Why DAOs and NFTs Go Hand in Hand
The metaverse, Web 3.0, and the demand for a new, decentralised approach to technology has prompted an increasing demand for blockchain technology. In recent years, we’ve seen blockchain creep into more of our day-to-day workplaces and landscapes, influencing everything from DeFi and GameFi, to NFTs and DAOs.
Some aspects of this rapidly evolving blockchain environment are more closely connected than most people realise. For instance, DAOs, or Decentralised Autonomous Organisations, are having a profound impact on the revolutionary rise of Non-Fungible Tokens (NFTs).
Here’s what you need to know about the evolution of DAOs, and how they impact NFTs.
The core focus of any blockchain environment is decentralisation. With decentralised technology, there’s no single authority in control of everything (like the government).
DAOs, or Decentralised Autonomous Organisations, build on this focal concept of decentralisation, introducing organisations run by groups of people with no typical business hierarchy.
In a DAO, the rules and transactions of the group are recorded and managed on the blockchain, removing the requirement for central entities. There are many different kinds of DAOs already in place today.
While Bitcoin is considered to be the world’s first DAO, a number of variations of these organisations have evolved over the years, such as:
As mentioned above, one of the ways NFTs and DAOs are closely connected is in the form of collector DAOs, a kind of decentralised organisation specifically focused on the development of NFT communities.
There are several NFT DAOs already on the market today, including the APE DAO, one of the better-known groups in the landscape, created by an NFT collector known as Kylo Eth. The APE DAO fractionalized many Bored Ape Yacht Club NFTs and helped to ensure everyone can own parts of highly sought-after digital assets.
There’s also the YGG DAO community, which focuses on delivering in-game assets from blockchain and NFT games to people in the ecosystem. The YGG Token holders in the community can vote on decisions related to the business and governance of the business.
The connection between DAOs and NFTs isn’t just limited to DAOs built for collectors. The whole function of a DAO is often influenced by the use of NFTs.
Decentralised autonomous organisations operate on specific sets of rules established using smart contracts in a blockchain. Through smart contracts, these groups can create transparency in their operations. No central authority can override or make changes to the smart contract, as changes are only made with a community vote.
People usually need tokens to participate in DAOs, and token ownership usually comes with various voting and governance rights to ensure users can influence decisions in the wider group. As a result, NFTs naturally play an important part in how DAOs generally operate.
NFTs (non-fungible tokens) are generally something a member of a DAO will need to have access to in order to make meaningful changes in the organisation.
DAOs also help to contribute to the NFT industry in several ways, allowing the landscape to grow and thrive as a new form of economy.
Some of the ways DAOs contribute to the evolution of NFTs include:
As you can see, Decentralised Autonomous Organisations and Non-Fungible Tokens are naturally connected in a multitude of different ways.
DAOs can be a powerful tool in helping communities of NFTs come together or ensuring that certain NFT projects get the right amount of investment and potential.
At the same time, these non-fungible assets form a central part of what makes the DAO landscape work by ensuring the right people have a say in how organisations are managed and run.