fees can range from a few dollars worth of ETH to several million dollars.

Governance

• Community DAOs with valuable funds and hundreds of members need a way to make collective decisions. Usually, initial consensus is reached in group chats (using emoji symbols, etc.), and governance voting is just a formality. But it's interesting to see who voted, how much they voted for, and what they voted for. In addition, most community DAOs will empower dedicated teams of 5-10 members to help them obtain a dedicated workflow, rather than requiring every small decision to be completed through a decision-making governance proposal.

This is the newest component of Community DAO, and also the most interesting. On-chain cash flow makes interesting group chats with your friends a sustainable thing. So far, the main way to generate on-chain cash flow is through NFT airdrops.

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So, can these community DAOs really work?

DAOs like Fingeprints and Flamingo have amassed five- to six-figure NFT collections over the past few months.

DAOs like Bright Moments sold millions of NFTs in minutes.

Rabbithole, Seed Club, Forefront, and FWB are becoming the main entry points for the next wave of active contributors in the crypto world."Some DAOs, like NounsDAO, make you think"（WTF）。

What the hell?

Don't even get me to mention Loot...

We'll take a closer look at community DAOs later in this article. How DAOs can be sustainable organizations, what are the risks, and what they might look like in the future.

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1. Develop community DAO

Unlike traditional startups, the initial goal of most community DAOs is not to maximize shareholder value, but to create a resonant atmosphere. People want to be surrounded by like-minded people, make collective decisions, and drive the community's goals forward.

But given the growth of the broader crypto market, many community DAOs have found themselves holding millions of dollars worth of funds and ERC-20 tokens with market caps in excess of $100 million. In the past few months alone, they've grown from a group chat to a real business.

One of the keys to growing these community DAOs will be recurring on-chain cash flow. There are other important factors such as community participation, community governance, tokenomics, etc. But generating on-chain cash flow funds the community DAO to reward contributors, hire full-time staff and grow their funds.

When I was studying finance in college, one of the most boring things I learned was how to analyze balance sheets, but it turned out to be really useful.

• There are two types of assets on the balance sheet of the Community DAO:Equity

• cash（ETH、USDC、DAI）*

FWB June 2021 Financials by Llama. Source

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Technically, ETH can be considered as equity in the Ethereum network, but for simplicity, let's classify ETH as cash on the balance sheet, since it is the primary medium of exchange for the DAO.

So, what can community DAOs do with the cash and equity on their balance sheets? For many DAOs, the crypto world feels like a massively multiplayer online game.

For a community DAO, the game is to increase the value of the treasury while maintaining the strong atmosphere that drove the community in the first place.

• Community DAOs can set themselves up to win this game in several ways:

• Collect blue chip NFT;

• earn membership fees;

• Issue NFT airdrops;

• Launch a tokenized NFT gallery;

• Establishment of media companies;

• selling SaaS tools;

Let's analyze them one by one.

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01 Collect blue chip NFT

This is the most common way to start a community DAO.

A group of enthusiasts want to collect blue chip NFTs like Punks, Autolyphs, DEAFBEEF, Fidenzas, Ringers, but don't want to invest all the money themselves. Instead, they pool their funds to buy a portfolio of blue-chip NFTs.

In practice, however, storing these NFTs in safes is illiquid. Doing so does not directly generate revenue. Therefore, some DAOs issue ERC-20 tokens so that people can speculate on the potential value of these NFTs, earn transaction fees, and decide when to sell them. PleasrDAO, one of the largest NFT collection DAOs, recently announced an approximate liquidity strategy for 1/1 of its Doge NFTs.

It’s a bit like storing gold in a treasury and issuing paper certificates based on the gold (sound familiar?). You can exchange paper certificates for the underlying asset, but you need to trust that the asset is available and has value when you want to exchange it. But instead of gold and paper certificates, we have blue chip NFTs and ERC-20 tokens.

To be fair, some of these pools are extremely valuable and have a good chance of being worth billions of dollars someday. So it's less like stashing gold in a vault and more like owning equity in iconic Internet culture and some of the most valuable IP in the world. But the reality is that in the short term, these treasuries alone cannot generate recurring on-chain cash flows.

As we'll see in the next few sections, the most valuable aspect of these vaults filled with blue-chip NFTs is that they attract human capital, turning illiquid jpegs into cash on their balance sheets.

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02 Collect membership fee"followers"and"and"These two words are a bit strange to me. They suggest a one-sided relationship. I follow (follow) you, you subscribe (subscribe) me.

but"member"and"and"owner

It's different.

We are members.

We are the owners.

In Web3, membership and ownership are encapsulated in tokens. Balances are stored on the blockchain. Your assets are controlled by your own private keys.

If the vibe in the community isn't good, or you've been hit in another declining yield farming and need liquidity, you can sell your tokens on an AMM or head over to the #otc channel on Discord to negotiate one Reasonable prices, no explanation needed.

This can turn into a great fortune if you are an early member of the community or earn large distributions through your contributions.

