Hey, how you d(a)o-ing? You've been reading about DAOs for a while now. Ever wondered about starting your DAO? Don't worry; we've got you! 😉
Building a strong foundation
You can only build a great building with a strong foundation. Similarly, to create a successful, functional DAO, you need to have a great foundation! You must first get your DAO basics sorted to ensure a great foundation. These are nothing but your:
- Mission: Identifying the purpose behind starting your own DAO is essential. Consider looking into questions like- what you intend to achieve through your DAO, what you want your DAO to be associated with, and so on.
- Voting mechanism: As previously discussed, DAOs function based on voting mechanisms. It would help if you chose the voting mechanism that best fits your DAO model.
For instance, let's say you would want a DAO model in which the larger token holdings are assigned more power. You would, then, opt for the token-based system of voting. On the other hand, if you want a DAO model in which only authorized wallets can participate in the voting system, you would opt for the wallet-based voting system.
Once you have your basic structure in place, it's time to look at the main Gs of your DAO- the core team!
Your core team matters!
A core team will typically consist of the co-founders of the DAO, social media managers, branding/ design managers, and an analytics leader. (This is just an example of a core team structure; you don't have to abide by this structure!)
Your core team is critical because they are the ones who ultimately shape the future of your DAO. Right from the nascent stage, your core team will help build, grow, and expand your DAO's reach. They will also be involved in making a few critical decisions for your DAO, like deciding upon the type of DAO, choosing a voting mechanism, etc., which will have long-standing consequences on your DAO's path. 📈
Just like we are often advised to choose our friends wisely, make sure you pick your core team members wisely too!
Determining ownership
By fostering a sense of ownership among their members, DAOs can develop and prosper. A DAO can distribute ownership to its members in various ways because ownership is often tokenized. DAOs frequently use the well-known methods known as 'airdrops' and 'rewards.' Tokens are distributed to participants through airdrops based on their efforts and deeds in the community. Members who complete tasks and meet targets receive rewards in the form of bonuses. Through awards based on local tokens, members can obtain ownership. Tokens can also be purchased on decentralized markets.
Determining the governance structure

When it comes to deciding upon a governance structure for a DAO, there are too many options. For instance, governance can be formal, wherein you can choose between on-chain and off-chain token systems. While off-chain governance requires talks that ultimately result in formal governance voting, on-chain governance uses token voting.
Governance can also be regulated as delegated governance. In delegated governance, the members of the DAO grant certain members the powers of decision-making on behalf of the DAO as a whole. This allows the DAO to fasten up its decision-making process while also making sure that the members of the DAO have a say in the process.
Once you have formally chosen a governance path, start setting up an incentive system to build trust among the members of your DAO!
Set up a rewards system to build trust
Not just for Jack; all work and no play dulls every one of us!
To keep the members of your DAO motivated and passionate about the goals of your DAO, it's essential to set up a reward system. It's a case of a win-win, which best suits everyone.
The most common example of an incentive system is the monetary kind- who wouldn't want money as a reward for their work? 💵
Paying your members for the work rendered by them is a great way to build cohesion and trust within the DAO. Members will also be enthusiastic about working towards a goal when they know it comes with remuneration!
However, the incentive system is not limited to just the monetary kind! For example, many DAOs often grant their members exceptional benefits, such as speaker privileges, exclusive access to events, direct networking with leading niche members, and so much more! 🥳
Hold on; there's more.

Everyone who runs a DAO knows the importance of an efficient incentive system. That's why they've come up with a list of ways owners of a DAO can offer their members rewards for their work! 🥳These are as follows:
- Retroactive funding proposal: This type of payment acknowledges contributors after they have made their contributions. Contributors are encouraged to submit funding requests detailing the value they've produced or delivered for t1he DAO and the number of funds they're asking for after a specified time.
- Governance power: DAOs can include governance tokens as part of the reward package they provide contributors. Governance tokens, which are provided in addition to the standard pay based on a significant crypto asset or a stablecoin, are a way to reward contributors and help them earn in the form of governance authority.
- NFTs: NFTs are a type of non-monetary compensation given to contributors. Access to gated channels or services can be granted using these NFTs.
Build a community around it
Your DAO community will essentially be people who participate in, contribute and work toward a project. Now, deciding upon the ambit of your DAO is one of the most challenging choices you would have to make as the owner of a DAO. 🫂
Do you want your DAO to be open to anyone interested in your project? Or do you want to limit the scope of your DAO by allowing only those who work in the DAO itself? For some organizations, the term 'DAO community' refers to everyone who owns a DAO token and participates in governance. Others interpret this to mean everyone who has an interest—whether material, psychological, or intellectual—in the future of the DAO.
