DAOs And Their Role In Improving The NFT Community

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As blockchain technology has become mainstream, we have witnessed widespread adoption of Defi, NFTs, GameFi, and more. Along with these, blockchain technology has given birth to a new form of an organization known as “DAO” or Decentralized Autonomous Organization.

DAOs are becoming increasingly popular in the digital world; they can also help NFT communities grow.

What are DAOs? How does it work?

A decentralized autonomous organization (DAO) is an entity without central leadership. Instead, it is usually controlled by a community organized around a specific set of rules applied to the blockchain, where decisions are made from the bottom up. 

DAOs are community-led and operated by the “smart contract“. Smart contracts start working automatically when certain conditions are met.

The main reason for the terms “decentralized” and “autonomous” in the name is that blockchain technology allows financial transactions without the need for central governing authorities and regulations.

No one will be able to access DAO’s built-in treasury without the permission of the group. They make all decisions through proposals and votes; this ensures that everyone has a voice to say something.

Due to the structure and technology of DAOs, their use is increasing daily. This technology is being adopted in various fields like business and government. DAOs are a possible solution to corruption and bureaucracy in governments worldwide only because of their transparency and efficiency.

DAO is a fully online-based organization and operates through blockchain technology and smart contracts. A smart contract contains the information of the organization. In the DAOs process, an individual’s decision is not final. Everyone’s decision is essential here, and the majority vote makes the final decision. DAOs are open and transparent. That is why no one can change anything without permission.

Why are DAOs important?

After NFT and Web3, the popularity of DAOS is increasing. So why are DAOs important? Let’s explore the details.

The main focus of any blockchain environment is decentralization. With decentralized technology, there is no single authority to control everything, just like the government. Therefore, DAOs play a vital role in revolutionizing governance. 

Most countries in the world are providing e-services for the betterment of their citizens. In addition, government activities, including voter registration, immigration, and taxes, use e-services.

We can see that traditional governance services are still working in most countries. Conventional forms of governance usually take on numerous levels of management to coordinate and apply processes. However, it comes with an error: many operations can become a hindrance or a source of corruption. Another downside is that monitoring and controlling management processes dependent on individuals puts the system at risk of becoming flawed. In addition, outsiders can easily hack the system because they have access. But with the help of decentralized autonomous organizations, these problems can be easily overcome. 

DAOs are currently used to design governance models, voting, and proposal processes. Once a DAO has been launched, it can often operate automatically and do anything from hiring people to sending payments.

Blockchain-based DAOs in e-government services have the potential to control and manage all relationships between decision-makers, management, company employees, other agencies, clients, contractors, stakeholders, and citizens using smart contracts.

To maintain transparency and accountability, every transaction of the government, including the transfer of money, property, data, access/use rights, etc., will be recorded in a public blockchain. 

Depending on the role-based authority system, smart contracts can be formed for different levels of access.

Being a blockchain-based DAO will eliminate errors and paperwork related to traditional human processes.

Extensive government systems can also be automated using blockchain DAOs. A smart permit can conduct regular government activities, and a smart permit can act as a blockchain smart contract. 

This is a type of legal agreement that is capable of imposing obligations on various parties. The government will benefit through better efficiency and transparency as well as improved resource management. This procedure protects all records for auditing, reducing litigation between the parties, and expediting contract allocation and execution.

At first, introducing a new government DAO to the general public may require a considerable adjustment that could create challenges in adapting to the complexities of government processes and technology. But once they can adapt, it will make their future more accessible. 

What are NFT DAOs? 

NFTs and DAOs are closely linked in the form of NFT collector DAOs, a decentralized organization that focuses on developing the NFT community.

There are already several NFT DAOs on the market today, including APE DAO, one of the most well-known groups in the landscape. The APE DAO has fragmented many Bored Ape Yacht Club NFTs and helped ensure that everyone could own a share of the highly sought-after digital assets.

There is also the YGG DAO community, which provides in-game resources from blockchain and NFT games to people in the ecosystem. In addition, community YGG token holders can vote on business and management decisions.

How are NFTs and DAOs connected?

One of the ways in which NFT and DAOs are closely linked is in the form of a collector DAO. A collector DAO is an organization that raises funds to acquire and issue NFTs. 

Collectible DAOs allow more than one person to own a portion of an NFT. This gives small NFT traders the opportunity to join more expensive projects.

NFT creators and community members can collectively decide on the future of the NFT project through a DAO

DAOs also have the potential to help emerging NFT makers nurture a community.

Investing in an NFT project, especially a more popular one, can sometimes require significant capital that can be difficult for small businesses to afford. The collector DAO allows more than one person to own a portion of an NFT. An example of a collector DAO is APE DAO, a DAO that fractions board app yacht club NFTs, allowing multiple users to own a fraction of the same asset.

The connection between DAOs and NFTs is not limited to collector DAOs. DAOs can also help create NFT projects through community governance. Community members and creators can come to a joint decision and come up with ideas for the future direction of the NFT project.

In addition, DAOs have the potential to help small projects or builders build a dedicated community. However, unlike some celebrities and well-known artists who already have a large following, not every emerging creator will have a dedicated community from scratch. 

Much like a crowdfunding platform, fundraisers can help DAOs raise funds and build communities for various NFT projects by allowing them to vote on the projects they want to be the most successful.

What are Nouns and Lil nouns DAO? 

The noun DAO uses a fork in the compound regime and is the main regulatory body of the noun ecosystem. Nouns DAO Treasury receives 100% of ETH proceeds from daily Noun auctions. Nouns may vote on a proposal or delegate their voting power to a third party. You must have at least one noun to submit an offer.

Owning a noun allows you to create and vote on governance proposals, which perform transactions on the Ethereum blockchain once approved.

Lil Nouns DAO uses the fork of the compound regime of Nouns DAO and is the main regulator of the Lil Nouns ecosystem. Lil Nouns DAO Treasury receives 100% ETH proceeds from daily Lil Noun auctions. Each Lil Noun is an unalterable member of the Lil Nouns DAO and has one vote on all governance issues. 

Lil noun vote is non-transferable but delegatable. As long as you own your Lil noun, you can give your vote to someone else.

How DAOs help NFT communities grow?

DAOs help NFT communities grow in various ways, especially by allowing the landscape to grow and develop as a new form of economy.

The ways in which DAOs contribute to the evolution of NFT include:

Supporting collective ownership: Investing in NFT can often require significant investment capital. This capital becomes difficult for many to bear. NFT DAOs and collector DAOs may allow more than one person to invest in an NFT or a portion of an NFT collection. This enables more people to invest in NFT. In addition, it allows a larger group of people to gain more control over the NFT marketplace.

Community Governance: We have already seen how DAOs play an important role in community governance. They can help develop NFTs through community governance. DAOs are a great way for NFT project fans and creators to come together and contribute ideas for its future.

For example, Gutter Cat Gang has its own dedicated DAO where people can focus on decisions about which community projects to invest in. 

Sometimes, communities build their own DAOs around NFTs, such as the Meebits DAO created independently by the community but supported by Yuga Labs.

NFT Creators Collectives: Extensive support from a dedicated community is generally critical to the success of an NFT project. While an existing follower of celebrities and artists already has access to this community, not every emerging creator will. NFT creator groups in the form of DAOs can help fund various NFT projects and allow communities to vote on projects they want to be the most successful.


From the above explanation, it is understood that there are many use cases of DAOs in the NFT industry.

As the days go by, the usage is increasing. In the future, Decentralized Autonomous Organizations may become an essential part of NFT projects.

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