A DAO is essentially a programmable group of people who form around a common goal and foster the future of DAO online community. Users have the power to form an online community with as minimal friction as possible thanks to a decentralized autonomous structure.
Social networks, grassroots organizations, and consumer communities are examples of online communities that share a common interest on the internet. As a culture, we are naturally communal, so sharing ideas and interests with others online makes sense. Communities are formed whether we create relationships with people directly or indirectly. However, the manner in which we do so differs.
Based on participation imbalance in social media and online groups, web expert Jakob Nielsen created the 90-9-1 rule in 2006. According to Nielsen, 90% of users in most online groups are lurkers, or those who observe but do not contribute, 9% contribute a little, and 1% contribute the most.
However, as the importance of online communities grows, their character is changing. A user, consumer, and creative relationship dominated the preceding age. Now, however, we’re seeing online communities take control of the content they want to share.
The economy of ownership and creation
With COVID-19 pushing many of us to work from home and socially isolate ourselves from loved ones, digital connectivity has become increasingly crucial in keeping us connected. Many people have become more reliant on online groups as a result of this. According to Facebook’s research, conducted in collaboration with The Governance Lab at New York University, 77 percent of respondents said their most important group operated online.
We now live in a world where content can be easily made and distributed. This creator economy, which is based on human ingenuity, intellectual property, and technology, is still evolving. And, after a year of lockdowns, this is a better moment than ever to value the creator economy. Creative economies will play an important role as governments try to restore their economy in the aftermath of the continuing worldwide COVID-19 pandemic. So much so that Deloitte estimates that by 2030, this sector would have grown by 40%, adding over eight million employment.
The next obvious step is to transition from a sharing economy to an ownership one. The ownership economy, according to Jesse Walden, creator of Variant Fund, is “not just produced, run, and supported by individual users, but also owned by users.” Nonfungible tokens are an example of the creator economy and ownership economy coming together (NFTs). NFTs allow creators to have a more personal connection with their fans while avoiding the problems that come with using middlemen. Creators have full control of their work and the freedom to copyright their inventions while verifying their legitimacy by doing so, thanks to the blockchain. NFTs are establishing creative ownership, providing a golden opportunity for creators.
And the rise of crypto and decentralized financing (DeFi) is assisting in the advancement of online communities. Crypto and DeFi are a natural fit because the industry uses assets that are owned by all owners, resulting in something that is aligned with their interests. The ownership economy, enabled by frictionless banking, allows real-world communities to use digital tools to generate, collect, and exchange value more effectively in virtuous cycles.
Bitcoin was the first to pioneer the ownership economy (BTC). Bitcoin, which first appeared in 2009, suggested a new way of accumulating wealth through the use of technology on a computer. Anyone with an internet connection was incentivized to mine for newly minted Bitcoin, thereby contributing to the network’s security while also claiming ownership of the network.
Since then, the cryptocurrency market has exploded, and with it, online communities have benefited from new tools and incentive designs, resulting in the current trend known as decentralized autonomous organizations (DAOs).
Online DAO communities
A DAO is essentially a programmable group of people who form around a common goal and foster an emergent online community. They share control of a crypto multi-signature wallet, ensuring that its goals, as determined by DAO members, are met. DAO governance and operations are written in smart contracts, which are comprised of automated if-then statements, making them transparent and auditable.
What’s fantastic about DAOs and their role in online communities is that the way they interact with one another is a broad surface area with a lot of work being done in it. Anyone, regardless of location, can participate in a DAO. All that is required is the staking of funds, which serves as an excellent foundation for participating with a community. DAOs are not walled gardens, therefore its members have both intrinsic and extrinsic incentives to interact with other DAO communities in order to strengthen each other’s skills while sharing ownership and direction of each project. With no central party to obstruct the process, everyone is given the right to have a say in how something is or should be done.
DAOs and DAO2DAO collaborations are still very much “a crypto thing,” but they have genuine capacity for positive change when the methodology, ownership models, and tools developed by this movement touch real-world communities, large and small.
This post provides no investing advice or suggestions. Every investment and trading decision entails risk, and readers should conduct their own research before making a decision.