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In the past month, $FWB membership value has grown from $1,000 to $12,000."However, membership tokens are not just"increase the amount

(nUmBeR gO uP), at a deeper level, tokens are a coordination mechanism that helps online communities create, capture, and redistribute value.

Community DAOs invest wherever they want. Sometimes it's a donation to a charity, sometimes it's a drinking party in Paris.

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03 NFT airdrop

This is the most important way for community DAO to generate cash flow on the chain. There are some airdrops with huge numbers. Last year, Bored Ape (BAYC) sold $92 million worth of Mutant Ape NFTs in one hour.

Another of my favorite recent airdrops was a collaboration between Arihz (anonymous Brazilian computer scientist/NFT artist) and FingerprintsDAO (one of the leading collector DAOs using smart contracts as art collections). The airdrop is called Avid Lines, and in its first 30 days, it has traded close to $10 million.

What's more, this airdrop is a great example of how NFT IP can be remixed in an interesting way. It is a derivative of Autoglyphs and the most valuable collection in the FingerprintsDAO treasury.

• It works like this:

• The minter chooses an Autoglyph as the basic input to the generation algorithm;

• Autoglyph holders can put their Autoglyph on the whitelist and get 10% of the NFT initial sales revenue based on their Autoglyph as input;

The generative algorithm combines the base Autoglyph input with Arihz's random code, and outputs a hybrid NFT called Avid Lines (they're awesome).

As DAOs look for new ways to increase the value of NFTs in their treasury, we will continue to see more airdrops of derivatives like this one that increase the value of core IP while also turning NFTs into productive assets .

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04 Tokenized NFT Gallery

Most community DAOs do not yet have their own tokenized NFT galleries. But in the near future, I think it will become one of the most popular ways for community DAOs to generate on-chain cash flow.

• The basic idea is:

• Members use community DAO tokens to vote on which artists/airdrops can be minted on their site;

• Support multiple airdrop mechanisms (reserve auctions, markdown auctions, version sales, lottery sales, airdrops, generation sales, etc.) by allowing developers to register smart contracts in the DAO's NFT library registry;

• Revenues from primary and secondary sales are shared between artists, development teams, and the DAO's treasury;

• Artists, collectors, development teams and other contributors receive community DAO tokens;

Token holders get members-only features like exclusive airdrops, NFT badges, discounts, physical minting, merchandise, and more.

This allows community DAOs to build their own NFT marketplaces while rewarding token holders, artists, collectors, and development teams in cash and equity. The curation capabilities of top community DAOs will eventually turn these NFT galleries into incubators for emerging artists.

It's a bit like CAA (Creative Artists Agency) or the record label of internet culture. But now agencies are fans, builders and creatives.

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05 Establish a media company

Building a media company is not as sexy as a token gallery, but it works. Build a podcast and/or regular newsletter, find some sponsors, and boom.

Top community DAOs should have an easy time finding sponsors since their communities are full of trendy people with cash to spend on items like digital pet rocks.

UTA, one of Hollywood's premier talent agencies, signed Larva Labs (creators of CryptoPunks, Autoglyph and Meebits) last September to embody them in film, television, video games, publishing and licensing. Just imagining Kevin Hart voicing CryptoPunk or Meebits on a Netflix show kills me. I'll be watching right away.

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06 SaaS tools

• Most community DAOs go through the following cycle almost every week:

• A problem arises that needs to be resolved;

• Someone conducts research based on existing tools;

• It turns out that existing tools do not meet the needs of the community;

Ah 😫.

FWB is one of the most active DAOs building custom tools for its community. When they needed a tool to token-gate events IRL, they did it themselves. When they needed a dashboard that showed key information about the community, they made one (and it was alive and well).

As community DAOs become aggregators of top talent in the crypto world, we will see more custom tools for serving the wider community. Similar to how YC startups typically get their initial allocations from their cohort of startups, community DAOs will receive initial allocations from other DAOs and projects in their community.

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07 Tokens (DeFi protocols, NFT protocols and other DAOs)

Interestingly, DAOs align incentives by investing in each other.

Last year, FWB and WHALE conducted a token swap (token swap), in which $FWB's stake was worth $100,000. Today, those shares are worth $1.5 million."DAO2DAO"The stake can end up being very, very large. These stakes will also create a new type of mutual alignment that we have never seen before in the competitive business world.

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2. Risk

Like any other investable asset, Community DAOs follow a risk-reward spectrum.

• The main risks of community DAOs include:

  Bad OpSec

  The DAO's assets (NFT, ETH, and ERC-20) are stored in smart contracts on the blockchain. Typically, the contract is controlled by a trusted group of community members via a multi-signature wallet. To withdraw assets, multiple members need to use their own encrypted wallet signatures to confirm, and it can only be realized when a certain threshold is reached. Doing so prevents one of the signers from going rogue and disrupting the community. Or to prevent a signer from being unable to access his own private key, there should be enough redundancy in the system to ensure that transactions can still be signed and submitted.

