Basic information about DAO

A DAO is a commonly used type of governance for DApps and is popular for its openness and decentralization. To create a DAO requires the proposed solutions and votes of the participants. Also, there is a lot of open source code available for creating DAOs.

A DAO (Decentralized Autonomous Organization) is an automated organization. Automation means that the system operates on its own without human intervention. A DAO is created and managed by the DAO project and the general management community.

While there are many different DAOs out there, they all follow the same basic principles. The number of tokens a person owns will be proportional to the number of votes in the management of the DAO, and these people can make proposals to change the way the DAO works.

How does DAO work?

DAOs aim to mimic a corporate structure where rules and regulations are built using open source code and are enforced through the use of smart contracts.

Smart contracts are agreements that are programmed to execute if and when certain conditions are met. These rules are usually decided by the stakeholders of the DAO.

Unlike traditional organizations, there is no hierarchy in DAOs. Instead, to align the interests of the organization with those of its members, the DAO encourages a distributed network of users to achieve their goals.

One of the key features of a DAO is that internal funding is used to incentivize these actors and ensure that the organization runs smoothly.

Once the initial set of rules has been established and programmed into smart contracts, DAOs typically enter a funding phase where anyone who wants access can participate.

Top outstanding DAO tokens

Uniswap

The world’s most popular decentralized cryptocurrency exchange has also introduced the largest DAO in the crypto space. Uniswap launched its governance token in September 2020 and established its identity as an influential DAO. The main functions of Uniswap as the best DAO project focus on community-controlled DeFi utilities for Uniswap users. For example, Uniswap’s vote to reduce transaction fees in certain stablecoin swaps led to exponential volume growth. Thus, one can see how clearly Uniswap has had a strong foothold in the DeFi market as of now.

The Uniswap DAO has garnered a lot of headlines in the crypto community for its broader connotations. For example, a proposal on Uniswap in May aimed to use nearly $40 million from the project’s coffers to establish political protections for DeFi in general. The proposal never came to light because the team behind the proposal were delegates from a notable investment firm. As of now, Uniswap has a market cap of $9.94 billion with the popular DAO token in UNI.

BitDAO

It is the largest DeFi treasury in the world, with nearly $2.5 billion invested in various DeFi projects. BitDAO’s reputation in the DAO ecosystem is quite unique and is largely based on its innovative capabilities.

It has successfully accumulated a treasury of more than $2.5 billion and has a market capitalization of $1.12 billion. Most importantly, BitDAO is one of the promising DAO examples where large investors have shown interest. For example, a Singapore-based crypto exchange, ByBit, has spent nearly 0.025% of its total trading volume on BitDAO.

BitDAO’s future in the DAO token list seems pretty promising as it invests in DeFi. At the same time, BitDAO may also start rolling out grants along with token swap incentives to diversify their treasury. The DAO is currently focusing on creating tools that can enable the use of the DAO treasury for lending, staking, and other activities.

DAO Maker

It focuses on introducing real-world assets into the crypto space. In fact, the DAO Maker token aims to grow into the largest central bank for DeFi. It also focuses on creating the largest decentralized stablecoin, DAI. The Maker has shown promising potential as the largest central bank in DeFi with its DAI algorithmic co-stable. The market capitalization of stablecoins has grown to nearly $9 billion.

Interestingly, the DAO Maker token is exploring new territories in the crypto industry by facilitating the introduction of real-world assets. Maker DAO governance token holders voted to use cryptographic versions of short-term trade receivables, freight bills, revenue-based small business loans, and agricultural real estate.

The project adopted the proposals and leveraged Centrifugal to tokenize non-crypto assets. In partnership with Centrifuge, Maker has begun to explore new aspects of adding more real-world assets to the crypto space. With a market cap of nearly $2.12 billion, the DAO Maker token certainly has some promising paths ahead.

Compound

Compound is also quite popular with the DAO, especially given its reputation in DeFi. Compound is a DeFi project known for providing cryptocurrency lending solutions to users along with providing passive income for users. Compound’s utility token, COMP, has gained considerable popularity among DAO tokens with rising prices. As of now, Compound’s market capitalization sits at a few billion dollars, providing a solid foundation for its growth.

Curve

It is a decentralized stablecoin trading platform with a native token called CRV. Users can purchase the network’s tokens through many popular crypto exchanges like Binance. The growing use of trading stablecoins, among other factors, has resulted in boosting the token’s market capitalization to nearly $2.31 billion.

As an automated market maker, Curve DAO manages liquidity and focuses on swapping assets of the same value. If you look closely, the Curve DAO token empowers the Curve financial platform as a whole. Curve DAO’s ability as an automated market maker and liquidity provider opens up new prospects for its applications in the future of DeFi.

AAVE

It is an open source, unattended money market platform that offers a wide range of debt-based products in a decentralized manner. Developed on the Ethereum blockchain, Aave offers support for Ether, stablecoins, and ERC-20 tokens. Aave allows users to earn automatic cash from their digital assets by locking them in liquidity pools. The Aave protocol has adopted the DAO governance model and is one of the best DAO projects for innovative money market management.

The AAVE Governance Token enables privileges to manage and grow the AAVE ecosystem. Token holders can put their tokens in the DAO and manage risks and rewards collectively. Currently, Aave has a massive market cap of $2.97 billion, which could present many new opportunities for the DAO.

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