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What Are The 5 Types Of DAOs?

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There are different types of DAO. Here, we will look at the different categories that a decentralized autonomous organization can fall into, based on its mode of operation, structure, and even technology. Here is a few of them. You have probably heard some of these names: 1. DeFi Protocol DAO These DAOs use smart contract protocols to bring DeFi (decentralized financial) services to their users. They use tokens as voting means to implement the protocol and financial changes. Examples of DAOs under here are Uniswap, Aave, Maker DAO, and Olympus DAO. Most of these DAOs manage billions of dollars. Founded in 2014, Maker DAO was one of the first protocols ever. It is a decentralized organization on the Ethereum blockchain that allows the lending and borrowing of cryptocurrencies without an intermediary or a middle man. Maker DAO issues a stable coin called DAI. DAI is one of the top stable coins in cryptocurrency whose value is pegged to USD. Maker DAO has another token called the MKR toke...
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How Does a DAO Work?

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Sounds great, but how is it supposed to work? How does the system guarantee trust? When a DAO is first created, its rules are written into its code in the form of smart contracts programmed to run when certain actions take place. Everyone agrees to abide by the rules when they buy into the group, and if those rules are violated, its funds are locked and nobody can use the DAO. This, in theory, is how a DAO guarantees that everyone will follow the rules. Every DAO has a built-in treasury to store its cache of digital currency that members can only access with approval by the group, and decisions affecting the group are made collectively during a set period. There are three steps to creating and launching a DAO:  Creating the smart contract: The developers of the DAO code the smart contract(s) that will dictate the rules of the group and decide on the group’s purpose. This stage involves extensive testing of the code, because it can only be changed through group voting once the DAO i...
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