Blockchain technology has been around for more than a decade, with the legendary BitCoin marking the beginning of the new internet, so-called “Web3” that took giving power back to the user as its tagline. Various applications followed suit after that, including non-fungible tokens (NFTs), decentralized finance (DeFi), metaverses, and decentralized autonomous organizations (DAOs). Different applications based on these facets grew up soon, and today each of these seems to be interconnected, although a total ecosystem is yet to be established. DAOs might help us in providing power back to the user, and this blog explains that line of thought in detail.
DAOs – A Brief Introduction
Decentralized autonomous organizations (DAOs) are protocols written using programs called smart contracts. They are decentralized, and hence, there are no authoritative figures to govern the community. Such a nature makes it possible to give power to the community user in determining the progress of the business, just like how initial public offering firms consider their investors an essential part of their business. In hindsight, DAOs are investor pools, but their powers can be exercised throughout a user’s membership.
DAO-enabled NFT Platforms
Typically, any NFT-based platform can easily become a DAO by integrating necessary smart contract programs with required rules. Popular DAO-enabled NFT applications include marketplaces, games, staking platforms, and DeFi platforms based on NFTs. These platforms massively benefit from their powerful decentralized communities that decide on all the changes required to be made. The profits yielded from the platform’s business are spent towards managing it efficiently and contributing it to the liquidity pool.
Types of DAO-enabled NFT Platforms
- Operating System DAO – These are platforms that help in establishing DAOs for other business ventures.
- Protocol DAO – These platforms are based on voting mechanisms to bring about new changes in an organization.
- Investment DAO – These platforms help ventures based on decentralized finance (DeFi), supporting their operations related to pooling and investments.
- Service DAO – These platforms help in recruiting new talent for companies and individuals through excellent regulation and execution.
- Collector DAO – These platforms help regulate ventures providing fractionalization and collective ownership for NFT assets.
- Social DAO – These platforms regulate and support decentralized social networking platforms.
- Media DAO – These decentralized platforms help in aggregating news that works, keeping public interest in mind.
Benefits of a DAO-enabled NFT Platform
- The main benefit one gets through a DAO on an NFT platform is that they get voting rights meaning that they can take part in various activities behind the scenes, including development, security, staking, and governance. The worth of a user’s vote is decided based on different conditions such as the value of holdings, the number of coins staked, and activity levels.
- With an NFT platform based on a DAO, there is no need to think about the consequences of human-based hierarchical leadership in a business venture, as everything works as per codes on the smart contracts.
- Community members can participate in verifying and editing the code running the platform, although changing the code requires a winning proposal beforehand.
- Such a platform cannot be shut down abruptly on the orders of an individual or government agency due to its decentralized nature, and any such activity requires a winning proposal.
- A DAO-enabled NFT platform also allows an end-user to review and propose changes to the policies written on the smart contract program. Acceptance of the changes depends on the outcome of the voting result for the proposal.
- Also, such platforms with a decentralized community allow community members to earn through staking NFTs and native tokens so that the platform’s liquidity is ensured.
- Community members of a DAO-enabled NFT platform can take part in various exclusive events such as launches, sales, promotions, meets, and more.
Earning Mechanisms Available on a DAO-enabled NFT Platform
Firstly, a user can earn voting rights of different levels based on the accomplished conditions out of the rules set on the DAO. For example, if a user holds native tokens in a minimum prescribed quantity required to satisfy some conditions, they will be provided a higher vote value. Also, such additional rights mean they can access the DAO protocol easily, which offers them opportunities for increased participation, and posting proposals in the community becomes easy.
In a DAO-enabled NFT platform, users can acquire monetary rewards for staking and supplying NFTs and native tokens to the liquidity pool. These methods help users generate passive income while holding the NFT products for themselves without transferring ownership. As more such platforms arise and the communities get diverse, newer ways of rewarding strategies are expected to emerge soon. Yield farming is a new tactic where users who hold both NFT products and native tokens can get rewards by staking their holdings. Bonuses offered are in the form of limited-edition NFT products and native tokens. However, the process needs a user to be eligible to farm by fulfilling all the provided conditions.
How can Blockchain App Factory Assist You Here?
Therefore, it can be said that DAOs hold the future of the blockchain ecosystem safely as massive and true decentralization will be achieved through them. Experts at the Blockchain App Factory always are open to learning new advancements, which makes us a lucrative destination to create your new DAO or DAO-enabled NFT platform. We ensure that all state-of-the-art technologies are employed in the development process while fulfilling all your demands without fail. Our professionals will be available to support you in every stage of developing your platform and even provide assistance post-launch. For more information, talk to one of our experts to start your journey with a DAO-enabled NFT platform.