Thus, choose the scope of your community wisely by ensuring that it is in line with the goals of your DAO! 😌
Starting your DAO
To start building a community around your DAO, you will first have to communicate the purpose of your DAO to community members. Having a predefined goal and mission gives the members an idea of what your DAO is keen on building and further reduces the vagueness in the minds of community members willing to join your DAO! 🚀
For example, FlamingoDAO focuses on investigating new investing possibilities for ownable, blockchain-based assets.
Building your DAO
The next step is to start building and upscaling your DAO once you have the desired members on board. Like any other project, building a rapport with your members is highly beneficial to the success of your DAO. There are various ways through which you can achieve this.
➡️ Scheduling group calls to brief the members about the DAO
➡️ Organizing multiple icebreaker sessions to keep the members involved
➡️ Receiving personal feedback and constructive criticism from the members because there is always room for improvement! 🚀
Setting Boundaries
While growing and expanding your DAO should be your #1 priority, it is also essential to set definitive boundaries for your DAO. Boundaries could include:
- The media outlets the community can post on.
- The initiatives it can lead.
- The events it organizes.
Clearly defining your boundaries gives the members an idea about the scope and ambit of your outreach!
Having learned the A-Z about starting your own DAO, one central question lingering in your mind would be estimating how expensive it is to create your own DAO from scratch.
We hope to give you a realistic glimpse into it! 🔎
Is it expensive to start my DAO?
Starting a DAO might not be as complex and pricey as you think. Before estimating the cost of setting up your own DAO, let's first lay down a few must-haves.
These are mere suggestions; do your research to choose a platform that best suits your DAO!
- Choosing a platform to build your DAO: You could consider popular platforms like Aragon and DAOstack Alchemy. The approximate cost of setting up your DAO on these platforms is around 2 ETH.
- Registering your DAO as a limited liability company (LLC): The primary rationale behind establishing a DAO LLC is its legal protections. There are no legal safeguards to shield investors and stakeholders from legal responsibility for a DAO if an organization builds a DAO before establishing it as a DAO LLC. This entire process might cost you around $100 or around 8000 INR.
- Employing a smart contract audit: (Woah, slow down, too many fancy words!) A smart contract audit entails thoroughly examining the contract's code to spot security flaws, improper, ineffective coding, and solutions to fix the issues. The audit procedure is crucial for assuring the dependability and security of blockchain systems. Companies that offer smart contract audit services often charge between $1,000 and $15,000.
The final quote of your DAO will depend on many more factors, depending on the type of website you build, the web agency you employ for voting, and so much more!
It might seem like a lot of work on paper, but we'll guarantee your DAO might end up being one of your top creations, which is worth the hassle! 😌
Balancing the tension triangle- voice, exit, and loyalty!
A DAO's tension triangle strikes a balance between the three unique but equally significant elements of voice, exit, and loyalty. How much a DAO respects a person's independence can be determined by how much freedom that individual is given to exit.
Let's break it down for you.
- Decentralization (loyalty): Technology and politics are combined in decentralization to create a belief system that identifies the traits of those who choose to join the DAO. Loyalty determines whether members of a DAO will skew towards voice or depart when all other factors are equal.
- Governance (voice): Governance rules cover an organization's activities, purpose, membership, on-chain and off-chain voting, and other aspects that allow for its establishment and dissolution.
- Individual (exit): Individuals who believe in self-governance and the larger good but wish to uphold their rights and are willing to take care of themselves are frequently referred to as the 'individual.' The concept may be expanded to encompass legally recognized and defined corporations that carry on business within their territorial jurisdiction, whether registered or unregistered.
Voice and exit frequently conflict with one another. A highly centralized organization could foster distrust and disloyalty. The tendency of members in decentralized groups would be to take a stand rather than quit. The voice mechanism becomes less significant if exiting is made more accessible.
Almost there
DAOs will not only revolutionize the way we work, but they will also gradually uproot preconceived notions of traditional organizations. Due to how rapidly and effortlessly DAOs can be established, they enable small groups to unite behind specific objectives that might need to be more significant for conventional organizations to address. DAOs enable true workforces to grow around causes, unlike crowdfunding sites, which allow anyone to accept donations for a particular reason. The lengthy procedure of forming a traditional organization—filing legal documents, paying fees, and opening a bank account—is quickly becoming obsolete.
You’ve got a basic understanding about how to start your own DAO. Now, let’s move to understanding how you can join and become a part of other DAOs, shall we?