Creator Economy

Demystifying DAO: The Rise & Importance

Sunaina Patnaik
Sep 5, 2023
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minutes read

An idea has been stirring in your head for a while — So is something similar in Hector's mind. But the only problem is that Hector lives in a different part of the world than yours.

Enter DAO or Decentralized Autonomous Organization

DAO is a structure that prioritizes community above a single entity or an LLC. Run by a collaborative community, in a DAO, the power of decision-making is also vested in the community. This means people can walk into a community and build it out of passion or personal interest; replacing traditional hiring, a community manager or members are chosen based on their interests rather than a resume. That's a bold move — No wonder Mark Cuban refers to DAOs as an ultimate combination of capitalism and progressivism!

While establishing a DAO, its goal and protocols are chalked out, with transparency as its linchpin. The initial members establish protocols for the DAOs, which function on commonly agreed philosophy and processes, but community management, investment, and engagement entirely lie within the community members.

Think of it as a community on the internet with the power to invest and build value. DAOs offer tokens (a form of cryptocurrency) that community members can sell and trade; as a matter of fact, these tokens are also crucial in taking a DAO forward.

A recent example of how DAO has been instrumental is UkraineDAO, which is powering web3 and the community to raise funds in favor of Ukraine. 👇🏼


At the Ethereal Summit (2021), crypto experts suggested that DAOs are theorganizational entity for the internet age. How will DAO disrupt the regular though? For that, we need to understand the different types of DAOs.

Types Of DAOs

DAOs are largely classified into the following:

Media DAO: Media DAOs are where content creators run and take the DAO forward. The funds for running this DAO can be fetched from advertisers or the readers themselves. A solid example of one such DAO is Forefront, which, apart from offering insights on social tokens and economy, prioritizes community building. DAOs like Web3 Social Landscape, How Creator DAOs redefine the way we work, Using Social Tokens to Support Creators of Public Knowledge, etc., are seamlessly accessible at Forefront.

Social Media DAO: A Social Media DAO can be classified as a part of Media DAOs, but it’s where like-minded folks come together to socialize and discuss what matters to them. Social Media DAOs are free from ads or corporate interference in most cases.

Collector DAO: A community that collects, sells, and issues NFTs is a Collector DAO. You might already be familiar with Bored Ape Yacht Club that mints Mutant Apes or Bored Apes. Well, they’re a Collector DAO — with a Discord community of over 146,000 members, this DAO sold its collection of 101 NFTs for $24.4M at the Sotheby’s Auction in 2021. You might have also heard of Pleasr, another Collector DAO that sold the doge meme.

Investor DAO: What happens when a bunch of creators or millennials come together to invest in ideas or creators they root for? That’s an Investor DAO, which is known for democratizing investments and extending funding to Web3 projects.

Let’s take Komorebi Collective for instance — this female-centric DAO invests in female and non-binary crypto founders.

Grant DAO: A Grant DAO is where various individuals from the community pool in funds towards the community. Usually, this type of DAO runs on vested interests or a shared philosophy, with everyone working for a common goal, but one that functions like a DeFi.

Protocol DAO: Protocol DAOs are quite essential as they bring DeFi to the community or users. The community can pool in its crypto and leverage it for liquidity or Decentralized Exchanges. A great example of a Protocol DAO is MakerDAO which is shaping the future of DeFi, making crypto trading and exchange accessible to pretty much everyone.

Rise & Importance of DAOs

“DAO is a sub-reddit with a bank account.” — Aaron Wright, CEO & cofounder, Tribute Labs (set up FlamingoDAO)

The best way to figure out a DAO is by being a part of one. Imagine it as a group chat that allows you to evolve and get involved in the future.

Why are they important? Well, for one thing, many experts say that DAOs might replace traditional companies and how they usually function. With Andreessen Horowitz, Snoop Dogg, Atelier Ventures backing Syndicate, a major DAO-builder, the importance of DAOs is abundantly visible.

Vitalik Buterin also states a DAO structure can exponentially reduce operational costs and enhance the bottom line finances of any company.

All said and done — what remains is to wonder will it be the future? Or to be precise, why won’t it be? Bringing in incredible collaborations, capital, and creativity, the purpose of a DAO is building for the community and also giving it back. Which for many seals the deal.

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