• Ideally, we remove the need for any trusted parties and integrate governance and execution of trustless transactions through tools like SafeSnap. But in practice, most communities require a level of trust in a select group of community members to ensure assets are stored and managed securely.

  Potential ETH/NFT crash

  Is there a bubble in NFT? Probably yes. The recent price rise and fall mimics the boom-and-bust nature of most tech cycles. If the price of ETH plummets, the Community DAO will have less cash on its balance sheet and will need to write down the book value of the NFT.

• This is a real risk. Many DAOs are implementing capital diversification strategies with the help of domain experts like Llama to ensure they can survive the bear market. DAO can convert ETH into stable coins such as USDC or DAI to resist the volatility risk of ETH. The best DAOs will have recurring on-chain cash flows and efficient cost structures that allow them to weather bear markets.

  lack of community involvement

  People are the center of any community, DAO or otherwise. The best community DAOs have a mission much deeper than mere headcount growth (nUmBeR gO uP). The collective action towards this mission is to ensure that core contributors and active community members come back every day. But when people get distracted by the token price, or the core team loses interest, the culture deteriorates.

• The magic of these community DAOs is the people. A mod who spends all night answering questions in the Discord group; a volunteer who writes help files to help newcomers. Many of the most valuable work in the community is unnoticed and unrewarding. Community members need intrinsic motivation to move the community forward. Otherwise, the community will slowly degenerate into just another inactive group chat.

  Poorly designed token economy

  The two biggest risks to the token economy are:

  1) The core team does not have enough equity to motivate them;

  We are still in the early stages of understanding community DAO token economics best practices. Many communities have hired experts like Fire Eyez, Delphi Digital, and Gauntlet to help them develop a robust token strategy.

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3. The Future of Community DAO

• Here are some predictions for the future of community DAOs:

  There will be many multi-billion dollar community DAOs

  This might not be controversial among the natives of the crypto world, but if you take the time to think about it, it's pretty crazy. Online communities exist on Discord servers, Telegram chat groups, Twitter DMs, FB groups, Patreon, and more.

• The DAO's organizational structure gives these online communities the ability to coordinate capital, make collective decisions, and capture value through the internet's native currency. A good example of a community that could use this feature is r/wallstreetbets during the GME short squeeze. In addition to investing, I think there will be billion-dollar community DAOs in the fields of games, publishing, music, education, art, software development, etc.

  Community Tokens > Social Tokens"Over the past few years, social tokens have been a hot topic when discussing the future of crypto-native consumer apps. the idea is"Isn't it cool that you invest in people like you invest in stocks?

  Bitclout's initial appeal is a sign of demand for such a product. But focusing on a single individual's social currency can lead to burnout, mental health issues and regulatory risks. So, unlike social tokens that focus on individuals, I think community tokens that focus on the collective efforts of a group of people will become the dominant model.

  Investing in Beat tokens is boring, but being part of the Mr.Beat community is fun. Social tokens feel like a top-down approach. Creators and management teams retain full control over creative decisions and IP. But as we saw with BAYC and Loot, with the right incentives, bottom-up decentralized communities will create more value than centrally coordinated ones. In previous eras, open source projects like Android and Linux didn't have a native business model. But now ERC-20 tokens and NFTs provide a business model for open source software. And it's not just open source software, but also open source IP.

• To me, social tokens mean a top-down centralized coordinated effort, while community tokens mean a bottom-up decentralized community with full access to the community's underlying IP. The latter is more crypto-native and paves the way for combinatorial creativity we haven't seen before.

  Service DAO will be reused in expanding community DAO"In the crypto world, building a successful project requires a whole new set of specialized skills. Such as tokenomics, treasury management, community management, onboarding, governance, smart contract development, data science, protocol security and OpSec, etc. Because there are not many experts in these fields, we have seen crypto-native institutions (i.e."Service DAO

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Four. Conclusion

Four. Conclusion

Community DAOs are the next evolution of online communities.

It's like a reddit forum where different subreddits have a shared bank account, a token, and a governance mechanism. They will be the new social networks. The best way to learn is to actively contribute.

• Here's what I typically share with friends who are interested in contributing to a community DAO:

• Join 3 to 5 Discord servers to feel the different atmosphere;

• Introduce yourself in the #introduction channel and read other people's introductions to see what kind of people are in the community;

• Find the 2-3 channels that are most relevant to you and watch them several times a day. Ask questions, answer questions, and send encouragement;

• Read the Governance Forum to learn about community priorities and how they make decisions;

• Connect with your most active contributors by participating in voice chat;

• After this initial research phase, pick one or two community DAOs that fit you and double down on them;

• Find a committee you can help out with and get involved with a project. As you feel better, take on some leadership roles;

• Try to get the rewards of community tokens to align incentives and truly become the owner of the community;

DAO guru Coopahtroopa himself recently published an article with a list of some DAOs and people to follow that you can contribute to.

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