Explore the most common DAO tools !
Nowadays, there are 10798 active DAOs according to DeepDAO, with a treasury of about $9.5 billion.
The truth is that DAOs have proliferated on Web3 in more areas and it is difficult to keep up with the new ones emerging day by day.
DAO tools are a set of software, apps and smart contracts a DAO uses to operate.
We can recognise up to 12 categories that identify these tools according to the activity and needs of the DAO:
1. Treasury Management:
Treasury management involves, for example, budget and remuneration, general management and control of mass token outflows. The possibility for these different tools to work together is essential to build a complete treasury management mechanism.
a. Parcel.money: a suite of tools to scale DAO financial transactions. It allows for multisig and multitoken mass payments (or paychecks), one-off or automated.
b. Gnosis Safe: is a smart contract wallet that helps ensure decentralisation of control over DAO funds. It requires a minimum number of people (multisig) to approve a transaction. So if an employee is negligent with the private key, funds are not lost.
c. Llama: is a multi-sig wallet DApp, another tool that facilitates the pooling and allocation of resources, including functions such as borrowing, providing budgets for internal projects and reporting transactions.
d. Juice box: allows you to design the fundraising page, set up the funding structure, define how the project will distribute funds and reward community members with tokens. It keeps 5% of the money raised for each project.
e. Fairmint: provides to the company a complete back-end for interested parties to execute and manage a Rolling SAFE offering, which stands for 'Simple Agreement for Future Equity', an agreement between an investor and a company that provides the investor with rights to future shares in the company without determining a specific price per share at the time of the initial investment. Rolling SAFE is similar but allows an investor to invest in a company at any time, with an implied valuation that automatically increases as more funds are raised.
2. Governance & Voting:
Governance is the process in which members and token holders participate directly in the decision-making process. To effectively govern a decentralised organisation, DAOs must have a reliable and accessible method for token holders to vote on key issues, including how treasury funds are distributed, spent and allocated. Among the most popular tools:
a. Snapshot: is a decentralised voting tool based on the IPFS storage system (it does not send tx to a blockchain, but uses IPFS to store votes). It allows off-chain voting and enables the use of NFTs and ERC-20 tokens to calculate voting power. Since Snapshot does not use on-chain verification, votes are essentially fee-free (voting using crypto involves fees to process the movement from one wallet to another). For this reason, Snapshot is a very attractive platform as members can create proposals and vote on them for free, unlike most other alternatives.
b. Boardroom: provides an interface where users can easily keep up with the latest proposals and engage in community governance. It also allows DAOs to standardise recurring actions such as voting, delegating, etc.
c. OpenLaw: aims to make legal advice accessible to DAOs. It allows users to create customisable legal agreements that will be stored on the Ethereum blockchain at a lower price, helping legal professionals enter the Web3 space.
d. Tally: is another tool that allows communities to vote, delegate votes and keep track of who voted, how they voted, and previous proposals. Tally specifically aims to make on-chain governance completely transparent (no need to own tokens to stay up-to-date on proposals).
e. Paladin: the portal helps deposit, manage and lend governance tokens.
f. SafeSnap: Gnosis and Snapshot created SafeSnap to automatically execute votes on Snapshot. It enables the decentralised execution of cryptographic governance proposals, through the on-chain execution of off-chain votes (it automatically executes the txs that would enable the proposal once the governance vote is overtaken).
g. Commonwealth: is a unified platform offering services to hold discussions, run votes and manage funds.
h. Sybil: created on Uniswap, Sybil helps with governance and on-chain delegation.
3. Contribution&Reputation:
In a DAO, reputation is used to determine who can participate in decision-making and who cannot.
a. Coinvise: creators who want to build a community and maintain engagement need tools that make it easy to launch a token or NFT incentive plan. Coinvise supports the emergence of DAOs by enabling creators to launch and transfer their community tokens via airdrops, acquired programmes and rewards. In short, it enhances the growth and involvement of your community.
b. SourceCred: as DAOs grow, it becomes increasingly difficult for the community to agree on remuneration sizes for individual contributions. SourceCred addresses this problem with a compensation algorithm using objective and subjective parameters to measure the impact of a contribution and its respective remuneration size, making them visible to the community.
c. Gitcoin: was created to help compensate developers who want to contribute to relevant open source software applications.
The founders of the project recognised that many software start-ups end up being abandoned, suffering from a lack of funding and (especially) post-release development work. This technology allows developing companies to access elegant and innovative solutions for problems that might otherwise be difficult to handle due to labor force or time limits.
d. Karma: tracks the activity of addresses in the DAO and assigns each one a reputation score, allowing to quickly and easily get a glimpse of which addresses are active and participating in the DAO and which are inactive or not contributing.
e. RabbitHole: allows users to discover and use new decentralised apps, protocols or crypto platforms in exchange for cryptocurrency rewards. Partners can use Rabbithole to distribute tokens to users through user trials and acquire new, experienced and engaged users.
f. 101.xyz: 101 helps to launch your own Web3-based learning hub, complete with NFT badges, crypto rewards, token-gating and more. It's also planned to add token prizes so that communities can allocate ERC-20 tokens as prizes for successful learners.
g. Others are Metopia, SOURC3, PNTHN, Astraly Popula, Underdog Protocol, SourceCred, Orange Protocol, Krebit.
4. Knowledge Management:
Since DAOs are based on the contribution of fragmented groups and workspaces, the need emerges for a tool that allows, through a community network, to share and organise documents and facilitate the creation of integrated public projects.
a. Bip: provides an integrated community workspace based on Git editable documents and other functionalities such as chat, rankings and permission management.
b. Clarity: an all-in-one community workspace that combines the functionality of Web2 apps, as Discord, Slack and Notion, while solving the problem of providing access to all users via tokenization.
c. Gitbook: is a modern documentation platform where teams can provide documentation for everything from products to internal knowledge bases and APIs.
5. Legal:
If you wish to hire employees, enter into legal agreements with other entities, offer employee liability protection, or resolve disputes in a decentralised manner, we recommend adding legal tools to your project.
a. Kleros: Kleros is an autonomous Ethereum-based organisation that also acts as the 'supreme court' for DAOs by verifying whether a proposal is compatible with the values of the DAO and verifying that approved budgets are used as specified in the original proposal. It operates as a decentralised third party to arbitrate disputes. Jurors (selected at random) must stake "Pinakion" tokens to participate in. At the end, they lose their share if they vote against the majority, while they are rewarded if they vote with the majority.
This mechanism incentivises the jurors to judge the cases correctly. Blockchain ensures that no party can manipulate proofs or jury selection and all judgements are automatically enforced by smart contracts.
b. Aragon Court: is a Web3 arbitration platform, accessible via API to any dApp but fully implemented in the Aragon OpenStack.
6. Framework:
Presents multiple tools and tool types in a single platform. However, these can also be built by assembling tools in other categories (e.g. Gnosis Safe + Snapshot + SafeSnap, or Aragon, or OpenLaw).
In addition to these 6 main categories, in the next lecture we will identify further vital tools!
If you are working on a DAO infrastructure or have feedback on this article, please contact us!